PM Daily Market Commentary - 4/14/2014

davefairtex
By davefairtex on Mon, Apr 14, 2014 - 11:07pm

Gold closed up +8.70 to 1327.10 on moderate volume; silver was unchanged at 19.96 also on moderate volume.  Gold opened up about $10 in Asia, likely because of the news from eastern Ukraine over the weekend - all those well armed but Definitely Not Russian troops occupying various government buildings.  Certainly if you don't resist Putin in Crimea, he'll definitely be satisfied.  Just like another guy who when given the Sudetenland was content once he got it (all those German speakers needed protection, you see), and that gift resulted in Peace in our Time.

Not suggesting we go to war or anything, but its not a big surprise what will happen next once its clear to Mr Putin that the immediate costs of territorial expansion at the expense of his neighbors are minimal.

The good news is, gold does seem to be getting a safe haven bid when geopolitical trouble erupts.  Good news from the standpoint of gold owners, of course.

The buck seemed to have found a low at 79.40, and rallied up +0.26 to 79.83.  Was this just another safe haven move from Ukraine and geopolitics, or something more?  Draghi is suggesting he's going to engage in "monetary stimulus" if the euro is too high.  He says its not a currency war.  Check's in the mail, etc.

http://www.bloomberg.com/news/2014-04-13/draghi-euro-warning-looms-as-ecb-debates-policy-measures.html

The strengthening of the exchange rate requires further monetary stimulus,” European Central Bank President Draghi told reporters in Washington on April 12. “That’s an important dimension for our price stability.”

GDX opened higher on gold's rally, moved even higher after the open, but sold off an hour before the close, up only +1.24% on moderate volume.  GDXJ behaved similarly, closing up +1.26% on heavy volume.  It was a lackluster performance on the part of the mining shares; traders clearly didn't want to take the miners home.  While gold seems to be rising every day for one reason or another (but on declining volume), mining shares continue looking like they're about to tip over and sink.

Why do I say such bad things about the miners?  GDX:$GOLD ratio is not looking happy.  It made a lower high, it has fallen below its 200 MA - below all of its moving averages, actually - and looks distinctly bearish.  If this ratio were making new highs, even if gold were dropping, then I'd be saying something different.

SPX rallied today, up +15 on moderately light volume.  I'm not convinced just yet that equities have put in a short term low - the volume was low, and the other high flier stocks I watch as indicators aren't doing all that well.

 

2 Comments

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
What happened to gold last night?

Looks like another planned smack down?

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Interesting enough, but.....

Quick review.....
20MA crossed the 200MA and the 50 MA is shouldering over.  I'd expect a continued run down to test .0180.  If the 50MA crosses the 200MA, the run may go all the way to .0173.

The reason isn't important, the movement is. 

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