PM Daily Market Commentary - 9/26/2013

davefairtex
By davefairtex on Fri, Sep 27, 2013 - 1:25am

Gold closed down -9.20 to 1323.90 on moderate volume, with silver down -0.06 to 21.73 on relatively light volume.  The gold/silver ratio dropped -0.25 to 60.94.  Gold broke to a new high of 1340 in asia but was unable to hold it near the time of the NY open - first hit by a positive jobless claims number, and then finally selling off at 10:02.  That second move is a bit more puzzling since the pending home sales number released at 10:00 wasn't so bullish and indeed the initial reaction for gold was bullish.  Silver tracked right along with gold, sold the rest of the day, although its close looked a bit worse.  Currently gold appears to be in a range with 1305 on the bottom and 1340 on the top.

Taper me, taper me not.  That's where the market seems to be these days, with gold in better shape than silver - which we can see on the steady climb in the gold/silver ratio since late August.  If you recall, late August was about the time gold hit $1425...I find it interesting how the gold/silver ratio hit its low point right exactly at that same time.  Its why I like to watch gold/silver ratio because it helps confirm trends for me.

The dollar was up +0.23 [+0.29%] today to 80.65, basically moving sideways in a narrow trading range, neither breaking down nor rallying much over the past few days.

Mining shares were down; GDX off -1.61% and GDXJ down -2.49%, but daily volume is declining on both index ETFs to light-to-moderate volume.  Once again, miners jumped up early after market open, but the move down in gold at 10:00 EST caused miners to be sold for the rest of the day once again...right up until the last 40 minutes, when they rallied back for no reason that I could see, which I'll take as bullish.  Traders didn't want to take their miner shorts home this time - or someone was accumulating.  It looks to me like the selling may be getting close to being over at these price levels for the miners.  Like gold, we're stuck in a narrow trading range waiting for the next move.

Other risk-on stuff looks to be having problems.  SPX tried to rally today but lost much of it, as did oil.  Oil is at an important support level of 102, and if it breaks down, it may prove problematic to silver on a "no inflation in sight" thesis.

3 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5418
new Fed Z1 released

Get them while they're hot!

http://www.federalreserve.gov/releases/z1/current/z1.pdf

Quick summary for the busy executive: credit growth this quarter was muted; annual rate of about 3%, with most of the growth coming from corporate borrowers and (substantially less from) the US government.

Overall mortgage credit continued its 5 year decline.  Homeowners are still deleveraging.

I'd guess the Fed is happy that business borrowing is moving along at a decent clip, but deeply unhappy that mortgage credit is still contracting.  "Wait, we can't restart a bubble in the same place twice?"

No, you can't.

The 3% credit growth suggests that overall monetary inflation remains generally quiet; normal credit growth (where "normal" means the past 30 years or so) is generally from 7-10% per year.  Individual sectors may vary, such as the cartel sectors supported by government: education, medicine, and defense.

 

janb's picture
janb
Status: Bronze Member (Offline)
Joined: Mar 11 2008
Posts: 61
Get them

Dear davefairtex,

  I so appreciate your posts and your PM Daily Commentary.  I really like how clearly you summarize the data and convey your analysis in such a succinct way.  Also, I am very grateful for the plain, straightforward way you describe the implications of the data you track.  An example is this quote below from your "get them while their hot" post:

  "The 3% credit growth suggests that overall monetary inflation remains generally quiet; normal credit growth (where "normal means the pat 30 years or so) is generally from 7 - 10 % per year."

Many thanks to you for bringing us consistently clear and valuable information.  Sincerely,  Jan

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5418
thanks janb

I'm glad you appreciate my posts - thanks for letting me know!  smiley

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