PM Daily Market Commentary - 4/9/2015

davefairtex
By davefairtex on Fri, Apr 10, 2015 - 3:47am

Gold fell -8.70 to 1194.00 on moderate volume, while silver plunged -0.36 to 16.15 on moderately heavy volume.  Once again gold's drop was modest, while silver took it on the chin.  Both metals are below their 9 EMA and 50 MA, and silver is dropping especially rapidly.

In spite of gold's drop today, gold rallied +0.41% when viewed in Euros.  Gold has had a steady bid underneath it in Europe over the past six weeks, which is probably what is keeping price of gold from collapsing here in the US.  Perhaps this support is also providing some support to the mining shares as well.

Unlike gold, silver looks to be in free fall, with no sign of buyers at all.  Silver is not yet oversold, and with no support close at hand, the most likely endpoint of this move is for a retest of the 15.25 recent low.  At this rate, that's 2-3 days away.  The gold/silver ratio continues to shoot higher, up +1.09 today to 73.93.  A rising gold/silver ratio is generally bearish for PM.

The miners experienced only light selling today, with GDX down -0.94% on extremely light volume, while GDXJ dropped -1.13% on light volume.  In the face of a massive dollar rally and a drop in gold - and a much stronger drop in silver - miners continue to do relatively well.

The dollar screamed higher today, up a huge +1.26 [+1.29%] to 99.39.  The close above the 99 level indicates that the dollar is back in bull mode, convincingly above its 9 EMA and climbing for a re-test of the 100 level.  Was this just a delayed reaction to the FOMC minutes release on Wednesday?  Its hard to say.  But we cannot ignore the implication of today's move.  I'd say it is better than 50/50 odds the buck breaks to new highs.

It sure looks like the buck found support at its 50 MA.

SPX rallied again today, rising +9.28 to 2091.18, breaking gently above its recent consolidation zone.  SPX isn't moving with any strong sense of urgency, but unless some bearish US economic news appears, the path of least resistance now appears to be SPX climbing slowly towards a retest of the previous high at around 2120.  VIX fell more dramatically, down -0.89 to 13.09.

Bond ETF TLT fell -1.30%, falling through the 9 EMA and the 50 MA and appearing as though it may be making up its mind directionally - it is going down.  Likely, this helps money flow into equities.

The CRB (commodity index) dropped -0.12%, a modest move given the dollar's huge rally.  Commodities continue to have trouble, but have managed to avoid making any new lows, at least so far.

WTIC also fell somewhat, dropping -0.23 [-0.45%] to 50.75.  WTIC has managed to retain its short & medium term bullish posture, remaining above its 9 EMA and its 50 MA in spite of the strong buck.  Surprisingly, oil equities rallied hard today, with oil services in the lead, up +3.21%. 

Markets are slowly revealing their hands.  Equities up, bonds down, and a strong rally higher in the buck suggests we may see new highs in SPX and possibly in the dollar as well.  Gold will likely continue moving lower as long as the dollar continues to rise.

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3 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5059
smoking gun for the private debt bubble?

Here's a fun chart I created just today.  It takes the total loan book of all commercial banks (LOANINV) and divides it by the required reserve balances (REQRESNS) by the Fed.  Its pretty wild.

Back in the day (i.e. before 1960) the Fed required a 10:1 reserve ratio for commercial banks.  Perhaps that is where the "10:1" money multiplier myth came from: 55 years ago, it was actually true!

But check out what happened next...a year passes, then a few more, and then: Holy Christmas, a ratio of 219:1 at the peak of the bubble in 2008!  Not a particularly onerous requirement to meet.  That's a growth of 21x.  Of course, if you are run by a group whose theories do not consider banks, debt, or money - who cares about a reserve ratio anyway?  No need for limits on banking, just let the free market sort it out.

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 364
Wow!

Wow! What could possibly go wrong?

It actually made me laugh - i think that's the stage i'm at now. I've gone through the grief and the anger

 

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 653
Disillusionment leads to Enlightenment

Somewhere I read:  To get "enlightened" one must break through ALL illusions, thus "dis-illusionment."

The key was/is the word "ALL."  That means EVERY illusion, on whatever possible level that exists.  Think:

all the contents of ALL the sciences, social or physical, all religions, all belief systems, especially the financial ones, as we have constantly seen in the comments posted here, a la Chris/Adam.

So, we are making GREAT progress!!

Here's to "Enlightenment," the fourth E?   Ken

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