[SLV] and commodities - short term threat model.

If you missed the recent dip in metals and miners I do see one more possible chance to buy at an even lower low.  If the model in this current post is correct it will invalidate my attempt to make an exact bottom call on Friday.  Not that it really matters because the actual bottom would likely come within the first few days of September in any case.  But I always find it entertaining trying to hit the exact top or bottom based on the Elliott wave principle simply because it is the only possible way to accomplish this even if it is not perfect.

Anyway, in the name of "Drive for show, putt for dough" I have to share the potential for one more spike down in SLV per the chart below.  Essentially, I see a way to count the recent move up as an a-b-c even though it is disguising itself as a motive 5 up.  The real concern is that that blue B looks like it could be a HT and if that is the case then it is penultimate meaning everything else above that was the C wave.

I think the smart money sells out of M+M at the first sign of weakness on Monday UNLESS this gaps up and over that top rail in which case I would say we are already golden.

But failing that, we have a declining double top that could b counted as a C and furthermore, that C did not come into the range of black 1 down as shown by the red horizontal.

JNUG and RUSL are up big time since the bottom and if this is correct they will likely give all that back up and then some.  But then we will have an obvious 5 waves down right into the new month.  Talk about your once in a lifetime buy signal.  To say in that case that I will be into JNUG and RUSL on margin is an understatement.

Note that JNUG and RUSL might use this lower low in silver as an excuse to do a deep vee 2nd.  So if we see 5 waves down in the metal but only 3 down that cannot hit a lower low in the miners, that is trey bullish non-confirmation IMO.


And if these bottoms occur in conjunction with that lying con woman Yellen saying that the economy isn't strong enough to bump rates this year then absolutely merge with the herd as it heads back north on commodity trail. 

What I think would be funny would be if the stock markets tanked as BKX breaks down per my recent post on it and then that scares the clueless Yellen so much that she actually comes out 2 weeks before expected with official statements pushing off rate hikes into next year.   I think it would be clear at that point that she can never officially raise rates.  At that time we can only expect interest rates to climb without her permission because, folks, as some of you will soon learn, the fed does not control long term interest rates.  This is not my opinion.  Greenspan said it when he was trying not to be blamed for low interest rates which caused the housing bubble. From that WSJ article I quote (yellow highlight mine):

"The Federal Reserve became acutely aware of the disconnect between monetary policy and mortgage rates when the latter failed to respond as expected to the Fed tightening in mid-2004. Moreover, the data show that home mortgage rates had become gradually decoupled from monetary policy even earlier -- in the wake of the emergence, beginning around the turn of this century, of a well arbitraged global market for long-term debt instruments.

U.S. mortgage rates' linkage to short-term U.S. rates had been close for decades. Between 1971 and 2002, the fed-funds rate and the mortgage rate moved in lockstep. The correlation between them was a tight 0.85. Between 2002 and 2005, however, the correlation diminished to insignificance."


In other words, globalization of our debt made the world a bigger player in the US treasury market than the federal reserve.  Buyers set the terms of any completed transactions, not the seller.  Sellers can recommend prices but if buyers don't want to pay that much they can either just walk away or they can haggle and then walk away if they don't get their price.  The USeless government is the only entity that can force you to buy something (like healthcare at ridiculous, "more important than food and shelter" prices).  Without the threat of physical force (all governmental force eventually devolves to physical violence when needed), sellers must find willing buyers.  Thus buyers set prices whether or not most people understand this.  Well, if its true for the downside on interest rates then its true for the upside as well.

Tangent: back in the day, buyers never just paid face value for anything.   Before the credit was flowing easy thus putting the economy awash in cash, people would think twice about spending a few pennies because, after all, a penny saved was (and is) a penny earned.  People would go into stores and offer prices.  Price tags, which auto retailers still refer to as MSRP (Manufacturers Suggested Retail Price), were not cut and dried but rather the starting point for negotiations AKA haggling.   I expect this to come back into vogue in the coming years.  Yes I know this sounds "out there".  Why else do I want it in writing?  It's not for you to care about today.  It's for future readers looking back, perhaps even years after I am gone, to be able to see that none of what is coming was a mystery to those with real understanding and who are willing to tell the real truth.  When you see haggling make a real, not fringe, come back in retail, you will know that the old conservatism is back in spades.