PM Daily Market Commentary - 10/23/2014

davefairtex
By davefairtex on Thu, Oct 23, 2014 - 9:49pm

Gold dropped -9.10 to 1232.20 on moderately heavy volume; silver actually rose +0.02 to 17.18 on moderate volume.   Gold sold off during London trading hours, spiking down hard early in NY as the dollar made a new high.  As the buck retreated, gold recovered some of its losses.  Silver dropped to 17.03 before rebounding, printing a modestly bullish doji candle.  Silver actually outperformed gold today - it looks to have more support than usual.  My guess: oil did well, so silver was happy.

The dollar moved modestly higher today, up +0.09 closing at 85.93.  The buck traded in a relatively narrow range today, but gold seemed to break down on the stronger dollar rallies.  Gold seems quite sensitive to moves in the buck right now.

Mining shares actually rose today, with GDX up +0.59% on moderate volume, and GDXJ was up +1.64% on heavy volume.  GDXJ made a new multi-year low in the morning, but rallied strongly in the last 90 minutes of the trading day.  Buyers actually showed up for the mining shares - but only after they set new lows.  This sort of "stop running" happens sometimes, with the big players pushing prices lower to flush out more longs right at the lows.  I'm not saying today is a low, but the price action was actually positive today for the first time in a while.  If GDXJ can close higher tomorrow, that's the first step in an actual rebound.

SPX closed up +23.71 to 1950.82.  SPX tried rallying up to the 50 MA but failed to breach it, retreating into the close.  VIX was off -1.34 to 16.53.  SPX appears to be slowing down a bit - if the 50 MA continues to prove difficult, shorts will get excited and pile in.  Also - the 50 is a good place for longer term longs, worried about the start of a downtrend, who are looking to bail out.

Long term treasuries (TLT) were off -0.89% today, a decent-sized move down.  It seems that money is moving out of bonds given the strength of the equity market, but I'd expect that to reverse if SPX can't cross its 50 MA.

Commodities were up today, +0.57%.  WTIC was up +1.53 to 81.86, and Brent was up +2.12 to 86.83, closing just barely over its EMA-9.  Brent is looking a bit stronger than WTIC, and seems to be on the cusp of marking a low.  Isn't it interesting that when oil does well, silver outperforms gold?  All these items are inter-related.  These days, when oil sneezes, silver catches a chill - and we also know that silver affects gold.

Quite possibly the reverse is true - if Brent rallies, silver will may well strengthen too.

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7 Comments

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
Am I Missing Something?

Yesterday I could not find reported Net Profit for CAT.  All I could find in MSM is EPS (CAT is buying back 2.5B shares per quarter).  CAT 0.9% increase in sales.  I have to think the Net Profit was not pretty. 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
ECB bank stress tests

This Sunday (Oct 26th) the ECB will release the detailed results of its bank stress test.  The banks have already been given their grades three weeks ago, and now its just the unwashed masses that get the news on Sunday.  The leaking in advance of the test results has been significant, but presumably once this stone is formally passed it will signal the All Clear for those Eurozone banks to start the ponzi back up again so we can get back to bubble business as usual!

http://www.bloomberg.com/news/2014-10-23/ecb-vies-for-third-time-lucky-in-european-stress-tests.html

Today is the last trading day prior to the release of the stress test results.  It will be interesting to see what traders decide to take home this weekend.  . 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5969
A Silver Cartel to Break the Paper Cartel?

For years I've been asking why mining CEOs don't just get together and fight the paper shorts...well, looks like the CEO of First Majestic silver has declared to do exactly that.

The idea would be to join up, pick a month in 2015, and not deliver any physical silver to the market.

Cool!

Transcend's picture
Transcend
Status: Bronze Member (Offline)
Joined: Jan 28 2012
Posts: 62
Physical vs Paper
cmartenson wrote:

For years I've been asking why mining CEOs don't just get together and fight the paper shorts...well, looks like the CEO of First Majestic silver has declared to do exactly that.

The idea would be to join up, pick a month in 2015, and not deliver any physical silver to the market.

Cool!

 

Hi Chris,

How come this would make a difference to the shorts if the delivery on the futures markets is next to nothing?  Or is it that the supply would be less so the price should theoretically go up and scare off the shorts?  There already isn't nearly enough physical to deliver to the paper market so I'm not convinced the shorts would disappear because of a little less supply being held back.  Can you please help me understand.

 

 

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
AG CEO doesn't care about

AG CEO doesn't care about other silver producer production expenses? That's interesting. I guess the competition is not a vigorous as other industries. I'm sure he knows his company has some of the nicest remaining assets though ;)

Thanks for sharing Chris

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2885
First Majestic
cmartenson wrote:

For years I've been asking why mining CEOs don't just get together and fight the paper shorts...well, looks like the CEO of First Majestic silver has declared to do exactly that.

The idea would be to join up, pick a month in 2015, and not deliver any physical silver to the market.

Cool!

Well, I for one would advise him to sell any hot tub(s) and/or nail gun(s) he might own.  And to stay away from high places.  And to keep a close eye out for snow plows parked near runways...

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
Bankers and CEOs are more

Bankers and CEOs are more likely to expose themselves to tall buildings and runways. Therefore they are more likely to die at those locations. We can't give the powers that be too much credit when we have things like this happening...

http://www.zerohedge.com/news/2014-10-24/nypd-stunner-cops-exit-ebola-vi...

There is an entire agency that in-part was created to respond to these situations and brilliant people work for that agency. Yet, every day the humanity is shown in the response and general handling of this crisis.

 

 

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