Gold and Silver Decline Fading, DOW Rolling Over, Bonds Scream Trouble Ahead – Eric Dubin
Following Trump’s win the stock market blasted higher. That’s now fading. Today, we should see the last of major declines in precious metals, too.
TND Market Brief: Eric Dubin
Trump’s “surprise” victory was no surprise to me. I nailed the electoral college map almost to the state (click here). For the two weeks leading up to the election, I documented where a surprise victory would come from and how, and my baseline forecast was that the popular vote would be a large enough win to overcome electronic voting machine fraud. Lot of good that did me, as my trades went against me the morning after the election. I find it helpful to have the markets punch me in the gut now and then. Markets can humble anyone!
Today, we’re witnessing another inflection point. The run up in the Dow Jones Industrial Average is going to roll over. The blast higher was excessive and the initial shock to expectations throughout the global financial markets has run it’s course as far as initial shifts are concerned. Long-term interest rates, however, will continue to inch higher even as the equities market advance takes a breather, this week.
Worldwide, long-term interest rates spiked higher, following the election. 2017 is going to usher in stagflation. The dynamics that I warned about on Nov. 3rd are going to develop, and this will ultimately prove to be part of the drivers for a massive move higher in precious metals. The bond market is a slow motion black swan. See: Larry Summers’ Worst Nightmare: Trillion Dollar Infrastructure Programs a Slow Motion Black Swan to Break 500+ Year Low Rate Bubble.
Odds are, we have seen the worst of the decline for precious metals. Perhaps silver might test $16, but I doubt it will and we probably will not even drop into the $16.20s. The downside move in precious metals has been excessive, and the rate of decline took a noticeable deceleration today as we prepare to go horizontal for a while at worst, starting from this point forward, or tomorrow.
As is usually the case, financial markets are leading the Federal Reserve. Interest rates are backing up and this is going to cause total chaos in the next 18 months.
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NOON UPDATE: First Majestic Silver has swung into the green, indicating that speculators are coming back into silver, and a similar speculator signal is visible with JNUG shifting into green as Wall Street enters lunch hour. The odds that we have bottomed in precious metals is now drawing the attention of speculators.
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Mr. Dubin is the Managing Editor of TheNewsDoctors.com. He has 25 years of experience as an independent buyside securities and global macro analyst. He has well over a decade of experience as a financial journalist, editor and political analyst. He’s primarily an autodidact, but his formal education includes degrees in economics, international relations and MBA. He welcomes feedback on his articles and will make an effort to respond to comments. Email Eric by sending to “Eric” and then @TheNewsDoctors.com. He can also be “followed” on Facebook: https://www.facebook.com/EricDubin