The much awaited and hoped for Santa Claus Rally turned into a complete rout today as the broader markets continued to sell-off to new lows this month.  The Dow Jones plunged a stunning 653 points today, the worst in the in the 122-year-old history of the index.  Furthermore, the Dow is on track for its biggest December loss since the Great Depression.

The Dow Jones was trading at nearly 26,000 at the beginning of December and just closed at 21,792.   That is a 16% decline so far this month.  As I mentioned in my last video, GOLD INVESTING:  What Really Drives The Market Price, I posted a chart showing that the Dow Index had a critical support level of 24,000.  I stated that the Dow reached a high of 26,000 at the beginning of 2018 and has been trading up and down off the 24,000 support level for the entire year.  The Index actually hit another record high of nearly 27,000 at the beginning of October.

When the Dow finally closes below the 24,000 on a monthly basis, it can get very ugly.  We still have three full trading days and a half day on New Year’s Eve for the Plunge Protection Team to do their magic and push the Dow back above the 24,000 level, but I doubt they will be able to do so.  If the Index was down 500-1,000 points from the 24,000 level, then it might be possible.  However, the Dow is down 2,200 points from that level.

Here is my updated Dow Jones Index with the Monthly support and resistance levels:

You will notice that the present Dow (monthly) candlestick is the biggest decline ever.  It’s even larger than the 3,000+ point drop in October 2008, shown by the RED ARROW.  However, if you look at that candlestick, it recovered from its lows that month.  According to the data, the Dow Jones opened on October 2008 at 10,847, fell to a low of 7,773 and closed at the last day of the month at 9,325.  That is why it has that large wick at the bottom of the candlestick.

Now, that could also happen to the Dow for the remainder of December.  We might see a nice rally, so traders won’t get too nervous about the market in 2019.  Either way, I believe the Dow will still drop to the 50 MA (BLUE LINE) at 20,470 and then we might see a nice correction higher before the continued BEAR MARKET.

If the market behaves similar as to what took place in 2007-2009, the Dow Jones Index will likely fall back below the 14,000 level by the summer or fall in 2019… could even by much sooner.  Yes, of course, the Fed might get nervous and stop raising interest rates and start QE money printing again.  That would change the dynamics of the market as we would then be entering the beginning stages of hyperinflation.  But, if the Fed continues to raise interest rates as it says two more times in 2019, then we are going to see a continued sell-off in the broader markets.

It was very interesting to see just about everything trade deeply in the RED today except for the precious metals.  Gold was up nicely by $13+ and silver gained nearly 1%.  Hell, even the U.S. Dollar Index fell 33 points.  I was quite surprised to see the oil price fall that much on Christmas Eve after it has been down 40% since the beginning of October.  The West Texas Intermediate Oil price fell $2.91 to a new low of $42.53.  That is very BAD NEWS because it is now below the very critical 400 Month MA (PINK LINE)of $43.83:

With the oil price now trading at $42.53, even more of the U.S. Shale Oil producers are now hemorrhaging losses.  I have since updated the chart by Art Berman to include to the oil price line below:

So, with the current oil price of $42.53, only one company, COP – Connoc0 Phillips is making money.  Even though the average oil price for Q4 will be much higher than the present spot price, these companies will likely be facing $40-$45 for Q1-Q2.  If the oil price does remain that low in the first half of 2019, watch for serious FIREWORKS in the U.S. Shale Oil Patch.

Finally, I am glad that I am a precious metals investor because 2019 is going to be one hell of a year.

Merry Christmas and Happy Holidays to everyone.

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45 Comments on "SANTA CLAUS RALLY TURNS INTO MARKET CARNAGE: Precious Metals Push Higher In A Sea Of Red"

  1. I keep wondering if this will lead to lower real estate prices?

    • Michael Kohlhaas | December 24, 2018 at 9:21 pm | Reply

      Sure it will. It will collapse like it’s 1999

      • Michael, you nailed the year. That’s when Case-Shiller index ran entirely off the rails to the upside. Most recent reading is 205, which means RE nationally is well over double what it should be… and multiples of that in the top markets.

        • Michael Kohlhaas | December 25, 2018 at 7:45 am | Reply

          Of course I’m right. Or do you think I’m a troll like most idiots here on the blog? Merry Christmas to you and your family!

