Copper is crashing, following oil's trajectory. Copper is called "Dr. Copper" because of its ability to predict the future for stocks. If you would like to understand why oil and copper are tanking, take a few moments to read David Stockman's 17 December 2014 article, "I'm Not Buying It" at http://bit.ly/1y04XL5 Stockman does an excellent job of explaining how basic commodity prices were driven to laughable highs by central bank money creation world-wide. (Course, it's not the central banks alone. They couldn't do much without their partners in crime, the fractional reserve banking system.)
Here's a nearly six year copper chart, http://scharts.co/1Bs777I You can see that it has built an enormous descending right triangle, and that has now collapsed earthward. From its present $2.53 it targets about $1.25. As the first blue martin to return in the spring signals hundreds more are coming behind him, so a tanking copper chart signals trouble for stock markets around the earthball.
A reader asked me today about the price of oil in gold. I ran a chart back to 1982, http://scharts.co/1BsajAe Price of a barrel of oil ranged from 0.027 troy ounce to 0.16 oz. Stands now at 0.04 ounce and falling, and has been below its 200 DMA since 2008, a long trend. This price suggests oil is very, very cheap in gold terms. Does that mean it might turn up? Maybe. Sometime. Not yet.
But in US dollars, that scrofulous paper, WTIC oil has made a key reversal yesterday & today, diving into new low territory yesterday with a higher close, followed by a higher close today, up 5.44% to US$48.62/barrel. Needs one more higher day.
All right, today. Bad day for stocks. Indices were down across the board.
Palladium sank $35.05 today to 780.65. Here's a chart, http://scharts.co/1BsbWOe Palladium is breaking the uptrend line from the 2012 lows. Rumor says the Russians are selling to raise money, since they produce 75% of the world's palladium.
Taken together these commodity declines are signalling deflation, but remember falling prices are not deflation itself. Rather, deflation is a decrease in the money supply that generally results in lower prices. It's just about impossible to have "deflation" under today's monetary regime, since central banks are without let or hesitation mountainously inflating ("creating new money"), but all the artificial demand for commodities created by huge money printing & credit creation is now collapsing.
So wait! Won't that suck down silver & gold, too? Nope, because they are not commodities. Gold and silver are MONEY.
Dow fell 186.59 (1.06%) to close at 17,429.09. Low came a hair -- two points -- above the last low (17,262). Tomorrow would be a grand day for a nose-dive. Once the Dow breaks that low, next safety net is the December low at 17,067, and 200 or 300 points is nothing when the Dow is whizzing downhill.
S&P500 lost 11.76 (0.58%) to 2,011.27, and is in the same shape as the Dow. Both are not far from their crucial 200 Day Moving Averages, 1,965.28 & 16,998.93.
This collapse may be a Big One.
Dow in Gold slipped 0.91% to G$293.13 gold dollars (14.18 oz). It is falling down the lower Gator Jaw, ready to fall through & dive sure enough.
Dow in silver rose, a tiny little fishhook on the line, 0.41% to S$1,338.00 silver dollars (1,034.86 troy ounces). Just like gold in a Gator Jaws or broadening top pattern.
US dollar index is beginning to roll over, maybe, perhaps. Skidded 18 basis points (0.19%) to 92.28. For the first time in 10 days (save one) the euro rose today, up 0.9% to $1.1786. One blue martin doth not a martin house fill. Needs more proof. Yen rose 0.45% to 85.22 and really is rallying above its 50 DMA!
Yield on the 10 year US treasury note is sinking like a Holstein cow shoved out of a Russian cargo jet. Closed today down 2.8% to 1.837%.
Gold reached $1,244.60 today but couldn't hold on there. After all the day's flurry, it ended up ten cents at $1,234.40. Still hasn't cut through that neckline.
Silver backed off 16.9 cents to 1695.6c.
As I've said until y'all believe I am repeating myself, gold logically would take a day or two to work through that neckline, more, perhaps, since it is the downtrend line that connects the October & December highs. Momentum remains up.
Silver couldn't batter through the downtrend line from the August 2013 high today, and kissed-back to the boundary of the diamond it escaped yesterday. Normal behavior for a breakout. Next move should be moonward.
Gold/Silver ratio jumped back to the boundary of the diamond topping formation, where today also lies the 50 DMA. Chart at http://scharts.co/17rG0hX Still headed down, down, down.
I am so glad I am not a Nice Government Man charged with keeping the(ir) world from coming to an end. Today 'tis unravelling badly, enough to leave the NGM sweating bullet & staring at the ceiling in the darksome night.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger