Gold and Silver Current Thoughts 4-9-2015

From the Trading Desk

Gold’s bullish reaction on the Sunday open to Good Friday’s disappointing nonfarm payrolls figures seems like a distant afterthought now.  Gold failed to break through the triple top at $1,224 on Monday and has now sold off for three consecutive trading sessions.  The Fed minutes were largely interpreted as bearish by gold investors this week.  It showed that members are divided on the timing of a rate rise with a few wanting an increase in June.  The USD has continued its March higher this week which is weighing on the precious metals complex.  Over the past three weeks, the euro has tested and failed at the 1.10 area on six separate occasions.  Its latest failure this week encouraged short sellers to add to positions and it looks poised to retest 1.05, a level that before a few weeks ago it hadn’t touched since 2003.  Gold is looking heavy and doesn’t have much technical support until $1,180.  Silver has rolled over with gold and is down today for the fourth consecutive session.  The psychological area of $16 may provide short term support.

The latest jobs number came out and they were better than expected keeping gold at bay. What a difference from a week ago! Gold still has not broke below $1,190 and I would need to see that to be a lot more bearish. Since we are trading around $1,194 we aren’t far away. Things don’t look good for the mining stocks either.

The wholesale trade data didn’t help gold either even though it was worse than expected and some are whispering “recession.” But even though JP Morgan’s Jamie Dimon is warning of another market crash, the stock market want up over triple digits today. All is well in la la land. Until it isn’t.

The dollar was again holding gold back. Many who read my blog articles and current thoughts know I am dollar bullish and have continually said the higher dollar could put pressure on gold and silver. Unfortunately for those long, it has. The dollar in fact is ready to break 100 again. From there, this may finally give us the smack down in gold under the November 5th lows and take silver with it. Don’t say you haven’t been warned.

I do realize that it is difficult to be patient when there are so many signs that the U.S. economy has issues. While there are cries of manipulation and other conspiracy type talk, I simply look at my indicators which I have told many people “haven’t let me down yet.” Would it be easier to make the case for a dollar crash like so many who sell gold do? Sure I can make that case. I can make the case for a ton of negative things that will at some point occur in the U.S. But perception of where the U.S. is right now, and price action, can’t be ignored.

Look at the weekly chart of the dollar and tell me what I’m missing. Charts both from http://www.fxstreet.com/rates-charts/usdollar-index/

Ironically (or not) the price of gold began to fall about the same time as the bottom left corner of the chart above.

The unemployment numbers, even though they are not REAL as the U-6 data shows, is what the market trades off of. That and every word out of the Fed’s mouth. Why would the Fed do anything to hurt the stock market? It’s in their best interest to get the economy going to have people get richer. Unfortunately for most Americans, they aren’t. Only the top tier for the most part invests in stocks. As this article states, forget Manhattan (where all the rich Wall Street folks are); Brooklyn is on fire! 17.5% higher than 2014. Money never sleeps.

About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534