Gold, Silver Bubble Keeps Deflating With Strong Drops; Stock Markets Falling; Bitcoin Looking Bearish Below $78k; Odds on Trump Iran Strike Lengthen; Japanese PM Seen Winning Election Victory
Summary: The precious metal bubble continues to deflate, dragging commodities and stock markets down with it.
- Friday saw an unprecedented collapse in the price of precious metals, notably Gold and Silver. Gold fell by more than 10% on Friday, while Silver fell by about 28%. So far in Asian session trading, Silver is down by a further 10% and Gold down by a further 6%. Silver reached as high as $121 on Thursday - it is quite possible it will be half of that value later today. This is the bursting of a bubble, and that it could happen in precious metals so quickly is shocking. However, those looking for conspiracy theories to explain it are barking up the wrong tree. It will be wise for all but the most experienced traders to avoid trading precious metals during this period of wildly high volatility, which is likely to continue for a while. Where the bottom will be is anyone's guess. We are also seeing similarly dramatic falls in the minor precious metals Platinum and Palladium.
- The burst bubble in precious metals seems to be dragging down commodities and stock markets, with many commodities sharply lower in early trading this week. According to the prediction market Polymarket, odds have lowered on a US/Iran war, with conflict now not expected until April or May, as the parties attempt to negotiate. In my opinion, it is hard to imagine that a true deal could be made between the current US administration and the Islamic Republic of Iran. This may have accelerated the decline in WTI Crude Oil, which has fallen by more than 5% already today since Friday's close at a fresh 4-month high.
- Stock markets are falling almost everywhere, with the S&P 500 Index already down by 1% from its Friday close.
- Bitcoin made a fresh 9-month low within the last few hours and is getting established well below the former very pivotal support level near $81,000. These are bearish signs, and a further strong drop is possible here. Something is off with Bitcoin and the crypto sector. If I wanted to buy here, I would sit on the sidelines and keep watching and waiting for the time being.
- In the Forex market, since today's Tokyo open, the strongest major currency is the Euro, while the weakest is the Australian Dollar. Some trend traders will still be long of the EUR/USD currency pair, but an exit from this trade is likely if we see a New York close below about $1.1840 later.
- The current Japanese PM is seen in opinion polls as likely to win a landslide election victory in Lower House elections next week.
- There will be a release of US ISM Manufacturing data today.