  2. The stock market is the financial heart of America now, NOT healthy savings accounts held in healthy HONEST banks like before. Now the stock guys know how we (precious metal stackers) felt in 2012. At least we have something besides paper to show for it.

  3. Ho-Ag/Au! Ho-Ag/Au! Ho-Ag/Au! Merry Christmas Steve!

  4. I have read your oil price and future theories with interest going on 2 yrs. I wonder how you figure USA agriculture to fit into this, productive farm land, food crop prices, fuel expenses, and the debt these very dire human needs have.

    • lastmanstanding | December 29, 2018 at 1:56 pm | Reply

      Just look at the latest farm bill. The grain farmers are now one of the top welfare recipients. Only way they can make it is sucking gub hind tit and they luv their big gub. You know how a grain farmer doubles his profit? He puts up another mailbox.

      Take a moment to think about the equipment that they use, how many trips over the land it makes every year and how much diesel that they burn, insurance, etc., etc…all subsidized by the honest US taxpayer. Most of shit grain is GMO.

      So who benefits the most? Well who sells the equipment, who owns the fuel, who lends them money, who insures the farmers, their land, etc. Who provides the seed, the fertilizer, the chemicals? Then finally, who passed the farm bill.

      The banks, the big corps and the politicians…all sleeping soundly at night with money being printed out of thin air. Nothing but the best for them, nothing but the bill for us.


  5. Simply put, you CANNOT taper a Ponzi Scheme. To keep the current system functioning, ever-increasing debt MUST be added. The masses are too indebted already to add their fair share and TPTB know that by continuing to print they will eventually destroy the currency and it may not be on their terms. Rest assured that is their goal. The Federal Reserve has made it clear that the party is over. They are now ramping up the controlled demolition of the American economy. It appears enough risk has been transferred from the elites to the masses. Why else would they tighten into weakness and increase rates at a time of insurmountable debt. Much more carnage is on the horizon and the only question remaining is whether or not they can pull this off without taking the blame. Trump is the perfect patsy, but don’t shed any tears for him. He’s the consummate hustler who had to know that this abomination would crater under his watch. There must be a hell of a pay off!
    Best wishes Steve to you and your family during this Holiday Season and beyond. Your insight, thoroughness and passion to cover these very difficult topics has been greatly appreciated by those of us who have long anticipated what’s now upon us. We have officially crossed the event horizon. Let us hope we make it to the other side.
    And to all of you who frequent this site, I wish you the very best during this Holiday Season and beyond as well.

  6. I think the party is over .. only those with credible assetts can survive … if you produce 2 steaks .eat 2 steaks not 3 or4 .all the promises of the financial institutions have been shown to be can’t eat promises. Agriculture and tangible assetts will survive .

  7. The people who will be attending the upcoming meeting in Davos Switzerland, reads like a list of literally everyone who is the head of a country, multi-national corporation or a major bank! Something is up. When the world’s financial/political power brokers, ALL put their heads together, you can rest assured that a momentous consensus will be achieved, that will have far reaching consequences worldwide. There will be a concrete decision concerning debt.

    Debt has just gone too far. Pensions are now in imminent danger of failure.
    eg: Pensions reaching for yield. Between 2006-2017 Kentucky’s bond portfolio has grown from
    1% junk bonds to now 53% junk bonds! These are no better than leveraged loans and in some cases worse. The CLO derivative sector is wobbling and take down the entire global system.

    The junk bond and leveraged loan sectors, is what the shale oil production runs on.

  8. Hej. let see what will happen with this market control demolition. This confusion they try to do with Mnuchin, Powell, Trump.. its a script. But what really got me thinking was when Putin come out this days and repeat publicly about weapons ( laser, nuke, hypersonic…) they got ready and ready to use if US do some realy stupid moves. this finance collaps is inevitable but in this days and age it can be replace quickly. i bet some blue print is allready written. but this if US lose everybody lose its just too much.
    Marry christmas everybody

    • It’s not 2008. You should look at other indices to find the floor. The best candidate is the DAX index. Its support level stands at 8000. It implicates that one should expect a market reversal at this level.

  9. A bearish article on stocks and a bullish on PMs here : reversal is nearly here like on cryptos a couple weeks back…

    • You’re delusional buddy. Only a believer can call a shitty dead cat bounce a reversal. Cryptos are not an investment, they are a faith-based “product”. Trying to make money off your faith is really not the way to go. Next year cryptos go down another 80-90%… let’s talk about them then. 🙂

      • Hope so but in the meantime stocks get a huge rise and PMs stocks are going to be hammered heavily.

