Vince Lanci: How Yen Carry Trade Unwind Affects Gold Silver | Arcadia Economics

The point is, the best-case scenario for the stock market is that we will get a reasonable, slow, orderly pullback in volatility as stocks drift sideways to lower. The implications for precious metals are you may have more opportunities to buy, especially in silver. Welcome to the Morning Markets and Metals with Vince Lancey, where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here’s Vince. Good morning, everyone. I’m Vince Lancey, and today we will do some analysis on yesterday’s yen-carry carnage and see what is in store for gold and silver on the back of that.

But first, let’s look at some markets. The dollar is up 48, impressive, considering yesterday’s sell-off. Ten-year yields are higher, again, up five basis points at 384. The S&P 500 is 5225, up a paltry six handles. The VIX is 3187, down six or 17 percent. We’ll cover that more in-depth in a second. In fact, let’s put a chart up for you on that. That’s the VIX with the S&P 500 as a line in the background. Gold is 2412, up 287. Again, that’s impressive. Silver is down 20 cents at 2706. That’s to be expected.

Copper is 399, down about a penny. WTI is down 90 cents at 7355. Natural gas is 191, offered unchanged. Bitcoin bouncing a little bit, up 2 percent at 55284. A little bit truncated there, up 1200 points. That is an Ethereum is 2463, up 2 percent. Crypto is a tech stock right now. I want you to think of it that way. Platinum and Palladium are up. Platinum continues to widen in Palladium’s face as the markets were to sell off. A55 and 916, up five and change, up 955. Respectively, grains are down. Soy leads the charge lower.

1049 and change, down 21. Corn is 386, down four, and wheat is down three and a half cents. Okay, this is, believe it or not, extremely important if you’re looking at precious metals, especially silver. All right, this is the work that I did to stress test Michael’s opinion, Michael Oliver’s opinion. So let’s take a look at Michael Oliver’s opinion. Michael Oliver on Sunday put out a report, his 360 weekly update, and it covered many markets, as usually does, in focus where the stock market was the stock market, and second focus was gold and silver.

Now, the gold and silver analysis was pretty much a reiteration of what he’d been saying, but further along the line in terms of the data that he was getting to that. But let’s get to that. The first thing we need to talk about is, well, first thing we need to do is go to the front page, right? The front page. Look, I did a great conversation. These aren’t even interviews anymore. They’re just conversations. Tom Luongo and I talked about everything from the Yen to Yellen to Nouriel Robini to gold and silver, of course, and to the politics of it all.

We found that in the past, and this may be true of other people that he interviews as well, that the half hour that we talk before the actual interview starts, the conversation starts, is rank better in some ways. But it’s not on focus. We talk about music. We talk about people on Twitter. We talk about ourselves, of course, and we talk about various political, financial political people and what motivates them. Now, last week, Tom was prescient enough to hit the record button while we were getting rolling on planning what we were going to talk about, and it just kind of spilled over.

Tom’s interview is unlocked and facing the public. We have a link to that in this post. We also agreed to publish, although I shouldn’t have done it, agreed to publish the 15 minutes prior to our conversation actually starting, which is pretty uncensored. While Tom is pretty fun to listen to, unfiltered and uncensored, I think I might have trumped him on controversial comments this time. Anyway, there’s 15 minutes of that, and that’s for premium subscribers. Frankly, it’s pretty good because well, if you don’t like Yellen and you don’t like certain other people, you’re going to enjoy this.

It was fun for me to do. Let’s put it that way. Hartnett, time to sell the first rate cut. Yup. Panic Begins, Gold Silver, that’s from a couple days ago, and we put out a shit ton of stories yesterday. I’ll give you an idea what we had here. Tom Longo, uncensored. Gold observations for Michael Oliver. That’s the post we’re going to discuss a little bit today. Michael Every had a story out the end of the beginning, Navigation Special, and Jim Grant. A lot of content yesterday, as promised. Let’s start with the premise. The premise today is that the overview is Michael Oliver says, don’t sweat it.

