PM End of Week Market Commentary - 6/12/2015

davefairtex
By davefairtex on Sat, Jun 13, 2015 - 3:50am

On Friday, gold fell -0.90 to 1180.60 on light volume, while silver dropped -0.06 to 15.93 on moderate volume.

Both metals sold off, and then recovered most of their losses by end of day.

On the week, gold ended up +8.80 [+0.75%], silver dropped -0.17 [-1.06%], GDX fell -1.49% and GDXJ was down -0.64%.  Gold rallied somewhat, while silver traded mostly sideways with a downward bias.

Gold managed to rally this week, somewhat supported by the falling buck, confirming last Friday's swing low on Wednesday.

Silver is still searching for a low; some support is visible below 15.75, but so far no confirmation yet.  Silver did break below its uptrend twice this week, but managed to avoid closing below the line each time.  We can call that mildly positive.  A close above 16.04 would confirm a swing low.

The USD

The dollar retreated this week, dropping -1.37 [-1.43%] to 94.99.  The falling dollar didn't seem to help PM very much.

Yen rallied +1.34% this week, with BOJ head Kuroda suggesting on Wednesday that the currency had fallen far enough.  The rally is already being sold.  We'll see if traders believe Kuroda, or their lying eyes.

Miners

It was another down week for the senior mining shares - no end-of-the-world moves, just a lack of buying interest from traders.  You can see that the down-day volume is quite light compared to the up-day volume, and this suggests to me that the selling pressure is not particularly intense.  Still, GDX needs to close above that 9 EMA before it can start looking positive again.  Until it does, for me it's hands-off.

Junior miners once again outperformed the senior miners.  That doesn't mean they were up on the week, and in fact they are starting to weaken, dropping below the 50 MA on Thursday.  Still, as anyone who lived through 2013 and 2014 can attest, this downside move is nothing compared to what happens to junior miners when they are truly unloved.

The slow move downhill continues to take its toll on the miners.

Name Chart Change 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Anglogold Ashanti AU 0.67% -43.59% falling falling falling rising ema9 on 2015-06-11 2015-06-12
Iamgold IAG 0.43% -42.96% rising rising falling rising ema9 on 2015-06-08 2015-06-12
New Gold NGD 0.31% -46.55% rising falling falling rising ema9 on 2015-06-09 2015-06-12
Barrick Gold ABX 0.00% -31.99% falling falling falling rising ma50 on 2015-05-26 2015-06-12
Newcrest Mining NCMGY 0.00% 11.76% falling rising rising rising ma50 on 2015-06-03 2015-06-12
Yamana Gold AUY 0.00% -59.09% falling falling falling rising ema9 on 2015-06-03 2015-06-12
First Majestic AG -0.42% -49.74% falling falling falling rising ema9 on 2015-06-03 2015-06-12
Royal Gold RGLD -0.46% -3.82% falling falling falling falling ema9 on 2015-06-09 2015-06-12
Newmont Mining NEM -0.46% 1.42% falling rising falling rising ma50 on 2015-06-09 2015-06-12
Goldcorp GG -0.71% -31.31% falling falling falling rising ema9 on 2015-05-19 2015-06-12
Coeur Mining CDE -0.73% -30.47% falling rising falling rising ema9 on 2015-06-12 2015-06-12
Pretium Gold PVG -0.84% -21.54% falling rising falling rising ema9 on 2015-06-11 2015-06-12
Aurico Gold AUQ -0.97% -26.15% falling rising falling rising ma50 on 2015-06-03 2015-06-12
Pan American PAAS -0.99% -31.99% falling falling falling rising ma50 on 2015-06-03 2015-06-12
Agnico Eagle AEM -0.99% -5.91% falling rising falling rising ema9 on 2015-06-11 2015-06-12
Franco-Nevada FNV -1.02% -3.62% falling falling falling falling ma50 on 2015-06-03 2015-06-12
Randgold GOLD -1.07% -6.72% falling falling falling rising ema9 on 2015-06-12 2015-06-12
Silver Wheaton SLW -1.34% -16.81% falling falling falling rising ema9 on 2015-06-03 2015-06-12
Gold Fields GFI -1.56% -11.73% falling falling falling falling ema9 on 2015-06-03 2015-06-12
Silver Standard SSRI -1.56% -18.97% falling rising falling rising ema9 on 2015-06-12 2015-06-12
Hecla Mining HL -1.67% -5.14% falling falling falling falling ema9 on 2015-06-03 2015-06-12
Fortuna Silver FSM -3.17% -20.09% falling falling falling rising ema9 on 2015-06-12 2015-06-12
Eldorado Gold EGO -3.68% -34.94% falling falling falling rising ema9 on 2015-06-03 2015-06-12
Kinross Gold KGC -4.84% -42.86% falling falling falling rising ema9 on 2015-06-12 2015-06-12

US Equities/SPX

This week had a lot of price movement, but ultimately SPX was up +1.28 to 2094.11, barely moving from last week's level.  SPX ended the week retreating back below the 50 MA, unable to sustain the momentum from the strong rally on Wednesday.  It sure looked like traders didn't want to take SPX home for the weekend.  The rally petering out on Thursday gives me the sense that the bears have the momentum at this point.

