Stocks and Precious Metals Charts - Silver Continues to Rip Higher - Release the Kraken

Wow.

It was a 'risk on' kind of a day, as stocks managed to hold their early ground and power higher into the close.

The SP 500 and NDX are both running into the key overhead resistance that has kept them rangebound in the past few weeks.

Gold held its recent gains and moved slightly higher, bumping into the upper bound of its consolidation pattern.

The Dollar continued its slight decline.

The VIX fell sharply with this new risk appetite in the short term punters.

But the real story was in silver, which continued powering upwards, going out on its highs.

This has all the signs of a short-covering rally.

I was reading the latest from Ted Butler today, to see if he could shed any insight on the reasons for this incredible silver rally.

His take is pretty much the same as my own.  He does not know of any particular event that is driving this, although there could be one.

I also took a look at the usual suspects.  The mainstream financial media continues to run their pom-poms for equities.  Most of the usual sources don't know or aren't saying.  I am chasing down rumors but haven't come up with anything that seems credible.

Most likely, given what we do know, this is an intense technical reaction to a breakout from a long period of price suppression driven by a few major players who were gaming the markets. Ted goes into much more detail and names the players, with the specifics of the market structure, but you'll have to read it on his site. (subscription)

I think the incredible out of norm level of the gold-silver ratio was a tipoff that at some point silver would shake off its market made bindings and bolt higher, following and exceeding gold.  Or that gold would get crushed, which was a bit of a concern all things considered.

And so it has done. This is a familiar scenario to old market hands. Silver may be kept lower, but at some point the beta is unleashed.

There will likely be a correction at some point, but I would not wish to try and get in front of this. I'll leave that up to the banks who can stomach billions in paper losses. For a while.

Chart-wise silver looks to have its sights set on 22ish.  It may go parabolic(er) and overshoot.  

Slack, of recent IPO fame, was monkey hammered after the bell as its results did not nearly support its current valuations.

We may be hearing a lot more stories like this in days to come.

Have a pleasant evening.

'Silk Road' Gold Demand

Gold is flowing from West to East.

Year to Date Performance of Certain Assets - Silver Takes the Lead

And a few mining funds for good measure.

The gold:silver ratio was just off the hook out of bounds before this latest silver rally. I was beginning to despair. lol

Stocks and Precious Metals Charts - Silver Takes the 19 Handle - Markets On Edge Before Payrolls and Powell

The Gathering Tweetstorm

"U.S. factory activity unexpectedly contracted in August for the first time in three years as shrinking orders, production and hiring pushed a widely followed measure of manufacturing to its lowest level since January 2016. The Institute for Supply Management’s purchasing managers index fell to 49.1 in August, weaker than all forecasts in a Bloomberg survey of economists, data released Tuesday showed.

Figures below 50 signal the manufacturing economy is generally contracting. The group’s gauge of new orders dropped to a more than seven-year low, while the production index shrank to the weakest level since the end of 2015. Faltering manufacturing could complicate President Donald Trump’s re-election campaign as recent data undermines one of his signature promises for a strong economy.

Stocks extended declines and the yield on 10-year Treasuries fell sharply Tuesday after the data was released. The dollar weakened."

Bloomberg, U.S. Manufacturing Contracts for First Time in Three Years


“Because silver and gold have their value from the matter itself, they have first this privilege, that the value of them cannot be altered by the power of one, nor of a few commonwealths, as being a common measure of the commodities of all places. But base money may easily be enhanced or abased.”

Thomas Hobbes

Gold and silver are the antithesis of the primacy of the power of the state to arbitrarily and sustainably mandate value and create wealth as it wishes at will.

Anyone who has personally witnessed the collapse of artificially managed maintained exchange rates into black markets knows this.

Tariffs and a marathon tweetstorm had US equities reeling a bit over the weekend.

Even an effort to turn it around during the quiet futures overnight trading hours couldn't help, and so stocks finished lower after the three day weekend.

The Manufacturing ISM missed this morning, and at 49.1 actually showed a slight contraction.

Risk off was the big story, with the Dollar and Gold higher.

But the real mover and shaker was once again silver, which took out the $19 handle in the morning with some authority, and then held it during the afternoon and into the close.

Wow.

Jay Powell will be speaking in Zurich near the end of the week.

There will be a Non-Farm Payrolls report on Friday, which may play backup to Fed Chair Powell's remarks.

It is fairly obvious that a market crash and a recession would have seriously negative effect on Trumpolini's 2020 election ambitions.

Let's see how the bulls respond to this. And who may decide to give them a helping hand.

And oh by the way, Insiders Are Selling Stock Like It's 2007

Have a pleasant evening.