Looking Ahead to the May 3 FOMC

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First of all, congratulations to Craig Hemke. Based on his analysis of the options expiration, he forecast a week in advance that Gold would close at 1995 and Silver at 25. They closed at 1995 and 25.09, respectively.

In being so accurate, he confirmed that manipulation in the precious metals market. The levels he provided were based on where most of the puts and calls sold by the banks would be worthless. Said differently, the levels where the banks would make the biggest profits on the sale of those options. Amazing but repugnant at the same time. So where next?

Last week, I stated, “In summary, we could see a deeper pullback in Gold, Silver, and the miners to as much as 1900 in Gold, 23 in Silver, and 30 in GDX”. That’s still a risk. Nothing has changed. I also said, “The risk-reward is heavily skewed to the upside given the approaching end to monetary tightening, lower yields, a weaker DXY, deterioration in commercial and real estate, and further problems in the banking system.”

The Fed meets next week on May 3^rd to decide whether to raise rates another 25bp and whether to “pause” their tightening cycle for the time being. Odds still favor a 25bp hike, barely, but all ears will be listening for a pause or not. This is because it would signal the end of the tightening cycle by the Fed. At that point, it’s risk on for all assets, except the dollar, which would head south below 100. Bond yields would fall too, also supporting the precious metals and miners.

Alternatively, if we don’t get a pause and the Fed leaves the door open for more rate hikes, then the market is likely disappointed and the dollar benefits while all else goes south in the short-term.

GOLD

A break of the recent high at 2063 would be very encouraging, but in order for the all clear to 2250-2300 next, we need to take out the record high of 2089. As stated, 1900 is key support, but ahead of that are support levels of 1970 and 1940.

SILVER

Should Silver close above 26, then 28 is my next target, possibly even 30. Support is at 24.37 and 23-23.10, the 50-day moving average.

GDX

GDX has to take out the prior high of 36.10 to set-up a test of 40 next. Support is the 50-day moving average, 30 and 29.

Bigger picture, my forecasts for the peaks in Gold, Silver, and GDX remain the same: 2600-3000 for Gold and 50-60 in both Silver and GDX.