PM Daily Market Commentary - 12/02/2014

davefairtex
By davefairtex on Wed, Dec 3, 2014 - 1:18am

Gold dropped -13.80 to 1197.50 on moderately heavy volume, while silver rose +0.01 to 16.47 also on moderately heavy volume.  After yesterday's big rally, gold sold off while silver traded sideways.  Silver's outperformance caused the gold/silver ratio to drop -0.86 to 72.73.

The USD broke to new highs, up a big +0.67 to 88.68.  There was no one currency that did poorly vs the dollar - they all sold off about equally.  The rising dollar did not help gold.  The fact that silver managed to stay flat on such a day was quite the accomplishment.

The miners did not like the rising dollar - GDX dropped -2.61% on moderate volume, while GDXJ dropped -6.61% on moderately heavy volume.  The miners look weak and as a result the ratios continue to decline.  This is a bearish sign for PM.

SPX regained all its losses from yesterday, rising +13.11.  Perhaps the two day correction is now over.  VIX fell -1.44 to 12.85.  I suppose all that foreign money pouring into the buck has to go somewhere, and right now they are choosing equities over bonds.

TLT sold off again, dropping -0.97%.  In spite of the breakout last week, bonds are looking weak now.  JNK bounced back +0.31%, rising right along with SPX.

The commodity index lost most of its gains from yesterday, dropping -1.58%.  WTIC dropped -1.66 to 67.65, whlie Brent sold off -2.00 to 70.54.  Commodities always have a tough time when the buck rallies, and today the buck broke out to new highs and rallied strongly.

All in all, it seemed to be a day of rest for PM after such a large move on Monday.  Of all the things I track, silver did the best, actually managing to rise slightly on a day where the dollar rallied hard and oil retreated.  Shall we believe silver, or the mining shares as indicators of direction for PM?  Its hard to know, but my money is on silver.  We can't forget what happened yesterday - the dramatic sell-off, followed by an equally dramatic rally.

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4 Comments

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 772
stupid question

Just a question: in all this daily move, each and every shift, reversal, failed move, and all is portrayed as an important state in the investor's portfolio.

Now,if I had significant assets to be able to buy and sell at above $200k per transaction, I could probably afford to transact on the moves. And maybe most investors here really do that. But from my point of view, these little moves are nothing; I can't make a profit on less than a 5% movement, and at that my own profit would be zero: it would all go to broker fees.

so... I'm wondering...

Am I the only one who would like less play-by-play, and more long term (months, years) discussion?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5070
nah, good question

MR-

I totally hear you, I trade relatively regularly, but I too am not interested in buying and selling on the daily moves.  I'm more of a swing trader, and I look for the reversal and the confirmation, and that's typically when I start to buy.

When I see distribution start to take place, that's when I start lightening up.

But I certainly don't trade every day.  That would just be too much.  I have a lot of other stuff I like to do in life!

If I write a daily column, could I actually write about long term things even though they mostly don't change week to week or even month to month?

Honestly, what I write is largely the stuff I think about at end of day.  Writing helps me to think more clearly and honestly, and draw a picture of how things are right now in the market.

Do you have any suggestions on what you would like me to cover?  I know Jim wants me to cover GOFO.  He's just about convinced me that it is doing something interesting right now.

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 772
Well, maybe...

I think your daily thoughts are fine.

But suppose you developed (for tuesdays, for example) a 1-month swing commentary. All week, thoughts on that go to your Tuesday initiative... but the Tuesday initiative might focus more on gold, or silver, or oil, or whatever.

Then, once that was in place and regular, develop another longer term commentary story. Maybe one of them might be a Thursday look at miners and miner problems. That could later shift to a look at storage and storage problems, then reserve banks and reserve bank problems...

... and so on.

So you still have your daily thoughts, but you also have something longer term, and interesting, for when -- really -- people should just be holding tight.

And Gofo would be fine. It's just that there's so much interesting understanding that I may or may not have, that is longer term.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5070
i like it

MR-

I'll take your suggestions under advisement!  Largely I think its a good idea.  Doesn't hurt to break stuff up a bit.  Yesterday I tried this out: it was ECB Money Printing Day - or not, as the case may be.

Perhaps next week I'll do something about Japan Money Printing.

As for holding tight, If I were giving advice - which I'm not - I would say "what you should do depends on your timeframe."

If was looking at a 10 year position, then for sure, I'd just watch all the games and hang on.

If was are looking at a 1-2 month position, then...I'd probably accumulate more on the next dip, as long as the dip doesn't go below 1130.  (If it does drop below 1130, then the bounce has failed, so I'd bail out)

That's what I'd say if I were giving advice, which I don't.  :-)

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