        • RD,

          Got to love your ANALYSIS. The Dow is still down 2,800 points since the beginning of DEC while Gold is up $43 and silver is up $0.80. You are more than welcome to continue to PUMP the WORTHLESS CRYPTOS and BROADER BUBBLE MARKET to your heart’s desire.

          But, please make sure you come back in 2019 to COMPARE NOTES.


          • My messages did not relate to mid and long term, only short term and I concede you are exactly precise to get short term turning point !
            All the best.

          • Greatest rise for DOW in points of all time today.
            Fictitious capital is far from dead !

          • RD,

            You are the perfect CONTRARIAN INDICATOR.

            Unless you have no idea how markets work, it is not surprising to see a reversal after the DOW fell 4,200 points in less than one month. Funny, I don’t see you around when the Dow fell 4,200 points, but the first day we see a big reversal higher, here you are… LOL.


          • I am here because you just wrote an obituary for stocks, that’s all, I do not say it will more than a dead cat bounce in a larher bear market.

          • Wait… so you actually agree with Steve but still feel the burning need to disagree? Isn’t that the definition of a troll? LMAO

          • Troll here, troll there, maccarthism at its finest…
            Each time this website post this kind of article, each time it is a minor or even sometimes major turning point.
            Stocks rise confirmed today with huge reveral with volumes up.

          • RD,

            You have no idea what you are talking about. Nothing goes down in a straight line. The Dow and broader markets are doing exactly what they are supposed to do… and that is to trade back towards the 24,000 resistance level.


          • DisappearingCulture | December 28, 2018 at 9:25 am |

            “Nothing goes down in a straight line.”
            Nothing goes up in a straight line either, unless it is fake, massive bubble, ponzi, or BS. In my opinion the rise in crypto values seen in the fall 2017 were a great example.

          • Another stocks run up…
            Be prepare for a few more !

          • RD,

            You are really a PRO at trading… LOL. Again, this is nothing more than a Bear Market Rally. As you can see in the chart below, the Dow Jones was clearly oversold and a reversal was expected. However, I doubt that the Dow will close back above the 24,000 major support, now resistance line:

            So, you are more than welcome to continue to PUSH the highly BUBBLE STOCK & CRYPTO MARKETS to your heart’s desire.


      • Its not about the rise, its about the value, dudes & dudettes.

  10. Just thought this made me chuckle this morning 🙂

    Anyone remember one of the Twilight Zone episode about how Gold would be worthless way in the future because they figured out how to make it in mass.

    Well, surprise..surprise !

    “Breakthrough: Chinese Scientists Turn Copper Into ‘Gold’

    • Rodster,

      Yeah… I read that article this morning. However, we won’t have to worry about this new element replacing gold as the article states:

      The new material will be of little use for counterfeiters since its density remains the same as copper, therefore making fake gold bars with it would be worthless.


      • DisappearingCulture | December 26, 2018 at 9:24 am | Reply

        And it isn’t a well-written article on the science of the topic either.
        I particularly liked the line:
        “Copper has a similar weight and looks to gold.”
        I wonder who wrote that. Apparently someone who has never looked at & held a cold coin in their hand

  11. Steve Ludlum of Economic Undertow (see new post below) compliments quite well the perspective addressed by this website. Both have an extraordinary knowledge on how the energy piece affects and impacts our current situation. In my earlier comment, I suggested that TPTB are intentionally collapsing the current monetary system. That does not mean however, that they are doing so for the reasons promoted on this site or a few others. I don’t believe that Trump or “Mnunchkin” fully understand the energy component, but must certainly know the current state-of-affairs cannot continue. They just see a new system with more concentration of power in the hands of fewer entities. At least that’s what they’re hoping for. Unfortunately, we are heading into a new age. History is replete with new ages and the transitions are generally horrendous. If our so-called leadership thinks that adding more debt to an already saturated debt edifice is some kind of solution we are catapulting to this new age with reckless abandon. The best we could hope for is a slow grind and that may be the only merciful quality to what Powell is attempting to pull off.

