PM End of Week Market Commentary - 6/23/2017

davefairtex
By davefairtex on Sun, Jun 25, 2017 - 5:30am

 

On Friday gold moved up +6.60 to 1257.80 on moderate volume, while silver climbed +0.16 to 16.73 on heavy volume. A strong move down in the buck encouraged gold and silver to rally, but the move in the metals was stronger than just a currency effect.

It was a week of reversal for PM; almost every PM component rallied, with the junior miners leading the seniors, and silver leading gold. This is the typical pattern for a bullish move in PM. Now that the turbulence caused by the realignment of GDXJ in the rear view mirror, the miners appear to be back as their customary role as leveraged plays on PM. Both junior and senior miners are back above their 50 MA lines, clearly leading the metals which have just managed to regain their 9 EMA lines this week.

Palladium is the only PM component in the red; that's because it had a big sell-off on Friday, dropping a massive -3.17%, driving through its 9 EMA, closing its lows, and wiping out 4 days of rally in one go. Not sure what that's about. Maybe something to do with auto manufacturing.

ame Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Junior Miners GDXJ 3.64% -14.03% rising falling falling falling ema9 on 2017-06-21 2017-06-23
Silver Miners SIL 3.26% -9.61% rising falling falling rising ema9 on 2017-06-22 2017-06-23
Senior Miners GDX 3.08% -9.83% rising falling falling falling ma50 on 2017-06-23 2017-06-23
Copper $COPPER 1.95% 21.57% rising rising rising falling ema9 on 2017-06-21 2017-06-23
Silver $SILVER 0.33% -3.66% rising falling falling falling ema9 on 2017-06-23 2017-06-23
Gold $GOLD 0.21% -0.12% rising falling falling falling ema9 on 2017-06-23 2017-06-23
Platinum $PLAT 0.19% -3.91% rising falling falling falling ema9 on 2017-06-23 2017-06-23
Palladium $PALL -1.36% 50.60% falling rising rising rising ema9 on 2017-06-23 2017-06-23

Gold rose just +2.60 this week; two days down, followed by three days up. The reversal roughly coincided with the buck topping out. Gold printed a swing low on Thursday, and broke above its 9 EMA on Friday. Friday's candle was a neutral-looking long white candle. The 3-day forecaster is now relatively bullish, having officially reversed on Thursday. It all looks pretty good for gold right now, at least in terms of the near-term trend.

The December rate-increase chances rose to 44%.

COMEX GC open interest rose +2,707 contracts.

Silver rose +0.05 for the week; as with gold, silver dropped for 2 days and then rallied for 3. Silver didn't print its swing low until Friday, but it too ended the week above the 9 EMA. Forecaster is also showing a bullish reading for silver. Friday's candle print was just a long white candle which the code felt was neutral.

The gold/silver ratio fell -0.09 to 75.15. That's slightly bullish.

COMEX SI open interest rose +5,805 contracts.

The miners appear to be back in their role of leading the metals; the swing low for GDX came on Wednesday, and the declines earlier in the week were much milder for the miners than they were for gold and silver. If anything, the junior miners behaved even more bullishly than the seniors. Forecaster for both miner ETFs are strongly bullish.

The GDX:$GOLD ratio rose sharply this week, which is bullish, while the GDXJ:GDX ratio rose a bit more gently - but that's still bullish too.

USD

This week the rose +0.07 to 96.94. That sounds good, but on the chart it appears that the buck has probably reversed and is now heading south. Buck printed a swing high on Friday, and closed below its 9 EMA. The forecaster has dipped below 0 and agrees that the buck is probably on its way downhill.   That said - there has been a fair amount of chop at the 96-97 level - I could easily see the buck moving sideways for a while longer too.

US Equities/SPX

SPX rose +5.15 [+0.21%] to 2438.30. Equities broke out to a new high on Monday, and then sold off for much of the week. SPX printed a swing high on Tuesday. The SPX forecaster, which currently uses a 10-day timeframe, has not yet broken down. (The 3-day forecaster, which does well for commodities, gets hopelessly whipsawed with all the day-to-day back and forth in equities.)

The equities sector map shows one huge winner: sickcare, which was up a massive +3.58% this week. Think that might have something to do with the Repeal & Replace work in the Senate? I think Congress just picked a winner – and a loser. I'm pretty sure I'm not one of the winners. Most of the other sectors fell, led by energy which plunged as a result of the continuing downtrend in oil.

