PM Daily Market Commentary - 11/29/2017

davefairtex
By davefairtex on Thu, Nov 30, 2017 - 3:10am

On Friday gold fell -6.40 [-0.49%] to 1286.90 on very heavy volume while silver dropped -0.24 [-1.43%] on heavy volume. The buck fell today; the drop in the metals had nothing to do with currency.

To make things a bit more complicated, today's drop actually was understated by a contract roll; gold had about a $6 jump (from December to March) and silver had an $0.11 jump. This means that today's move down was larger than you see here.  Gold was off maybe $12, and silver $0.35.

Today's plunge started just after 8am; it had a different character from the preceding series of smashes, looking as though it was more of a natural sell-off than simply a one-minute smash special. Either that, or they are getting better at using finesse.

Gold mostly moved sideways for much of the day in Asia and London, and then just dropped off a small ($2) cliff right at 8am; after that, "it was all downhill from there" as prices plunged more than $12 during the New York session. The selling pressure was strong enough to stuff all the attempts to rally. Gold closed near the lows of the day. Candle print was a confirmed bearish NR7 (18% bearish reversal), while gold's forecaster dropped –0.25 to -0.10. That's a sell signal for gold. Gold ended the day right at its 9 MA, and above the 50 and 200. Gold also remains above its shallow uptrend line.  O the chart, gold has yet to enter a downtrend, even though the forecaster has turned bearish.

COMEX GC open interest fell by -13,795 contracts. Both yesterday and today show huge drops in open interest – about 5% of the OI has vanished over the last 2 days. Something is going on, but I don't know what it is.

Rate rise chances (Dec 2017) remains at 93%.

Silver's drop also started around 8am, and although the drop took longer to reach the ultimate bottom than gold, it fell further, and also ended the day at the lows. Candle print was a closing black marubozu (bearish continuation) and silver's forecaster dropped -0.50 to -0.87. That's a serious downtrend. My feeling, from watching silver intraday, is that the commercials have finally convinced managed money to start liquidating. I think silver is therefore vulnerable to further abrupt drops in price, at least until those managed money longs get largely rinsed out.

COMEX SI open interest rose by +3,528 contracts.

The gold/silver ratio rose +0.73 to 77.64. That's bearish.

The miners fell again today, with GDX off -1.88% on very heavy volume, while GDXJ fell -1.83% on heavy volume. Candles were both bearish continuations, and miner forecasters dropped deeper into downtrends: GDX –0.20 to -0.32, GDXJ -0.35 to -0.38. Miners are now at the bottom end of the recent trading range. If gold continues to fall further, they will most likely break down below the range, and based on today's price and volume, it will probably be a large initial move. Risk for the miners is increasing.

Today, the GDXJ:GDX ratio fell, while the GDX:$GOLD ratio was flat. That's bearish.

Platinum fell -1.04%, palladium plunged -1.40%, and copper dropped -0.95%. The metals sold off across the board today. Platinum and palladium forecasters both issued sell signals, and copper continued moving deeper into downtrend.  It seems that something was in the air today.

The buck fell -0.11 [-0.12%] to 92.87. Print today was a bearish harami, which was actually neutral. Forecaster rose +0.47 to -0.19; a large improvement, but not enough to issue a buy signal. Buck is trying to reverse back to an uptrend – but it remains below the 9 MA.  Until it crosses the 9, this is just a dead cat bounce.

Crude was all over the map today, ending down -0.36 [-0.62%] to 57.39. The EIA report kicked off the activity with a somewhat bearish-looking report: crude -3.4m, gasoline +3.6m, distillates +2.7m. Market reacted higher, but then rapidly reversed, dropping a full buck before bouncing back. Print today was a spinning top (bearish continuation), but the forecaster liked the action, rising +0.26 to -0.11. That's still a downtrend. Crude remains above all 3 moving averages. OPEC meeting is scheduled for tomorrow.

SPX broke to another new high, but wasn't able to hang on to the gains, dropping -0.97 [-0.04%] to 2626.07. The high wave candle could be a reversal: 47% chance, and the forecaster dropped -0.17 but remains at a very bullish +0.67. Volume today was very heavy. Financials continued to celebrate “Tax Reform” (XLF:+1.71%) while tech was smashed (XLK:-2.21%). That's some huge moves under the covers: sector rotation out of tech and into financials.  FANG stocks had a bad day: $NDX was down -1.71%.  AAPL appears to have made a lower low just today.  That's a nascent downtrend.

VIX rose +0.67 to 10.70.

TLT was also hit hard, dropping -0.99% printing a swing high candle pattern (59% reversal). Forecaster moved further into downtrend, dropping -0.17 to -0.20. TLT is below its 9 MA. TY fell also, down -0.36%, with its forecaster issuing a belated sell signal today.  Something made the bond market unhappy today; forecaster saw something it didn't like yesterday.