Don’t sweat stock market volatility when looking at precious metals risk right now at these levels. He also has said that we’re on the cusp, if not already in the acceleration phase. We may not be in the acceleration price phase, but he’s a momentum guy. The momentum acceleration has already started in his book. We’re going to look at that. I’m going to start by giving you something that you’re probably not going to see. You’re not going to see it anywhere else, unless you read Data Trek. They’re very good on stuff like this. When Michael said not to worry about the stock market volatility, and with the VIX doing what it did yesterday, I thought it was worth looking at where the stock market bottoms relative to the VIX making highs over, say, 30, 40, or 50%.

This is what we came up with. This is a weekly chart. When the VIX spikes above, I haven’t refined it yet, 40 or 50. It depends on to refine it, how you want to do it. It takes time for the volatility to work its way off, so just human behavior. The volatility spikes, the market clamps down on it, but it has lower highs as it goes down. During these lower highs, the stock market is still being sold. You may have bear market rallies, little spikes higher, but you end up getting a longer-term buy level that’s lower after the VIX spikes.

In these three rectangles here, you see the VIX spike is pretty much in the middle, or the first third of the rectangles, but the low is anywhere from two to six weeks later. There’s other data to that, but I just wanted to put these three on here. The question is, does it matter this time and there’s this time? The sell-off started before the VIX spikes, which is what happened here, here, and here, and now the VIX spike is probably going to back off. Probably, we don’t know. The point is, the best case scenario for the stock market is that we will get a reasonable, slow, orderly pullback in volatility as stocks drift sideways to lower.

The implications for precious metals are, you may have more opportunities to buy, especially in silver, although you may not really have a meaningful buy left in gold. That, for me, confirms or gives me a little bit more leeway to look at Michael’s concepts. Let’s move on to Michael’s concepts. In gold, his Sunday report, his analysis aligns with something we had said a month ago. He had said a month ago, sorry. We happen to agree with that gold was being gripped by a fixed market-based selling, market-based in quotes, if I say it, holding it below $24.50.

Up until today, that fixed grip was definitely weakening. This is me talking, but today, the market may have bailed shorts out, meaning yesterday. Only for them, we expect to have to deal with gold resilience again later on. Bottom line is, look, when you have trillions of dollars at your behest, if you need to spend them, you could stay short longer than most people can stay long. Unfortunately, these guys literally have to wait for an event like this to get their shorts back. They’re playing the Martin Gale game, doubling every time they lose, black, red, black, red, and hoping eventually they make money.

They may not have made money, but they certainly got to cover some of their shorts yesterday. That’s what happened yesterday for them. The identified momentum triggers, including closing a week at 2500, or trading 25, 1580, are critical indicators to watch for him. What does that mean? Remember, this is your cup and handle? Well, now that we’re out of the cup and handle, he’s looking at a very wide parallel, very wide channel. and we’re near the top of the channel, okay, which, if we get above it, there’s your acceleration, right? We’re going from linear to, you know, to linear to geometric to exponential to, you know, infinity, right? Well, this area here that he has, this line comes in in several areas.

It comes in on that slope. It comes in with four or five weeks that touched in that area where it was kept. Remember those long wicks? So he’s saying if we get above 2500 on a close or trade 2516 and change, uh, you’re pretty much locked in for the next level. All right. Now we move to silver and I’ll bring this back to the end in a second. Moving on to silver. The report notes that silver’s price action in 2011 included a significant pause followed by a sharp lift off a pattern that seems to be repeating now.

The expectation is for a more sudden upturn this time, especially if key levels such as the daily close above 29 are breached. Okay. The takeaway is, is we’re in a consolidation trading range. The momentum has already triggered for an acceleration phase. The price should confirm and trigger it. If we get above 29 now, these charts, it’s a little bit hard to see if you’re a layman, but basically my impression, this little rectangle in 2010 that I drew, that’s where he gets a momentum indicator saying, the momentum is now turned higher. And then we get a series of higher lows.

