PM Daily Market Commentary - 3/12/2018

davefairtex
By davefairtex on Tue, Mar 13, 2018 - 4:02am

Gold dropped -0.50 [-0.04%] to 1323.50 on moderately light volume, while silver fell -0.07 [-0.39%] to 16.54 on light volume. The buck fell on the day, losing -0.26%; gold in Euros continues to drop.

While the Euro moved higher today [+0.26%], on the way up there was a bit of a dip starting at 5 am, with a low about 3 hours later.  Gold more or less followed the Euro lower, but gold didn't recover quite as well as the currency did, ending the day flat.  Trading range was fairly narrow - gold's candle print was a doji/NR7 which was not rated because it was an inside day. Forecaster fell -0.03 to to -0.32. Gold remains in a downtrend – daily, weekly, and monthly.

COMEX GC open interest rose 10,995 contracts.  That's a fairly substantial increase; perhaps that's why gold did so poorly relative to the currencies today.

Rate rise chances (March 2018) remains to 89%. FOMC meeting in 8 days.

Silver followed gold's track, but its rebound was a bit more feeble, not quite making it back to even.  Silver's trading range was also narrow, printing a short black/spinning top, unrated because it too was an inside day. In spite of the decline, silver's forecaster moved up +0.06 to +0.10; silver remains in a mild uptrend on the daily chart; weekly and monthly charts remain in a downtrend.  Silver ended the day just above its 9 MA, and continues to trade sideways in its recent trading range with a slight upward bias.

COMEX SI open interest rose 2,631 contracts today.

The gold/silver ratio rose +0.28 to 80.02. That's bearish.

Miners did fairly well compared to the metals, rallying from the open through to the close, with GDX up +0.88% on moderate volume, and GDXJ climbing +0.85% on moderate volume also. XAU forecaster moved up +0.16 to +0.22, which is a somewhat more enthusiastic uptrend.  XAU is now back above its 9 MA, and has moved right up against the downtrend line.  When the miners outperform gold, that is a distinctly positive sign for PM.  One other note: the silver miners (SIL) broke above their downtrend line 5 trading days ago.  That's a hint that silver is the place to be.

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

Platinum fell -0.25%, palladium plunged -1.94%, and copper dropped -0.73%. -1.77%. Copper, which has whipsawed back and forth over the last 5 sessions, issued a sell signal again today, while palladium and platinum remain in uptrends, at least for now.  The other metals definitely didn't support higher PM prices today.

The buck fell -0.23 [-0.26%] to 89.46, seemingly reversing direction one more time. The confirmed bear NR7 had a 41% chance of marking a top, and the forecaster fell -0.19 to -0.14, which is a sell signal for the buck. This is yet another reversal on the daily chart; the buck has done so 6 times over the past 3 weeks.  Long term, however, the buck has remained in a downtrend in both weekly and monthly timeframes.

Crude dropped -0.70 [-1.13%] to 61.35. There was a strong sell-off that started in Asia and bottomed out at about 11 am in New York.   Crude did bounce back about 50%, which kept the day's candle print from looking too horrible: the long black candle was neutral, while the forecaster dipped -0.01 to +0.04, which leaves crude clinging to an uptrend by a slim margin. 

FT reports that UK officials were informed by officials in Saudi Arabia that the Saudi Aramco IPO will be delayed until 2019.  My guess: the oil market has yet to stabilize sufficiently to support the 2 trillion dollar valuation that they are looking to achieve.  https://in.reuters.com/article/saudi-aramco-ipo/uk-officials-told-that-aramco-ipo-unlikely-until-2019-financial-times-idINKCN1GO0AV

SPX fell -3.55 [-0.13%] to 2783.02. Trading range was quite narrow, resulting in a (neutral) short black candle. Forecaster moved up +0.16 to +0.50, which is a strong uptrend. Industrials led lower (XLI:-1.24%) while utilities did best (XLU:+0.43%). That's a somewhat bearish configuration.

VIX rose +1.14 to 15.78.

