PM Daily Market Commentary - 7/15/2015

davefairtex
By davefairtex on Thu, Jul 16, 2015 - 12:33am

Gold fell -5.80 to 1148.50 on moderately heavy volume, while silver dropped -0.28 to 15.06 on moderate volume.  Both metals started selling off right at 08:30, the time of the Producer Price Index, which was unexpectedly hot at a 0.4% month/month increase.  The buck rallied at that time, suggesting that the market saw this as suggesting that a Fed rate rise is more likely to happen.

During the selloff, gold hit 1141.90, just 30 cents above the previous low of 1141.60.  It did manage to rally back, but not all that enthusiastically.  Based on today's behavior, I'd guess the next try at 1141 will succeed.  If the buck continues to rally, next stop for gold is 1130.

Silver was significantly weaker than gold today, dropping -1.82% vs gold's drop of -0.50%.  Silver's rebound was also more tepid.  It appears that last week's rally was yet another selling opportunity for the shorts.

The miners looked even worse, with GDX off -2.28% on moderately heavy volume, making a new six-year low just today.  Last time we were here: October 2008.   GDXJ dropped -1.86%, but managed to avoid making a new low.  Juniors have resumed their outperformance, once again surprising given just how bearish everything else looks in the PM space.

Platinum: down -0.33%, palladium down -1.75%, copper off -1.02%.  That China (Shanghai) bounce is starting to fade, with SSEC off -3.03%.  China released a GDP growth number of +7%, which nobody believes.

The dollar rose +0.51 to 97.28, making a new closing high for this cycle and inching up towards the May high of 97.88.   The continued move higher in the buck is pressuring gold; while we here in the US whine about how horribly gold is performing, over in Europe they see gold moving more or less sideways over the past five weeks and right now it is about at the middle of its seven-week trading range.  This tells me gold's swoon is entirely a currency effect.  Strong dollar = weak gold.

This suggest to me, if the buck keeps rallying, gold will most probably drop through 1130 support.

SPX (US equities) fell -1.55 to 2107.40, trying to rally but failing.  In addition to the Producer Prices report, the key Industrial Production report was released at 09:15, which showed modest increases in some areas but generally showed a weak manufacturing sector.  Overall INDPRO rose by about 0.3%.  It didn't look like the INDPRO report moved the market at all.  VIX fell -0.14 to 13.23.

Bond ETF TLT rallied +1.06%, bought steadily all day long.  In spite of the rally, bonds remain in a downtrend.

The CRB (commodity index) sold off hard, down -1.26% erasing the rally of the last four days.  Commodities overall are not doing well right now.

WTIC (oil) dropped along with everything else, falling a big -1.75 to 51.62.  While the Petroleum Status report was released at 10:30 and it showed a sharp drop in oil inventories (down -4.3 million barrels), it caused only a brief rally in oil that was soon sold.  Oil has dropped to the lower end of its recent consolidation range.  My code says oil has further to drop.

The code also thinks gold and silver are due for a rally.  I have noticed that the code can be early - I see further downside ahead, given the strength in the buck.

PM looks weak - along with all commodities.  The buck is strong.  There is no good news right now in metals or in commodities overall.  If the buck continues to rise, commodities including PM will most likely continue falling.

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3 Comments

Trun87114's picture
Trun87114
Status: Bronze Member (Offline)
Joined: Apr 28 2013
Posts: 80
Premiums

I'd really like to buy some more physical silver down here but the premiums have skyrocketed.  Silver eagles actually cost more now than they did a week ago when the spot price was $0.50 higher.  Just another form of the big guys rigging the system against us little guys?

 

Jbarney's picture
Jbarney
Status: Silver Member (Offline)
Joined: Nov 25 2010
Posts: 233
Go Ahead and Buy

I'd go ahead and buy right now anyway.  You can never time the highs and lows of the market, and even if you are paying through the nose (Silver at $15 an ounce but you are paying $18 or so) just go ahead and bite the bullet.  When it eventually goes higher the cheap price you get it for today will have been worth it.

Even if it goes down more.....just buy while you can.

Jason

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5065
avoiding high premiums during shortages

If you don't like buying at a time of high premiums, you can always buy PSLV (current premium: +2.08%) today in order to lock in your price, and then wait for those silver coin premiums to drop.  It usually takes a few months.  Once the premiums get back to normal, then sell your PSLV and take the money and buy your silver coins or whatever.

If silver has rocketed higher, you'll make a profit on PSLV.  If silver drops, you'll lose money on PSLV.  Basically, you basically get today's price with tomorrow's premium - although if silver screams higher, you'll owe taxes on your massive profit.

http://sprottphysicalbullion.com/sprott-physical-silver-trust/net-asset-value/

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