VIX fell -0.36 to 10.02.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Healthcare XLV 3.58% 12.73% rising rising rising rising ema9 on 2017-05-22 2017-06-23
Gold Miners GDX 3.08% -9.83% rising falling falling falling ma50 on 2017-06-23 2017-06-23
Technology XLK 1.90% 28.04% rising rising rising rising ema9 on 2017-06-21 2017-06-23
REIT RWR -0.02% -2.06% rising falling falling rising ema9 on 2017-06-23 2017-06-23
Materials XLB -0.31% 11.91% falling rising rising rising ema9 on 2017-06-20 2017-06-23
Telecom XTL -0.41% 21.91% rising rising rising rising ema9 on 2017-06-23 2017-06-23
Homebuilders XHB -0.62% 12.79% falling rising rising rising ema9 on 2017-06-22 2017-06-23
Cons Discretionary XLY -0.70% 13.16% falling rising rising rising ma50 on 2017-06-22 2017-06-23
Cons Staples XLP -0.82% 2.49% falling rising rising rising ma50 on 2017-06-22 2017-06-23
Industrials XLI -0.98% 19.97% falling rising rising rising ema9 on 2017-06-20 2017-06-23
Financials XLF -1.65% 26.11% falling rising rising falling ema9 on 2017-06-21 2017-06-23
Utilities XLU -1.66% 5.72% falling rising rising rising ema9 on 2017-06-21 2017-06-23
Energy XLE -2.90% -6.71% falling falling falling falling ema9 on 2017-06-19 2017-06-23

Gold in Other Currencies

Gold moved higher in every currency this week – it did exceptionally well in the Ruble, which cratered this week, dropping more than 4%. Gold in XDR was up +6.37.

Rates & Commodities

TLT rose +1.13% this week, following on from last week's breakout to new highs. Bonds are now up 10% from their lows set back in March. Bond market is doing very well, and it has erased half the losses from suffered in the big sell-off that occurred in the second half of 2016. Forecaster is bullish. TLT is signaling risk off.

JNK rose +0.08% on the week, with traders buying the dip Thursday & Friday after a big sell-off Wednesday. JNK made a new lower-low this week, but it seems that once oil stabilized at 42, the dip-buyers for JNK returned. While the action at end of week signals bullish, the medium term chart remains bearish.

CRB plunged -3.07% - the move down in commodities is starting to accelerate. While only 3 of 5 groups fell, energy fell -3.83%, and agriculture was down -4.10%. These are both big moves. Two more weeks of this and we will be testing the lows set back in early 2016 – back when oil was trading in the high 20s.

Crude dropped -1.69 [-3.77%] to 43.17 this week. The oil market continues to sell off, even after getting a moderately bullish EIA report that showed inventory draws in both oil and gasoline. As long as a market sells off on good news, there is little hope for a recovery. Even though oil rallied on Thursday and Friday, the moves were not large enough to move the forecaster to bullish. The chart below shows that the forecaster is slightly improved, but remains bearish.  You can also see that there have been four bounces all the way down, and so far no recovery.

That said – managed money just went heavily short crude this week, adding +41k contracts to their short positions. This was an increase of 27%, and puts them well into the range of a temporary low in crude. If not this week, then probably the next.

Physical Supply Indicators

* SGE premium to COMEX fell to +8.39 over COMEX.

* The GLD ETF tonnage on hand fell -2.66, with 851 tons in inventory.

* ETF Premium/Discount to NAV; gold closing of 1257.80 and silver closing of 16.73:

 PHYS 10.26 -0.46% to NAV [up]
 PSLV 6.34 +0.45% to NAV [up]
 CEF 12.34 -7.6% to NAV [down]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) showed no premiums for gold or silver.

* Big bars premiums were: gold [1kg] 1.2% and silver [1000oz] 3.1%.

Futures Positioning/COT

COT report is through June 20th, when gold closed at 1244.10, and silver at 16.43.

This week in gold, the commercials closed -34k shorts, while managed money bailed out of -50k longs. Those are big changes. Might it be enough for a low? It might. If the rinse cycle in gold is 2-3 weeks right now, and gold remains in an uptrend, then we are probably at max-rinse right now for this short-term cycle. Here's a chart that shows what I mean:

In silver, the commercials closed -8.4k shorts and added +4.7k longs, while managed money bailed out of -8.2k longs and added +9k shorts. This was a reasonably large change. Is it enough? Same answer as gold: if silver is in a longer-term uptrend, then yes, this could be a low.

