When we addressed the ongoing downtrend presented in silver, last month on November 3, 2014, the price per ounce was $16.47/oz. This was the monthly candlestick chart at that time.
This is the monthly candlestick chart today, in the middle of December 2014, sixteen hours before the Federal Open Market Committee' last 2014 rate decision:
It's hard to be bearish with the US $ right now: Relative to other currencies, interest rate expectations remain entrenched firmly in favor of the US$. The precipitous decline in crude oil (which is priced in dollar terms) has aided the greenback against the other major currencies, because people and companies who are paid in terms of the Japanese ¥ , the Euro, the Australian dollar, and the British £, all have to convert their currency into US dollars in order to buy oil for refinement to gasoline and other petroleum products.
Much of this US dollar advance is predicated on raw economic data, too---not just log rolling against other assets: There is real economic activity in play: The labor market is improving. Americans are buying houses and cars. They're traveling so much, airlines don't feel any pressure to reduce fares because the consumer is willing to tolerate higher fares---which were elevated, ostensibly, to compensate for the expense burden caused by higher fuel costs. And yet: Even with oil having fallen to almost $50/bbl at this writing, Senator Chuck Schumer of New York thinks the fact that fares remain high is an indication of unfairness.
Senator Schumer's knee jerk impulse to deploy the police power of the government to correct perceived market imbalances tells you everything that's wrong with the meddling Marxist mind. For all their desire to disarm the people and claim a monopoly on violence, they really think guns are the solution to all economic problems. In any event, when the consumer is willing to tolerate elevated prices, that's an indication of discretionary spending. And any way you want to cut it, cheap crude oil and good economic data all adds up to dollar strength, and weaker silver and gold.
Now: I am writing this on December 16 at 11:00 PM EST. (That's Wednesday , December 17, 2014, 4:00 AM GMT)---about 16 hours ahead of the Federal Open Market Committee statement Wednesday, at 2:30 PM EST. The market is waiting to see what the Fed's Janet Yellen is going to say about the impact of this spate of favorable economic data on future interest rates in the US. That statement is going to have a major impact on the US$ in relation to silver, gold, and to a lesser extent, crude oil.
I see a potential turning point here. In the first place, we already called a turn in the €/$ last week.
Secondly: Every FOMC statement for years has promised that interest rates in the US would remain low "for an extended period of time".
So this is what's likely to happen:The Federal Reserve is going to be duly, truly impressed with this bout of US $ strength since the November meeting. This ever stronger dollar is acting as a hedge against inflation and that is going to supply powerful medicine to justify continuing to stand pat on interest rates "for an extended period of time". The Fed will stick with this language in order to pacify emergent doubt in the stock markets.
So: Do you see? Weak economic data argues for low rates "for an extended period of time" as a means to encourage economic activity. Strong economic data, supported by cheap crude oil, is an argument to let the dollar do the heavy lifting against inflation and keep interest rates where they are "for an extended period of time". Therefore, the market's expectations for an increase in interest rates will cool from here. And that sentiment ironically, is going to boost silver, gold, and oil.
Take a look at the charts. Watch silver as it approaches that 200 month simple moving average, and expect crude oil to catch a serious bid ahead of $50/bbl.