Are the Predominant Macro Trends About to Reverse?
I felt a great disturbance in the Force-- Obi-Wan Kenobi
If you've been watching the precious metals closely – what a day! Both gold and silver plummeted in overnight trading. And by "plummet," I mean the gut-wrenching vertically-straight-down kind of free-fall (silver was down nearly 10% over a matter of minutes). Then, after a few hours of partial recovery and stabilizing, the precious metals went parabolic in the up direction.
The below charts from CoinInfo.com show the crazy price action over the past 24 hours:
Many leading technical analysts have guided that precious metals prices needed to retest their mid-term lows before a true reversal in trend could be possible. Gold came close to its low of $1,320 (getting as low as $1,340 this morning), and silver smashed below its own before recovering. So does this count? Have gold and silver prices bottomed?
As with all one-day events, it's much too soon to call. But today's action sure does feel like a strong bounce off a bottom.
Of course, Chris and I will be tracking this closely and sharing our thinking as it develops.
But the inspiration for this post is larger than just today's volatility in the PMs. Through recent conversations with Chris and Peak Prosperity's contributing editors, Charles Hugh Smith in particular, I'm becoming more confident that a major market turn almost upon us, if it's not indeed arriving now.
Over the past year and half, we've seen an inexorable march upwards in the equity and bond markets – much stronger in both intensity and duration than most had predicted. Victory goes to the Fed and the world's other major central banks. Their massive liquidity measures have supported asset prices around the world, from financial markets to housing (with the notable exception of the commodity complex; the precious metals in particular). In fact, the uptrend has become so relentless that it has become farcical.
Capital managers are aware of these realities. And up until now, most have chosen to dance while the music played. And they've made a lot of easy money by not fighting the Fed.
But they've learned over their careers that trees don't grow to the sky and markets don't go up in straight lines, despite the recent trending suggesting otherwise.
To the chorus of voices like Chris' warning about the fundamentals, those who practice technical analysis (TA) are also beginning to warn that this market rally is long in the tooth.
Peak Prosperity has gone on record calling for a large correction in the stock market in or before September. We stand by that forecast, which will be complemented by a new report by Chris in the next 24 hours clarifying the various dangerous bubbles (in both number and magnitude) that have re-emerged from the Fed's money printing program.
So if you're a fund manager and want to take your gains out of the market, the question is: Where to put them next?
Forthcoming reports from Chris and our other authors will tackle that important answer.
But for now, I just wanted to share our growing belief that the market status quo is ending: We're feeling a disturbance in the Force.