Gold Manipulation Report

There were no after-hours spikes to report this week.

Eurozone Status

  • German Elections; October 2017: currently the polls show Merkel/CDU with a 13 point lead. Both parties are pro-Euro.

  • Greek bailout: can kicked for another year. Moodys upgraded Greece one notch. Greek equity market remains at multi-year highs.

  • Turkey & the migrants: no news on the migrant deal, or visa free travel for Turks this week. While perhaps not entirely relevant, my news feed tells me that Turkey has decided to stop teaching evolution in high school, and has now banned Gay Pride from Istanbul.  I'd laugh at them, except I know that there are some large sections of the US that would be happy to do the same thing.

  • Italian Elections: no progress on a new electoral law in Italy. M5S has lost ground, slightly, to the PD; now 27.7% to 28%.

Summary

Stars and moons lined up this week; PM reversed direction. Junior miners led seniors, silver (barely) led gold, and the dollar appears to have reversed back down. So far so good.

The COT report showed large changes in commercial short holdings, as well as managed money longs. It could be enough for a low, depending on how you look at it.

Gold and silver big bar shortage indicators shows a small uptick in buying in the west, but no real shortage signs. ETF premiums rose slightly, but GLD tonnage fell. In Shanghai, premiums increased as prices fell slightly.

Political turmoil has receded in Europe – although not if you count the UK, where PM May remains unsuccessful at cobbling together a coalition after her recent electoral disaster.  Does Brexit mean Brexit?  Is the UK actually part of Europe?  Allegedly the view from the UK is: "Fog in the Channel - Continent cut off."  But for the rest of the place, relative calm prevails.

In looking at volatility data in financial instruments, there are some really interesting patterns. Here I'm not talking about VIX, but some different measures of fear or excitement: large daily price moves or trading ranges, such as candle size, gaps, and the like. My observation is, volatility goes in cycles. It spikes up, and then falls away, again and again, in patterns that have a strong cyclicality to them.  And some periods, volatility just drops away to nothing.  It feels like we're in one of those volatility valleys right now.

Meanwhile, the indicators say that PM is now in a short-term uptrend. It will help if the buck keeps heading lower, if equities start to turn down more rapidly, and if commodities can manage to stop their plunge towards the basement.

Trend-following code says:

Uptrend: gold, silver, copper, platinum, and USD.

Downtrend: crude, natgas.

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16 Comments

PeakGold's picture
PeakGold
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silver

Just an update. Watching this channel closely as it potentially reflects the larger long-term market for silver...

http://i.imgur.com/8WYSvbB.png

Here is the current weekly chart. Holding bottom support so far, waiting to see what happens above...

http://i.imgur.com/hmGnlmr.png

PeakGold's picture
PeakGold
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update

It did break through that support line, but it looks like it wants to bounce off that down trending line before heading south. I guess I will find out in the morning.

http://i.imgur.com/A5OmcGu.png

davefairtex's picture
davefairtex
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gold/silver raid @ 4am

Well, gold and silver were hammered at exactly 04:00 Eastern (08:00 GMT) - running the stops of everyone who got long recently, presumably.  18k GC contracts were traded in a one-minute bar.  (That's not the number sold - number sold was probably far less, but the initial sale triggered a bunch of stops which caused a cascade).  It was a really big number of contracts, though.

Anyhow.  Gold down -12.70 and silver down -0.17.  New low on the spike for silver: 16.22, gold 1236.50.  Instantaneous rebound took silver back to about 16.45 and gold to 1242.  Technically, this invalidates the swing lows and the trend change.

Now we get to see if traders will buy the dip, or if price will continue to fall.

There was no other, related activity that caused this event to occur.  No currency moves, no other commodity moves.  It was just a straight out raid.

Incidentally, first notice day is coming up soon for the front-month silver contract "SIN7" - on June 30th.  Perhaps that's the real reason why.

cmartenson's picture
cmartenson
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"bear raid"

The slam last night follows exactly the scripts of prior successful raids.  Sunday night, all at once, with supreme violence.

All I can guarantee you is that the WSJ headlines today will read something like "investors sold gold, cheered by the successful resolution of two problem Italian banks, signaling that the world is now safe, and everybody both loves and trusts the central banks!!"

Yeah, right, ""investors.""

Also, my other prediction is that there will be ZERO response from the CFTC, or SEC, because as long as you are killing the PM markets to the downside, they could not care less.  

