PM Daily Market Commentary - 12/27/2017

By davefairtex on Thu, Dec 28, 2017 - 8:26am

Gold rose +3.80 [+0.30%] to 1291.40 on moderate volume, while silver moved up +0.14 [+0.84%] to 16.75 on moderately light volume. The buck fell again today; it dropped -0.19%, making a new low.

Gold moved slowly higher today – there was one interesting up-spike at 2:05 am, and another down-spike at 7:50 am, but overall the buyers won the struggle, even though the trading range was fairly narrow. That means a short white candle, which has a 35% chance of marking the top. Gold's forecaster dropped -0.17 to +0.31. Momentum may be slowing – or it may just have been a slow day. Most of gold's move was encouraged by the Euro rally, which rose +0.33% today.

COMEX GC open interest rose by +2,195 contracts today.

Rate rise chances (March 2018) remains at 62%.

Silver outshone gold today, rising steadily after that 2:05 am up-spike. Silver's long white candle was a bullish continuation, and the forecaster ended the day unchanged at +0.32. Silver's uptrend remains intact. It does not seem to be suffering any ill effects from the resistance zone at 16.60.  Next stop: the 200 MA, which is just below round number 17.

COMEX SI open interest fell -2,752 contracts today.  Commercials don't appear to be going short into the rally.  That's a positive thing - and its also just my guess.

The gold/silver ratio fell -0.42 to 77.10. That's bullish. After starting out slow, silver is starting to move a bit better now.

The miners encountered some selling in the morning – they're up pretty big over the past few weeks and some traders probably felt it was time to cash in. Mostly, though the modest dip was bought. GDX fell -0.17% on moderately heavy volume, while GDXJ dropped just -0.12% on moderately heavy volume also. GDX's opening black marubozu had a 47% chance of marking a top, while the GDXJ spinning top was only a 36% chance. The XAU forecaster wasn't happy, dropping -0.27 to +0.13. That's still an uptrend, but its also a warning sign. Miners have had a 13% move over the past month.  At some point, even in an longer-term uptrend, they will have to retrace.

Today, the GDXJ:GDX ratio rose slightly, but the GDX:$GOLD ratio fell. That's slightly bearish.

Platinum rose +0.19%, palladium climbed +1.15% making a new multi-year high, and copper rose +0.14% - which was a new closing high as well. Platinum is the weakest of the bunch; although it rose, and its forecaster moved up +0.07 to -0.02, platinum's spinning top candle had a 50% chance of marking a top.

The buck fell -0.19 [-0.20%] to 92.61, which is a new low for the buck. Candle was a bearish continuation/long black candle, and the forecaster rose +0.05 to -0.59, which is still a strong downtrend. The buck isn't falling rapidly, but the signs are all pointing lower right now.  The Euro seems to have steady upward pressure right now.  I'm not sure why anyone would buy the thing, but that's what I see.

Crude fell -0.21 [-0.35%] to 59.59 today. A mixed API report at end of day didn't help much (crude -6.0m, gasoline +3.1m, distillates +2.8m). While crude inventories have been dropping, US crude production continues to rise – it is up almost 1 million bpd year to date, and is setting new records each week, most recently at 9,789,000 bpd. Print was a bearish harami, which was actually just a bullish continuation. Forecaster dropped -0.28 to +0.16. Will 60 mark a near term top? It might; 60 is a round number, and I bet there were a lot of sell orders in place at $60 - if not from the shorts, then from the shale drillers.

SPX rose 2.12 [+0.08%] to 2682.62. There was a modest sell-off that got bought right at end of day. Utilities did best (XLU:+0.42%) while energy trailed (XLE:+0.33%). Really not much happened. Utilities might be putting in a near-term low after a 6-week sell-off. Maybe.  The bond rally probably helped.

VIX rose +0.22 to 10.47.

TLT screamed higher, up a big 1.30%, following through off yesterday's forecaster buy signal. Forecaster rose +0.11 to +0.61. TLT has been very choppy these last few months – no rally (or downturn) lasts longer than about a week. TY did well also, up +0.35%, with its forecaster up +0.43 to +0.09. That's a buy signal for TY. I'm a bit more inclined to believe this one, since TY is a lot more regular-acting than TLT.

JNK went nowhere, up just +0.03%. While JNK is in an uptrend (forecaster +0.07 to +0.39) it doesn't look all that enthusiastic to me. All I see is a collection of lower highs on the chart.  Time to sell my junk, I think.

CRB rose +0.52%, with 3 of 5 sectors up, led once again by industrial metals (+1.76%). CRB is now not far from its recent high. It feels like traders are positioning themselves for a commodity rally in 2018 – although I may be reading too much into a two-week move.

We are rapidly approaching end of year. Gold is within striking distance of 1300 again, and silver is moving fairly cleanly through its resistance zone. The miners took a break today, but unless we see some more serious selling pressure, uptrend remains intact. I'm going to go back to that COT report; commercials have a vested interest in rising PM prices, so the wind is at our backs right now, I think.

We've had a pretty good run here at end of year, but I don't hear anyone cheering!  Could it be that you're all shell-shocked, assuming they'll come and snatch the football away from us one more time?

The worse you feel (and you are probably not alone), the more likely it is we had a meaningful turning point here in December.

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davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5874
btc: downtrend resumed

While the 4h forecaster doesn't nail the tops and the bottoms, it does keep you on the right side of the trend.  At least so far anyway.  BTC has resumed its downtrend, at least in the 4h timeframe.

Daily charts say:

BTC uptrend (buy yesterday), BCH downtrend (sell yesterday), ETH downtrend (sell today), LTC downtrend (sell 8 days ago).

I suspect the 4h has it right, but we will only know if we get a close below 13000 on the 4h chart.

charleshughsmith's picture
Status: Platinum Member (Offline)
Joined: Aug 15 2010
Posts: 741
gummit somewhere announces crackdown, BTC falls

Gummit somewhere announces crackdown, BTC falls. Now it's S. Korea.  This is a script that is repeated every few weeks or months. Ironically, this invokes the Streisand Effect:  rather than suppress speculation, it actually fuels it by publicizing it via restrictions. If it's forbidden, it must be good!

debu's picture
Status: Silver Member (Offline)
Joined: Aug 17 2009
Posts: 243
Gold as a Geo-political Asset

Macro Voices' The Anatomy of the US Dollar Endgame podcast series has been fascinating and well worth devoting some time to.

 At the end of part 3 Luke Gromen makes the interesting point that gold is once again more a (geo-) political asset than a financial one, which drives home with the factoid that between March 2013 and March 2017 central banks around the world bought more gold than US treasuries!

David Collum makes what I think is a related observation in his Year End Review where he notes that price of gold began to come under pressure when official purchases by China began to ramp up in 2011.

It's well nigh impossible to know exactly what has been going on in the gold market for the past six of so years but it certainly hasn't seemed to behave as a normal one. Much to ponder...

lambertad's picture
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 190
Opaque vs visible smackdowns


BTC is lucky in that the press covers the attempted smacks. Imagine if everytime gold/silver got smacked we had a headline that read - Gold/Silver just got thwacked back in line, don't worry.

Oh wait, we do. But alas, not everyone reads the PM daily market commentary.

Thanks, Dave!

I don't dabble in the digital currencies, but I do view the smacks in gold/silver as buying opportunities, so maybe that's the bright side.


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