Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Week Hit on the Metals

I was expecting a hit on the precious metals this week, and today would certainly qualify.

Non-Farm Payrolls on Friday.

Stocks and the precious metals are running inversely here which is a change from the past.

I think that is because both stocks and the precious metals were rising in a reflationary environment.

We are now past that reflation and stocks have entered bubble territory. That bubble is soaking up quite a bit of excess liquidity and funds are being created for financial paper by selling positions in commodities. And the metals are prime targets.

The lack of volume in the stock rally is a huge warning sign of trouble ahead.

IF the market expected a serious recession, would stocks be rallying so hard? No. But how does this square with the meme that commodities are falling due to decreasing demand?

I believe this is a monetary phenomenon in an unreformed market. IF that is correct we should see a rather violent reversion to the mean, or norm, sometime this year, probably in two steps. Step one is probably going to be a 'market break' that will scare the stocks bulls for a time, until the Fed calms their fears with more liquidity. The second break could be rather impressive.

I am not necessarily expecting a market 'crash' of 20+% although that is possible.  I think there will be a dislocation in the financial-political realm that will have far-reaching effects.

But no one can predict the future and that certainly includes me. 

At the same time, I am seeing a rally in paper financials and corporate profits, and at the same time increasing despair amongst consumers and the public, with very little signs of sustainable recovery. 

This divergence is being ignored by policy makers and influencers, who are taking a 'Shut Up Savers' stance towards their base of support.

So let's see what happens.

SP 500 and NDX Futures Daily Charts - New Highs and Complacency Returns.

The SP 500 tagged my intermediate chart objective of 1565 to 1570 intraday today.

Stocks are in a Fed-induced bubble now.

They are not expensive based on a multiple of earnings. However, the earnings are not sustainable.

The most illustrative chart is to compare the growth of corporate profits and the median wage.

The world is slipping into a recession, approaching depression in some errors, all due to a policy error on the part of the group think of the global elite and their hangers-on.

There will be a serious break at some point, perhaps as early as this summer.

Non-Farm Payrolls this Friday, ADP and ISM services tomorrow.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

"Oh what a tangled web we weave,
When first we practise to deceive."

Sir Walter Scott, Marmion

Thin premiums on another 'record day' for stocks.

I bought volatility when the SP 500 June Futures tagged 1568 intraday.  As you know volatility is just another name for uncertainty.

That is close enough to my intermediate target of 1570 to have a go at it. We may get back up there for a couple more tests.

I think the hit on the metals today was rather heavy-handed and obvious. The Gold/Silver ratio is approaching an extreme.

Remember that Non-Farm Payrolls is on Friday.  I was therefore expecting a hit on the metals, and here it is.  It may not be over. 

The COT seems to indicate that this is in the hands of the hedge funds and momentum funds in addition to the usual suspects.  They tend to move quickly when there is a turn.

As you may recall I tend to take a long view of the precious metals bull market as the progress of the ongoing currency war which will result in the establishment of a new global currency regime to replace what we have called 'Bretton Woods II' based on the fiat US dollar.

I believe gold will play a role in this, and probably silver as well, if not in a formal way, then as a modifier or a 'hedge.'

Respect your timeframes and your ability to endure risk, because there will be risk aplenty no matter what you may do.
It is probably better to leave leverage to the professionals.

Administrative Note: Matières à Réflexion Is Back

The Matières à Réflexion list of news links is back on the left hand side of the blog.

Thank you for bearing with this while Google was repairing things.

As a reminder, I don't necessarily put up things with which I agree, but things rather which I think are interesting. If two people in an organization always agree on everything, one of them is probably unnecessary.

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And I always appreciate your opinions, thoughts, and correction for my occasional errors.  I am certainly far from perfect;  my wife is an authority on this.  I think she keeps a list.