That move last night was designed to do one thing and one thing only, drive down the price.

That such moves ALWAYS result in a new lower price that sticks is the remaining piece of evidence that these are not markets but ""markets""

Couple that to JPM having NEVER lost money while being short silver for a decade the entire time...and well, it's really not hard to piece together the situation.

The PM ""markets"" are fully controlled playgrounds of the bullion banks, they are protected by a captured and willfully ignorant regulatory apparatus, and the bullion banks make money by being able to control both the vertical and horizontal knobs of this ""market.""

They will keep doing this for as long as there is no response, nothing to stop them, and no losses involved.  It's nothing personal, it's just big banks raping and pillaging because, that's all they do.  They are parasites of the very worst sort and it was the complete abdication of any regulatory or criminal response under Obama that sealed the deal.  

Justice and accountability...it turns out that they DO matter.

Cold Rain's picture
Cold Rain
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Posts: 327
TA

Seems like all of the bullish signals were invalidated just like that. Not really sure what good technical analysis serves in a market that can be so easily manipulated and said analysis can be invalidated at the drop of a hat.  Don't get me wrong.  I love reading it and studying it.  But you might as well flip a coin on any given day as to the direction.

PeakGold's picture
PeakGold
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It did bounce off that upper

It did bounce off that upper down trending line as per my previous post. It did happen at the right time in the right place (support broke then resistance was retested), the distance and speed did appear odd though.

http://i.imgur.com/eg6b8RS.png

davefairtex's picture
davefairtex
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some minor differences

Chris-

I have some minor differences with your analysis.

First, the 4am assault was unusual, as it happened after Tokyo closed but before London opened.  The formerly usual method was to hit at the soft spot before Tokyo opened.  That's what my script is designed to track, and I haven't seen any of those for quite some time.  So this one didn't follow the script.  The change in target time is meaningful, since lots more people are up and about in Europe when this went down.  9 AM in Paris isn't exactly the dead of night.

I also do not agree that "such moves ALWAYS result in a new lower price that sticks".  That's just not true.  I've seen with my own Mk 1 Eyeball instances where the lower price did not stick.  If buyers are plentiful enough, they treat the dip like a free lunch.  Maybe today will be one of those days.    FWIW, I bought the dip, so I'm earnestly hoping that such moves don't ALWAYS result in a new lower price that sticks.  :)  Right now, silver is back up to 16.57.

The rest of it I'm 100% behind.  My friends who have deified Obama have absolutely no clue what horrors he wrought by giving everyone in banking a "get out of jail free" card after 2008.  There's nothing that encourages incredibly profitable illegal activity like explicitly ignoring it for 8 long years.

There's a reason why that Monopoly game was so popular back in the day.  All that's missing in Monopoly is a vast, gigantic market crash that chops rents & incomes by 90% making all your mortgages unpayable.  Hmm...a Peak Prosperity board game.  Now wouldn't that be fun?

Gamma Geek's picture
Gamma Geek
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Gold data point

Good morning.  Not sure how this factors into the move in metals, but this does not sound like a small data point:

http://www.zerohedge.com/news/2017-06-25/first-india-bans-cash-now-its-t...

sand_puppy's picture
sand_puppy
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Ether takes a beating too

Down another 5%.    And I do believe that I bought in on EXACTLY the top.  :-(

Time2help's picture
Time2help
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"Fat finger"

Gold Flash Crashes As "Someone" Dumps $2 Billion, "Fat Finger" Blamed (Zerohedge)

Quote:

With no clear driver for the move, Bloomberg has suggested it may be a "fat-finger" mistake, although many are skeptical and see either algo or central bank intervention, as the gold plunge was offset by the usual USDJPY spike, which jumped as high as 0.35% to Y111.66.

“No-one has a clue, apart from the unfortunate individual that pressed the wrong button,” David Govett, head of precious metals trading at Marex Spectron Group in London, said of the spike in volume.

PeakGold's picture
PeakGold
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Took a position in DSLV

Took a position in DSLV today. Not sure today was the best day to "buy the dip" 

davefairtex's picture
davefairtex
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waiting for that dip in ether

Any guesses what the price of ether was on the day mrees posted his "skeleton", teasing me for me saying I was waiting to buy the dip?  Anyone?