JNK fell -0.14%, printing a neutral-looking bearish harami. Forecaster plunged -0.45 to 0.14; still an uptrend. JNK's uptrend seems to have run out of momentum.

CRB fell just -0.16%; 3 of 5 sectors fell, led by PM (-1.12%) and energy (-1.06%).

To put it simply: silver is leading gold lower, and the miners are leading the metal lower. That's bearish. The other metals are dropping too.  That's bearish. Forecasters are all in downtrends at this point. What's more, this is happening with no major currency moves.

Up until today I felt there was a good bid underneath the market. After seeing the sell-off in gold and silver, I think that is no longer true. All the metals look weak right now, along with the miners too.

Risk of breakdown is quite high right now. Based on what I saw today, we are approaching a time when the commercials may be able to get away with some big smashes in the direction of the trend – which right now is down – with substantially smaller fears of dip-buyers pushing prices back up.

Its time to be careful out there.

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7 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 291
A Long Time

I think it is going to be years until gold is able to rise anywhere close to $2000 and silver is able get and stay above $20.  They're not going to let them go.  All the PM bulls/analysts out there will continue to remain befuddled as the price drifts around.  We'll continue to see calls for thousands of dollar gold/hundreds of dollar silver, though.  Don't get me wrong.  It's wise to own physical gold and silver just in case the world falls apart.  But that's about it.  Investing in gold/silver/miners is a no win scenario with all of the manipulation that exists and probably won't end for a very long time.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5468
Reminds of this for some reason...
Cold Rain wrote:

I think it is going to be years until gold is able to rise anywhere close to $2000 and silver is able get and stay above $20.  They're not going to let them go.  All the PM bulls/analysts out there will continue to remain befuddled as the price drifts around.  We'll continue to see calls for thousands of dollar gold/hundreds of dollar silver, though.  Don't get me wrong.  It's wise to own physical gold and silver just in case the world falls apart.  But that's about it.  Investing in gold/silver/miners is a no win scenario with all of the manipulation that exists and probably won't end for a very long time.

I am reminded of this....

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 161
Price suppression

For those with day jobs and who aren't traders looking to make a buck on gold/silver trading, seems like we've got the opportunity of a lifetime. 

TPTB are suppressing the price of gold/silver through their manipulation. We know it, Dave has charted it for us. Wouldn't it make sense to buy physical now and hold it? It would be nice to see some price appreciation in gold/silver, but that just means it costs me more to buy.

What was that old saying, buy low and sell high.... I forget. I think it is now buy high and FOMO will drive prices higher and then sell on the way down and hope you make money.... Or the CBs have my back and won't let prices fall. Anyway....

I haven't purchased any PMs in a while as I just finished grad school, but I recently landed a job and start in January. Personally, I'm hoping the price suppression continues because I will be one happy stacker when the paychecks start coming in. 

When the "violent revolution" in prices that Chris mentioned above does come about, I hope I've been smart enough to DCA into a sizeable position. 

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5468
...or buy value...

The Dow is up 317 points today...gap after gap after gap upwards....

One of the components is CAT, sporting a value centric p/e of only 783 (earnings of 14 cents, price of $140).

Get it while you can!

PeakGold's picture
PeakGold
Status: Bronze Member (Online)
Joined: Jun 3 2017
Posts: 73
Silver

Looks like my $16.00 silver is on it's way. I'm hoping this is the last major dip for a while!

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4851
yeah but

Peak-

Yeah, but your $16 silver didn't come with a flurry of charts that preceded such an outcome so you don't get the credit! :)

 

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 161
About that violent revolution in prices

http://www.zerohedge.com/news/2017-11-30/has-never-happened-global-equit...

Listened to a David Collum and Kunstler podcast. Dave made the point that in physics, chemistry, etc. the more out of equilibrium things become the more abrupt and violent the move back to equilibrium (Reversion to mean). Of course Dave would have intimate knowledge of this as he's an organic chemist. 

Here's an example from Nature that I thought of:

Forest service suppresses forest fires. Deadfall doesn't burn for decades, it builds up on the ground. When you have a fire that gets out of control after two decades of supression, it's a beast. Pat yourself on the back, now where's the FEMA money to rebuild?

When I was in the military in NC the base had prescribed burns. They purposely set fires to an area of relative wilderness every couple of years to clear out the undergrowth and burn deadfall. It worked amazing. When they would set fires to the area it would slowly creep along the ground and maybe a foot up a tree. Weak/dead trees burned, healthy trees were fine. No risk of large fires. They reverted to the mean on purpose and on schedule. 

 

 

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