TLT rose +0.58%, printing a swing low (45% reversal). Forecaster moved up, but remains in a downtrend. TY rallied too, up +0.12%. TY remains in a mild uptrend on the daily chart, although on the chart we see that TY has just been chopping sideways for the past 3 weeks, and the weekly and monthly charts remain in a downtrend.

JNK fell -0.11%; JNK remains in a slow, choppy uptrend.

CRB fell -0.32%, with 4 of 5 sectors falling, led by industrial metals (-1.07%). CRB has dipped back below its 50 MA.

It was a pretty uneventful day – trading ranges were narrow, volume was light, and there wasn't much in the way of economic news or reports to move prices around.

The one interesting bit of news was that Trump blocked Singapore's Broadcom from buying wireless technology company Qualcomm on national security grounds. My opinion: that's the right move, since QCOM is an IP and technology treasure house, whose spread-spectrum wireless technology inventions more or less makes modern cell phone networks possible. I'm biased, since a good friend of mine worked on their very first systems way back in the 90s, and I got to hear about it as it was being developed. It really was a case of “small company builds a better mousetrap”; in the lengthy patent battles that followed, their much larger competitors would claim that QCOM's CDMA technology didn't work – and if it did work, they invented it first. QCOM won the battles and then finally the war; Qualcomm's patented CDMA technology became the mobile standard, replacing TDMA, and for quite a while, nobody could make better CDMA chips than Qualcomm. If you see the word “Snapdragon” on your cell phone specs - probably android - that's QCOM Inside.

The downside is a longer-term one; if you are a foreigner holding dollars, and you can't use those dollars to buy American companies, it makes the dollar less interesting to own, at least over the longer term anyway.  Still, I must ask – would China allow a US company to buy any of the iconic Chinese companies? How about Japan?

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4 Comments

phusg's picture
phusg
Status: Bronze Member (Offline)
Joined: Jul 16 2014
Posts: 56
P. Radomski

Hi Dave,

I don't know if you've read him at all, but would you care to comment on P. Radomski's analysis and prediction from yesterday?

Summing up, a major top in gold, silver and mining stocks is probably in, and based on the way silver and gold stocks performed on Friday, it seems that the big decline is just around the corner. We already saw the key short-term signs: silver’s outperformance and miners’ underperformance on Tuesday, and the fact that they were repeated on Friday makes the bearish outlook even more bearish, especially that our last week’s upside targets for gold and silver were already reached.

His articles can be found here: http://news.gold-eagle.com/authors/p-radomski

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 375
Reversal

Does gold reverse every morning around 2:00 AM?  Serious question.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 375
phusg wrote: Hi Dave, I
phusg wrote:

Hi Dave,

I don't know if you've read him at all, but would you care to comment on P. Radomski's analysis and prediction from yesterday?

Summing up, a major top in gold, silver and mining stocks is probably in, and based on the way silver and gold stocks performed on Friday, it seems that the big decline is just around the corner. We already saw the key short-term signs: silver’s outperformance and miners’ underperformance on Tuesday, and the fact that they were repeated on Friday makes the bearish outlook even more bearish, especially that our last week’s upside targets for gold and silver were already reached.

His articles can be found here: http://news.gold-eagle.com/authors/p-radomski

 

I'm not Dave, and I don't know anything about this guy's analysis, but there's clearly no bid for gold, silver, or the miners right now.  New lows ahead seem probable to me.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5584
major tops

I'm not sure about major tops - but right now, we're in one of those 'nobody cares' situations with gold once more.  While my trendlines aren't technically accurate, they give you a sense as to the general mood for gold right now measured in Euros.

Currently gold in USD doesn't look all that bad - but that's just because the buck has dropped 14% since the start of 2017.  If gold in Euros breaks below that lower support line, things could start to look pretty unpleasant - unless the dollar decides to crumble at the same time.  Which I suppose it could, since Europe seems to have avoided (so far) any of its political grey swans, and we continue to be in that global expansion.

Regardless - if we factor out currency, gold definitely isn't in an uptrend.  The major top was back in July, 2016.  Note that in USD, gold got quite close to that just last month - but that was just currency effects.

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