Answer: ETH hit 420 that day.  It was June 12th.  Mrees absolutely nailed the top.  His smug skeleton post marked the pinnacle of Ether's recent climb.

https://www.peakprosperity.com/comment/207375#comment-207375

Today, of course ETH is trading at 241.  That's still way, way above when he told me to buy at 75, so he gets full points for a great trade (and I'm sure he bought in at ten cents) but that's not the point.

The point is this.  His timing with the skeleton was astonishing.  He is the most informed person about *coins I know, yet he is as clueless as the rest of us are about timing.  It shows just how much emotion plays a part in trading.  How confident do you have to be to make a post like that?  Pretty darned confident.  And usually that level of confidence (that feeling of inevitable billionaire-hood ahead) happens at or near the near-term tops.

Here's how we make use of that in our next trade.  Next time, the plan is to secretly buy what we think is the low, and then as price rises, we need to pepper him with comments about what a bad time it is to buy, say how we're waiting for the dip, and when he finally is so confident that he trots the skeleton out again, we will know one thing for certain: THAT is when it is time to sell.  :)

[And, of course, my less-than-polite-post-in-response may well mark a capitulation day.  Aren't markets fun?]

dip

Ethereum will dip...any day now.

 

sand_puppy's picture
sand_puppy
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I did the same thing in '99

During the exponential rise of JSDU, QCOM Global Star, and the telecommunication giants of '98-'99, my retirement fund was growing exponentially and I just loved to sit there and look at the stock price charts.  It made me happy!

My retirement was eminent as my 401k had doubled, doubled again and was almost to complete its third double.  I gave notice at work and a co-worker asked how I had done it.  I said the telecommunication boom and recommended George Gilder's Telecommunication newsletter.

My co-worker invested a great deal of his own 401k.  Just a month later everything turned.  He lost everything.

I felt very guilty, of course. 

Such is the difficulty of living in a world where we cannot see the future.

thc0655's picture
thc0655
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Posts: 1513
...that, and a central banker/player

Davefairtex wrote:

There's a reason why that Monopoly game was so popular back in the day.  All that's missing in Monopoly is a vast, gigantic market crash that chops rents & incomes by 90% making all your mortgages unpayable. 

I say you also have to let the player who is the bank play a hand by giving him/her a token to move around while empowering him/her to create money out of thin air.  And it will be ok if that player chooses to help one or more of the other players by secretly passing them money under the table, or changes the rules when an opponent passes "Go" and only pays them $150 instead of $200.

New_Life's picture
New_Life
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Posts: 195
Enjoying the ride
sand_puppy wrote:

During the exponential rise of JSDU, QCOM Global Star, and the telecommunication giants of '98-'99, my retirement fund was growing exponentially and I just loved to sit there and look at the stock price charts.  It made me happy!

My retirement was eminent as my 401k had doubled, doubled again and was almost to complete its third double.  I gave notice at work and a co-worker asked how I had done it.  I said the telecommunication boom and recommended George Gilder's Telecommunication newsletter.

My co-worker invested a great deal of his own 401k.  Just a month later everything turned.  He lost everything.

I felt very guilty, of course. 

Such is the difficulty of living in a world where we cannot see the future.

 

Yep, just shows how we all are enticed, Coulda, Shoulda, Woulda.

In the Spring of 1999 I was working for a Tech Company, bought a few shares at £5, they got to £20 by Xmas, I got nervous of Y2K bug and sold in 3 lots all near £19.  My wife doubted me saying it could go higher still.  It did.

By March 2000 they'd got to £28 with P/E ratio of nearly 100.

6 months later they were worth less than £2.  

You never buy at the bottom and you never get out at the top... Unless you're JPM...

And joking aside, after just listening to the podcast with Justin, a Peak Prosperity board game isn't a bad idea to teach the next generation about how to navigate their likely future.

davefairtex's picture
davefairtex
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Posts: 5069
games as teaching tools

I've often thought that a game is a good teaching tool.

There was a game I played, long ago, that was the usual conquer-the-world game, and as one aspect of it, it had oil well sectors where you get oil from the ground, it depletes, and then is gone.  I remember thinking what a depressing game it was.  "This game doesn't have a grand future ahead of it - it seems programmed to end in disaster."  This was maybe 20 years before I found PP.

In some sense, that game primed me to be receptive to the messages here about peak resources.  I'd already experienced what that was like when I was running my country way back when, knowing that there was a fuse on the whole civ effort and at some point, the oil (and whatever else) would simply be gone.

And the question, "well, then what", was left completely unanswered.

 

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