from Silver Doctors:
It’s becoming an interesting week for gold & silver, but the charts have been weaponized, so how do we know the coast is clear? Here’s some insight…
I was poring over the Federal Reserve minutes from Feb. 21, and as I was rolling my eyes and looking around my den for something to throw, I was reminded of the comments from then-Fed chairman Ben Bernanke years ago when he was asked if the Fed was “monetizing debt.” The reply was “No.”
Yet here we are, years later, and the new mantra is now “Modern Monetary Theory,” which says central banks and sovereign treasury departments can print any amount of money they so desire over any extended period of time and it won’t create anything but rising stock markets and minimal inflation. Better still, for those who depend on either their houses or their retirement portfolios for late life safety and security can continue to do so because the Fed minutes revealed the “Greenspan Put,” which was survived by the “Bernanke put,” which morphed into the “Yellen Put,” has now been replaced by the “awesomest” put of them all—the “Powell Put.”
A put option gives the holder the right to sell a finite amount of the underlying security at a fixed price for a finite period of time, so for those stock market and real estate speculators, all they need to do to activate the central bank fire alarm is to simultaneously dump their portfolios “at the market,” creating a stampede of selling large and violent enough to trigger circuit breakers, nightly news stories and Presidential tweets.
It was only 60 days and 3,000 Dow Jones points ago that the POTUS threatened to fire the chairman of the U.S. Federal Reserve (Jerome Powell) and the Treasury Secretary (Steven Mnuchin), resulting in a resounding call to arms that has since added over 10% to the S&P 500 and dropped the ten-year yield from 3.25% to 2.65%. Happy, smiling faces of Wall Street gamblers and online speculators are popping up everywhere as the Trump Presidency continues to groom its legacy with the iron fist of price management and interventions. “Balance sheet normalization” and “quantitative tightening” are now fragments of a distal threat, and margin calls are what your now-unemployed work mates got a few short months ago, but will never again stain the palette of the profit and loss (P&L) statement.
At all times, I try my best to use sarcasm and irony in an attempt to satirize this travesty of free market capitalism called “central bank policy,” but it gets to the point where I want to literally take the closest heavy object, whether an obsolete ashtray or a half-full wine bottle or a computer monitor (or even the computer!), and hurl it off the balcony in the direction of the closest Bay Street banker sashaying his way down the street with his Au Bon Pain peppermint latte in one hand and the latest iPhone in the other, firing off an Instagram of the homeless guy on the corner. Taking in the vista of a computer monitor sailing through the air in a perfect trajectory for full facial contact with the vermin-child banker sends wave after wave of exhilaration through my veins, something for which I can be either extremely remorseful or wildly elated, depending on my mood and/or the price of gold.
Once again, the use of my priority timing tool for gold and silver trading worked its magic as I offloaded the bulk of my leveraged precious metals investments late Thursday morning, very close to the high for the move. While the jury is still not exactly in yet, silver’s pathetic performance was the negative divergence that spoiled the party, and while it was one of my best calls in recent months, I should, in retrospect, have blasted out the silver positions as well.
Instead, I tried to be “cute” by adding a few more of the SLV out-of-the-money April calls on the assumption that silver could move countertrend to gold’s overbought condition. Guess what? I was wrong, deadwrong, in that silver’s lagging behavior was the nagging fishwife calling you home for dinner while in the company of your rum-swilling mates. A true party-spoiler was never more present.
There are few people I admire and respect more than my former coworker, technical analyst, market historian, senior strategist and beer-league goaltender (still going strong in his 70s) David Chapman (Enriched Investing). You have all read Chappie’s work over the years; his pro-bono gift to the numerous websites that cherish “free content” has been nothing short of spectacular. You have all read my constant “tweaking of noses” of most members of the “Society of Technical Analysts” over the years, but what you should know is that my jabs at technical analysis are actually an extension of after-work beer debates with none other than the “ChapMeister” himself.
We used to absolutely rage at each other over my contention that technical analysis is useless in rigged markets. while he would argue that all markets have been rigged in one way or another since the dawn of creation, so the “rigging” is still part of all of the data inputs through which the charts can see. I would argue that since the technical patterns tell the analysts whether to buy, sell or hold and are all well-known to all traders whether human or machine, they are also wonderful deceptions that can be fabricated by properly programmed algobots.