VIX fell on the week, dropping -0.43 to 13.78.

Gold in Other Currencies

Gold was mixed this week, up in USD, CNY, INR, and BRL terms, but down in Euros, JPY, and Rubles.  XDR tells us that gold was more or less unchanged, up +1.60.

Rates & Commodities

Bonds (TLT) had a bad first half of the week but managed to find support on Thursday, to close the week up +0.30%   Friday was a failed rally, leaving TLT basically unchanged, printing a lovely-looking doji candle on the weekly chart.  That suggests a possible reversal for TLT, if it can manage to rally next week.  There is enough negative sentiment about bonds right now to support a reversal just from a contrarian perspective.

Junk bonds (JNK) moved lower this week, dropping -0.28%.  Truth be told, junk has been doing generally better than its less junky cousins.  There's no strong "risk off" signal from JNK right now.

The CRB (commodity index) rose +0.45% on the week, climbing briefly above its 50 MA only to retreat below it again.  It seems to be four steps forward and three steps back for commodities right now - strong for a few days, only to sell off hard for the next few days.

WTIC rose +1.06 to 59.94, hitting 61.82 at one point only to retreat back below 60 by end of week.  The pattern for the last 7 weeks has been for oil to face selling when it moves up into the 61-62 range, while  strong buying appears every time it drops below 58.

Physical Supply Indicators

* Shanghai premiums rose to +2.66 over COMEX.

* The GLD ETF lost -4.48 tons, with 704.22 tons remaining.

* GC futures are not in backwardation, with the current two front-month spread at +0.40.

* ETF Premium/Discount to NAV; gold closing (15:59 close price on June 12th) of 1180.40 and silver 15.89:

 PHYS 9.75 -0.29% to NAV [down]
 PSLV 6.16 +0.39% to NAV [down]
 CEF 11.77 -7.43% to NAV [down]
 GTU 40.98 -5.71% to NAV [down]

ETF premiums were down across the board.

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) shows no significant premium amongst its 5 locations.

Futures Positioning

The COT report covered trading through June 9th, when gold closed at 1177.30 and silver 15.95; there were three large down days during the coverage period, so the COT report should be helpful in dissecting the action.

The charts below are a bit complicated - the circled region is the place where the short interest has indicated a low in the past.  Managed Money is usually very short at the lows, and the Commercials are exactly the opposite - they have a low level of short exposure at the lows.  "Follow the Commercials" is my theory.

There were some big changes this week in gold, with commercials covering 18k shorts, and Managed Money adding 20k shorts.  It was clearly Managed Money pushing prices lower through increasing short exposure, and it was the commercials ringing the cash register.   While Managed Money has now entered the rough area where lows in gold generally occur, the commercials still might have a bit more covering left to do.  According to the COT, we're near a low for gold.

Silver COT report shows even larger changes in short exposure than for gold.  Managed Money increased their short exposure from 11.9k to 35.7k in just one week.  It is a truly massive change - in fact, its the single largest weekly increase on record dating back to 2007.  Managed Money is usually wrong at the lows, and it looks like they went all-in short this past week.  I can't tell you why, but there it is.

Moving Average Trends [9 EMA, 50 MA, 200 MA]

All PM components red once again this week.  GDXJ popped above its 50 MA this week only to drop back down by the end of the week - and that's the healthy one!

Name Chart Change 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Gold COMEX.Gold -0.09% -7.44% falling falling falling falling ema9 on 2015-06-11 2015-06-12
Silver Miners SIL -0.67% -29.61% falling rising falling rising ema9 on 2015-06-12 2015-06-12
Platinum COMEX.Platinum -0.76% -23.90% falling falling falling rising ema9 on 2015-06-11 2015-06-12
Silver COMEX.Silver -0.85% -18.98% falling falling falling falling ma50 on 2015-06-03 2015-06-12
Junior Miners GDXJ -0.96% -36.93% falling rising falling rising ema9 on 2015-06-11 2015-06-12
Senior Miners GDX -0.96% -22.26% falling falling falling rising ema9 on 2015-06-03 2015-06-12

Summary

Buyers did show up a bit for gold which put together a modest rally, but they were not as kind to silver, and the miners continued to slowly sell off.  The falling dollar may have helped some, but not very much.