    • Good comments of yours Bill 😃

      I am pretty much a novice, but I can see the current monetary system for its faults and limitations and inevitably will have to be changed if it is to continue. The US Reserve Dollar rort has been around for too long. If the TPTB are to remain in charge and an “International Reserve Currency” developed; that change will come through the BIS and the IMF and will involve Russia and China. It will also bring with it a long period of “De-Growth”.

      One must admit though, the current “Monetary Model” with all its faults has stood us in good stead for many years. It has just had its day.

      Merry Christmas to you all and a happy New Year.

  12. Michael Kohlhaas | December 26, 2018 at 7:26 am | Reply

    Last year that cryptocurrency crap. This year the real thing: precious metals. Two-phase rocket has launched. First phase to $1360. Second phase to new all time highs. Will only take a few months. From there I don’t know. Will be a completely different world by then. This will be biblical. Time to watch some Bo Polny videos on YouTube. 😂

    • If you’re going to binge on Boloney Polny then visit King World News cause Eric King always has one of his Legend’s predicting the price of gold.

  13. I could be wrong but I still think a head and shoulders will eventuate. There is too much bearishness at the moment. I can see a rally to almost new highs to suck everyone in before it breaks the neckline and goes into a bear market.

  14. DisappearingCulture | December 28, 2018 at 9:31 am | Reply

    “Despite official prevention efforts, two-way price discovery has been introduced to the stock market. The Establishment, lazy, entitled and fattened-up on the 10-year stock bubble, has gone into convulsions over the possibility that the stock market will do anything but move higher”.

    • DisappearingCulture | December 28, 2018 at 9:40 am | Reply

      From same article:
      “A coordinated Central Bank-engineered bounce is to be expected and certainly there’s extreme political pressure in the U.S. for this. But more intervention preventing true price discovery merely defers the inevitable rather than fixing the underlying systemic problems. Furthermore, as evidence of the market’s reaction on Monday after reports hit the tape that the Treasury Secretary (head of the Working Group Group on Financial Markets) was convening the CEO’s of the six biggest banks to discuss the market sell-off, official intervention serves only to signal to the markets that something is profoundly wrong with the system, contrary to official propaganda.

  15. Past Average Weekly Closing Prices

    These are averages of weekly Friday closing price quotes on a yearly basis:

    Gold: 2016 Average weekly close @ $1250.35 Silver: $17.11

    2017 Average weekly close @ $1308.16 Silver: $17.02

  16. Let me state once again that the level that stocks are at has no relation to gold or to the viability of the financial system.

    Stocks crashed in 2001, 2008, and look set to again in 2019 despite the recent bounce. So what? We can go through round after round of this. But admittedly, each round takes out more investors so the ponzi gets more difficult over time. But not impossible.

    Gold trades as a metal commodity independently of any other asset. Gold merely trades at however much it costs to produce an ounce, plus a premium. That’s all it will ever trade at.

    The financial system meanwhile relies on confidence, military control, and the ability of the powers that be to suppress any alternatives, which they have done so pretty well. We can continue with low rates for another 20 years at least. Beyond that it’s difficult to see, I admit. I doubt the current U.S. dollar system can continue much beyond that, so they will have to create an international reserve with balanced dollars, euros, and yuan, most likely. Just guessing here, who cares. Most of you fogies will be dead.

  17. DisappearingCulture | December 31, 2018 at 10:32 am | Reply

    “Let me state once again that the level that stocks are at has no relation to gold or to the viability of the financial system.”
    Wrong. The stock market levels have a VERY strong relation to the viability of the financial system, and when the levels drop [selloff, large decline, crash….whatever one wants to call it], you will see the relationship to the valuation of gold as measured in fiat units [like dollars].
    “Gold merely trades at however much it costs to produce an ounce, plus a premium. That’s all it will ever trade at.”
    Again incorrect. As stated when the stock market valuations drop OR there is a large dollar decline [as compared to other currencies], the fiat valuation of gold will go up.
    “We can continue with low rates for another 20 years at least.”
    Pure guessing or conjecture.
    “Just guessing here, who cares. Most of you fogies will be dead.”
    So you are much younger than the majority of people who make comments here? And therefore your youth trumps every older person than you, who just might have gained some wisdom over time?

  18. Steve, all the best for 2019, and further. Thanks a lot for providing shitloads of precious info on energy and markets.

    Regards, houtskool (charcoal)

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