And then we have a pullback. It’s 2010, 2011. And lastly, this is now, uh, and then we have a slight pullback, but the momentum indicator remains in acceleration phase. And then above 29, we can move higher. Now the parallel is in 2010, 2011. Oh, there we go. 2010, 2011. He got a momentum indicator that says the momentum is higher. Now the momentum has flipped to bullish. We got a series of higher lows. We got a pullback that did not negate the momentum indicator. And then boom, it looks like we got above 30 here, uh, and the market takes off fire.

So we’ll go back to the other chart. There’s our, there’s likely his momentum indicator turning this area here at price. We don’t see the momentum indicator, the lower highs. I’m sorry, the lower, the low, the higher lows, and then the consolidation below the higher lows that does not negate the momentum indicator. So if you’re a trend line person, you say, well, this is a new trend line, right? Above 29 and boom, we’re off to the races, bringing this back to the yen. Until a breach of 29 happens, macro funds are also unwinding massive stock positions now.

And that will weigh heavy on everything, especially silver, which is perceived to be industrial. But if this, his analysis is correct, and we have no reason to believe it is not, especially in combination with some volatility indicators that we watch for stocks, which I just showed you, uh, metals will float in a range as paper investments sink over the next four to six weeks and four to six weeks. Statistically, historically, stocks will chop sideways, have little rallies, but continue to work off that frothy length as panicked longs who didn’t sell on the way down, start to offer stocks a little higher.

And this will keep a lid on precious metals for several reasons. One is, well, uh, if stocks are going down, precious metals are going down, whatever people think that way. The other is, well, I’m long gold and I’m long silver, right? And if I’m taking losses in my stocks or they’re taking winners, actually, I’m going to close out. So everybody’s going to start closing out as, as the, uh, as the third quarter commences. So that will keep pressure. Now, my opinion is completely negated if silver gets above 29, right? That’s Michael’s level.

And gold gets above 24 50. So it’s my opinion that, uh, using combining these things, I’m not upset if silver goes lower. I’m not upset if gold goes lower. And I want to see in the next call two to six weeks, I want to see stocks bottom. I want to see silver break 29. And then I want to see gold break 24 50 at roughly the same time. Then I say Michael’s momentum indicators in play for me and I’m going to buy strength. That’s it. There’s, we have a full write up on his analysis or you can subscribe to his work.

Uh, his link will be in the website, his website link will be there. All right. Uh, we want to share this because we think it’s actually interesting in the news, in the market news. This one’s actually, I think, uh, worth looking at how our chatbots being used. You can read that we’re running a little bit low on time here, but essentially it’s mostly, uh, 15% seem to be about work and, uh, uh, 7% seem to be about school and the rest seems to be about creativity or BS, depending on how you look at it.

All right. So in premium, we have, uh, our write up, which we posted yesterday for the report checking back with the markets. Here. I’ll give you a gold chart. It could be worse. That’s a monthly. Let’s look at the daily. It could be worse. You know, look at that wick. That’s a phenomenal wick, right? Right. I know I’m, I know I’m rationalizing, but I’ll give you an idea. I’m talking about yesterday’s wicking gold. Here’s yesterday’s wicking stocks off the lows remaining very low. Yesterday’s wicking gold off the lows back to the open of four days ago, right? Yesterday’s wicking gold off the lows back to the open of two months ago.

So you’re going to see a convergence between stocks and gold as time goes on. It just has to happen. Uh, silver will catch a bid, especially look at silver rallies. And you see the news that China is doing some sort of an aggressive stimulus. We’re going to be off to the races, but until then, sit tight. That’s what I’m doing. Thanks for watching this morning’s markets and metals with Vince. Brought to you each day by miles Franklin precious metals, who we encourage you to contact for your next gold or silver order. And miles Franklin brings us a gold and silver special each week where this week’s special includes constitutional silver half dollars for only $2.50 over spot.

One of the more popular silver items available. And on the gold side, we have 10 pounds American gold Eagles for only $39 over milk and to place an order or get your questions answered, call 833-326-4653 or email us at Arcadia at milesfrankton.com. And as always, thanks for watching. Please note that this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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