This week, the gold/silver ratio rose +1.33 to 74.14, moving to the higher end of its 6-month trading range.  Bearish.  The GDX:$GOLD ratio dropped more this week and remains bearish, while GDXJ:GDX rose and continues looking bullish.  SIL:$SILVER looks bullish as well.  Moving average trends are all bearish.

The COT reports show a large change in gold short exposure for Commercials and Managed Money, nearing a point where a low for gold might be near.  The weekly change for silver was record-breaking, with Managed Money opening more short contracts in one week than ever before in history.   Silver too is in the neighborhood where a low might be expected.  COT isn't an exact timing tool, but - those Commercials are usually right.

Physical demand is neutral this week; in the west, ETF premiums were all down, GLD tonnage dropped, no backwardation at COMEX, and premiums in Shanghai are mildly positive.

Commodities continue to look a bit weak, and WTIC oil is back in its 7-week trading range.  No trend changes in oil or commodities.

I have to give my vote to the COT report this week as the "most interesting indicator" award.  Changes in silver are record-breaking, and - perhaps its a self-fulfilling prophecy, but when the Commercials cover and Managed Money is short, its usually time to start looking for an entry point to go long.  Buyers still need to appear to move prices higher, but odds are they will.  Possibly this week, or maybe next.  Come on Commercials, you don't want to miss out on all that free money, do you?

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12 Comments

sand_puppy's picture
sand_puppy
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Posts: 1756
Texas to repatriate its gold

Writing's On The Wall: Texas Pulls $1 Billion In Gold From NY Fed, Makes It "Non-Confiscatable"

The lack of faith in central bank trustworthiness is spreading. First Germany, then Holland, and Austria, and now - as we noted was possible previously - Texas has enacted a Bill to repatriate $1 billion of gold from The NY Fed's vaults to a newly established state gold bullion depository.

 

“In a lot of cases with gold you may not have clear title to the metal. You may have a counterparty relationship that makes you a creditor. If the counterparty has a problem unrelated to gold, they can default and then you become an unsecured creditor in bankruptcy,” said Keith Weiner, president of the Gold Standard Institute.

 

This means you get whatever is left after liquidation, often just a fraction of the initial value of your holdings.

“This exact scenario happened with futures broker MF Global. I knew people who had warehouse receipts to gold bars with a specific serial number. But that gold had an encumbered title and they became unsecured creditors in bankruptcy,” said Weiner.

davefairtex's picture
davefairtex
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how Syriza got into power

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_13/06/2015_550990

The article, appearing in the Greek conservative newspaper Ekathimerini, tells the story of "the review that never ended" from which it is suggested led directly to the victory of Syriza in January 2015.  [I think the rupture was preordained, but perhaps the timing could have been altered with a bit more clever operating by the principals]

Anyhow, it makes for interesting reading - it is clear to me that former PM Samaras is trying to get his version of events out there via Ekathimerini, and it does paint a curious picture into the inner workings of the Troika.  He's also absolving himself of blame - what a surprise.

Moral of the story: never accept a "bailout" that ends up with you reporting to three different bosses, all of whom are apparently run by committee, and all of whom have different agendas...

In February [2015], the Greek program’s main architects met in Brussels in a bid to pinpoint what went wrong. By that point it was clear that the new coalition government of SYRIZA and Independent Greeks not only had no intention of moving ahead with the program but would reverse many of its basic provisions. [No, really?]  European Commission officials stressed that this was a bad development and questioned the sagacity of the tough stance adopted with the previous government. The IMF’s representatives responded as they always did, saying it was not their problem Greece had an unpredictable, weak political system with frequent elections. The German representative said SYRIZA would have come into power anyway and done the same thing. Little more is known about that meeting except the atmosphere was very tense.

"Were you guys actually TRYING to blow this situation up?  Because you sure did a great job of it."

"Oh, they were going to break up with us anyway."

"You know those crazy Greeks...(shrug)...whaddaya gonna do?"

 

davefairtex's picture
davefairtex
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Al-Jazeera weighs in on Greece too

Its actually penned by a co-director of CEPR, a PhD economist (who doesn't like neoclassical economics), and an apparent past supporter of Hugo Chavez.  In spite of  that dubious credential, its an excellent article viewing the Greek situation through the lens of personal political analysis and US Empire/Realpolitik.  Henry Kissinger might even approve...at least in private anyways.

http://america.aljazeera.com/opinions/2015/6/germany-is-bluffing-on-greece.html

Although there have been numerous references to game theory in the ongoing commentary, it’s really not necessary if you look at the revealed preferences of ... its European partners. Take partner-in-chief German Chancellor Angela Merkel: If there’s one thing she doesn’t want to be remembered as, it’s the politician who destroyed the eurozone.

