PM Daily Market Commentary - 8/4/2015

By davefairtex on Wed, Aug 5, 2015 - 2:37am

Gold rose +1.40 to 1087.00 on moderate volume, while silver rose +0.09 to 14.55 on moderately heavy volume.  Metals rallied in Asia and London, but sold off in the afternoon in NY which happened concurrently with a strong dollar rally.

If its not one thing, it's another.  At least some strength in the commodity complex is providing some support for PM.  Gold's rally today was capped by the 9 EMA, but it did manage to find support at 1080.  If gold loses 1080 support, it could get ugly.

Silver made a new low today at 14.35, just a few cents above the previous low from last week at 14.33.  It is very close to breaking down right now.  The strong dollar isn't helping.

Miners were all over the map today, but they ended up following gold lower.  GDX rose +0.15% on moderately heavy volume, while GDXJ climbed +1.07% on moderate volume.  It wasn't a great day for mining shares, and the senior miners looked particularly weak, closing quite close to the lows of the day.  Miners do not appreciate a strong dollar.  If miners fall below support, likely more strong selling will occur.

The USD rose +0.41 to 98.02, moving strongly higher in the afternoon in NY.  I'm not sure what started the dollar rally, but it was significant, and it caused the buck to rise sharply starting at 13:25 right into the close.  Gold, silver, and the miners sold off at about that same time - they do not like a strong dollar very much at all.

SPX dropped -4.72 to 2093.32, closing below its 50 MA for the second day in a row.  It traded within a fairly narrow range.  VIX rose +0.44 to 13.00.

Bond ETF TLT fell -0.79%, dropping back below its 200 MA - a surprising outcome given the fall in SPX and the rise in the buck.  I'm not sure what this means - if it continues, it may be significant.

The CRB (commodity index) rose +0.79%, bouncing back somewhat after three weeks of a strong move downhill.  However, CRB has not put in a swing low even with today's rebound.

WTIC (oil) rose +0.67 [+1.48%] to 45.97, regaining just a small fraction of what it lost in the last few days.  Its what traders call a "dead cat bounce" ( - even a dead cat will bounce if you drop it from a high enough altitude.  That's the opposite of a reversal.  Oil has a long way to go in order to put in a swing low.

If its not falling commodity prices, then its a rising dollar that is causing problems for gold.  What can I say, right now the stars and moons seem to be aligned against PM.  All we can do is watch and wait and see when the buyers appear. 

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Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Zimbabwe beats a path to the future.

We can learn a few lessons from Zimbabwe on what to expect from a complete currency collapse. Of cause it doesn't happen overnight. You have to have patience.

The Government is in the process of crafting a policy to decriminalise the possession of gold, an official has said.
Announcing the mid-term monetary policy statement this morning, Reserve Bank of Zimbabwe governor Dr John Mangudya said the move is aimed to boost gold deliveries to Fidelity Printers and Refiners.
Currently, Section 3 (1) of the Gold Trade Act criminalises the possession of gold without a licence.
“There is need to decriminalise the possession of gold and instead focus on engaging the artisan miners on the norms and principles of responsible gold trading in line with best practice.
“To this end, the Reserve Bank, in consultation with the relevant authorities, is currently working on a policy to decriminalise the possession of gold in order to allow those in possession of gold to sell it to Fidelity Printers and Refiners,” said the central bank governor.
Official stats show that over the past five years large scale producers have contributed 75 percent to total gold production, while the balance has been accounted for by small scale miners.
According to the RBZ, gold deliveries during the first half of 2015 were 8 181,16 kilogrammes. Expectations are that if the present trend in deliveries continues, gold production for the whole year would surpass 13 899,9 kgs achieved in 2014 to around 16 tons.
How do I read this? The government has lost control of the money supply. Bob is no getting his fair share.
Nate's picture
Status: Platinum Member (Offline)
Joined: May 5 2009
Posts: 605
Erik Townsend newsletter

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