After some nervousness exhibited among gold and silver holders last week after gold and silver prices sharply spiked higher to begin the week and then quickly spiraled downward, future expectations for gold and silver prices were unclear for many investors. With another week of price behavior under our belts, future expectations for gold and silver have regained clarity and rationality as well. Gold and silver prices, particularly gold, have rebounded nicely this week, with gold only down $10 an ounce as I write this sentence from its peak price last week before it was smashed downward. The smash in gold and silver prices last week, in light of admissions from Barclays, Deutsche Bank, and JP Morgan bankers of manipulating gold prices lower in recent years, had the fingerprints of another artificially orchestrated smash all over the pullback in prices and had many in the gold and silver community overly concerned about their future expectations for gold and silver price behavior.
If you’ve been following my articles on my website, then you should have been able to deduce the reasons for the artificial takedown in gold and silver prices that occurred last week before prices rebounded this week. With all the articles I’ve written about the mass financial media underestimating the economic consequences of the coronavirus pandemic over the past few weeks, and of how the much more significant economic consequences, many specifically of which I predicted have now come true, would eventually cause Central Bankers to slash interest rates, there was a clear conclusion to draw from these facts. The last thing Central Bankers want is to have strongly rising gold and silver prices into a significant interest rate cut. Historical analysis of previous large gold and silver price dumps un-coincidentally often precede Central Banker interest rate cuts. However, due to the depth and breadth of such attacks in previous years, future expectations for gold and silver became overly negative last week.
The reason for the timing of such engineered price dumps in gold and silver is not by accident. Should gold and silver prices be rising strongly into Central Banker interest rate cuts, then the added momentum produced by the interest rate cut will make rises in gold and silver prices especially difficult to control. So let’s just say the dampening effect executed in gold and silver futures markets prior to interest rate cuts is extremely likely, given past historical behavior, to be intentional and artificially engineered.
That said, what lies ahead for gold and silver prices? The silver price rebound still needs to play a lot of catch up to the gold price rebound at the current time, and thus, still needs to rise a considerable amount in price and surpass critical price levels before I would say that silver solidly regains the upward trend. If we look at the two charts I produced below, we clearly see that the gold: SPX ratio has clearly broken above a multi-year downward sloping channel now. If this ratio does not sink back into the channel and remains above it, this may very well mark a multi-year trend of gold rising and the US stock market falling.
Furthermore, below, in the chart of US corporate junk bond yield, we can observe a recent spike higher in yields after yields have traced out a massive 4-year long bullish cup and handle formation. If yields can break above the red line I’ve drawn above, we may very well experience a rapid escalation in junk bond yields for the first time in many years.
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