Of course, we don’t know if a Greek exit would do that, but there’s a chance that it could. Even if the European Central Bank would be able to contain the resulting financial crisis, it is possible that Greece would, after an initial shock, ultimately do much better outside the euro, which might convince others to want to leave. Whatever the probability of that scenario, Merkel is, like most successful politicians, a risk-averse creature who won’t roll those dice.

The politics of empire are much more important than any economic concerns here. For the same reasons that the United States intervened in Greece’s civil war (1946 to ’49) and supported the brutal military dictatorship (1967 to ’74) — with all the murder, torture and repression that these involved — Washington does not want to have an independent government in Greece.

...Everybody knows that if Greece leaves the euro and needs to borrow hard currency for its balance of payments, it will get some from Russia and maybe even China. Greece could leave NATO. Greece could participate in Russia’s proposed gas pipeline project, which would make Europe more dependent on Russia — something that American officials warned against, drawing a sharp rebuke from Greece’s energy minister, who rightfully told them it was none of their business.

Writer has a clear axe to grind, you can see it in the words he chooses, but it doesn't mean he's wrong.

I wish I had his level of certainty.  I'd take a much bigger position than I have now.  :-)

We are living in fascinating times.  I used to love to read about history, but now I have the privilege of living through it - I read about history in the making almost every single day.

davefairtex's picture
davefairtex
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Greece: a flurry of warnings from the EU

While normally I get an article or two about the latest progress, this weekend I saw a flurry of warnings from across the Eurozone about how Greece needs to get with the program.

It occurs to me: the actors feeling the most pressure are the ones complaining the loudest.  Syriza is still polling 66% domestically, they are managing to sound super positive all the time - always just a heartbeat away from a deal - while their counterparts are sounding increasingly cranky.

Although the headlines say "markets down", the US markets are in reality little changed.  SPX down 0.5%, gold unchanged, the buck up 0.35% - it sure seems like a big ho-hum to me.  The Athens market did get hurt: down 5% today, and down 20% over the past week or so, heading towards its low.

As Mish has pointed out, if Greece defaults, the guys on the other side of the table stand to lose hundreds of billions of euros, and they will have to explain that to their constituents.  On the other hand, the difference between the two parties is about two billion euros, and "a matter of principle."  Will the EU actually throw themselves right into a 250 billion Euro fire just over principle and a loss of face?  End of June - or maybe before - and we should know the answer.

Curiously, market is saying not to worry.

KugsCheese's picture
KugsCheese
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TPTB will change a formula

TPTB will change a formula here and there then presto all things fixed and more bail out money. 

thc0655's picture
thc0655
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US Fed to the rescue (again)?

Maybe the "market" is saying not to worry because the apparent amount between the parties is so small (2 billion Euros), and the "market" doesn't believe "they" would risk a raging financial forest fire engulfing the whole globe for such a small sum.  Maybe they assume that because a mystery benefactor, from Belgium for instance (US Fed, China?), could appear and pay today's bill and kick the can a little further.  The Fed could do it in secret and no one would notice.  It's not like it's real money that has to be earned, saved and then transferred from the savings account to Greece.  Or China could secretly slip Russia the two billion from their foreign currency reserves so Putin could ride in on a white horse and buy Greece and save Europe!  What a boost to his ego.

I'm fascinated that there is still so much trust in politicians, central banks, giant "private" banks and the money system itself.  We're way past ridiculous, but still when "they" are cornered "they" find another higher gear I didn't suspect "they" had and we are all dragged further into the twilight zone.

First, Greece repays an IMF loan using the IMF's own SDR's. Then Greece misses a loan payment on June 5 and arbitrarily announces it has bundled that payment in with two others due in June and will make all three on June 30.  And NOTHING happens!

And it seems that two or three times per week, whenever things are looking grim and the "markets" are starting to tremble, somebody starts a rumor that a deal is about to be agreed upon and the "markets" recover and make gains.  Then in a few minutes or a few hours someone denies the rumor, and the football gets teed up again.  How many times are "they" going to fall for that dumb trick?

I must conclude that the abyss "they" are looking into is every bit as terrifying as we little people here at PP know it is.  That's why they HAVE to keep the system going.  No one in a position to do so has the courage to call it quits and take the beating we've all got coming.

KennethPollinger's picture
KennethPollinger
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Dave: What think ye about this?

I recently received a Special Report from Phoenix Capital Research.

 

It basically stated that one of the best indicators of a coming collapse/correction/crash is the following.

"The 50-DMA served as a useful metric for gauging that a serious decline was about to begin:  He showed charts of the $SPX on Dec 31, 1987 , $SPX on Dec 31, 2008, and $SPX on Mar 31, 2010.  Then  the research stated:  "As you can see stocks rolled over and broke below their 50-DMA. After that, the 50-DMA acted as strong resistance.  Indeed, there was only one bounce above this level which lasted roughly a month and a half.  Thus, this tells us that the 50-DMA is a strong metric for gauging when real trouble hits stocks again.  ON THAT NOTE, THE TRIGGER YOU SHOULD BE LOOKING FOR IN TERMS OF WHEN THE NEXT CRASH WILL HIT WILL BE A DECISIVE BREAK below THE 50-DMA FOLLOWED BY A STRONG BOUNCE THAT fails TO BREAK ABOVE IT AGAIN.

I do not recall if you or anyone has complied a LIST of the MAJOR trigger gauges for the next crash, maybe even ranked in terms of importance.  Tine to get out!!!!!

Challenging?  Thanks,  Ken

KennethPollinger's picture
KennethPollinger
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50-DMA on $SPX

Since I'm not up to snuff on much of this stuff, could you print out a 50-DMA on $SPX  for us and maybe even tell me how to do this on my own in the future.  The research with the charts mentioned above SURE seemed convincing.  They actually had an arrow showing when to get OUT.  Thanks,  Ken

KennethPollinger's picture
KennethPollinger
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50-DMA on $SPX

Since I'm not up to snuff on much of this stuff, could you print out a 50-DMA on $SPX  for us and maybe even tell me how to do this on my own in the future.  The research with the charts mentioned above SURE seemed convincing.  They actually had an arrow showing when to get OUT.  Thanks,  Ken

davefairtex's picture
davefairtex
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the 50 MA

Ken-

Your enthusiastic blogger is, I feel, exaggerating the predictive impact of the 50 DMA for SPX.  Moving averages are useful, if and only if the underlying item seems to respect them, and SPX doesn't seem to be minding the 50 MA (at least, not on the daily chart).

Here's an example of what your guy is talking about: this is the Thai stock market, "SETI".  Note how the SETI has failed cross the 50 for the past three months.  In other words, the 50 acted as resistance, and traders decided to sell every time price rose up to that line.  At some point, this will probably lead to a big breakdown.

Here's a link to SPX on stockcharts.  You can go there and poke around.  3 moving averages are active: MA50, MA200, and EMA9.  You tell me if SPX is respecting the 50 MA in the same sort of way.

http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&b=5&g=0&id=p70356364027

You can also change the timeframe to "weekly" and see what that looks like.  Perhaps your blogger was speaking about the 50 WEEK moving average.  A drop below that would be significant.

KennethPollinger's picture
KennethPollinger
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Thanks Dave. However

it WAS the 50-DMA.  And if he was correct, then according to your chart above,  the time to get out would have been April 27th, no?

  "At some point, this will probably lead to a big breakdown," as you say.  Then isn't this further confirmation of what the Phoenix Capital Research is saying? Please watch this  and let's see how it plays out.

I'm still looking for a list (and ranked) of the major indications/warnings, canaries, etc.  Ken

KennethPollinger's picture
KennethPollinger
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Posts: 653
More info from same folks

June 17, 2015

It Took 6 Years For This Signal to Finally Hit 

Stocks will likely bounce today because they tend to rally during Fed FOMC meetings.

However, the fact remains that the technical damage from the breakdown over the last week has been severe. We’ve not only broken a trendline, but we’ve since been rejected by it… indicating that what was former support, is now resistance.

REERRE.png

 

 

Looking at this, the only thing holding stocks up is hype and hope that the Fed might hint at doing something in today’s meeting. However, the most the Fed could do is push back its interest rate hike to 2016… but given that the market already anticipates this, that won’t accomplish much.

----------------------------------------------------------------------

 

-----------------------------------------------------------------------

The bigger situation involves the large 6-year rising wedge pattern that the S&P 500 is just completing. The sheer size of this suggests that the inevitable breakout will be truly MASSIVE.

REERRE2.png

 

 

We’ve actually only just taken out the lower trendline. We need a confirmation of this to definitively say that the bull market in stocks is over.

Smart investors should take note of this now. It is a MAJOR red flag to be watched closely.

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