PM Daily Market Commentary - 10/5/2015

davefairtex
By davefairtex on Tue, Oct 6, 2015 - 12:38am

Gold fell -2.50 to 1135.10 on moderate volume, while silver rose +0.40 to 15.64 on heavy volume.  Gold attempted to rally but failed, while silver rocketed higher, breaking above 15.50 resistance and eventually hitting a new high of 15.73 and keeping most of those gains into the close.

This massive move in silver caused the gold/silver ratio to crater, dropping -2.07 to 72.60.

Gold took a rest today after Friday's big gain; while the buyers really weren't excited enough to push prices higher, the sellers weren't all that enthusiastic either.  Gold remains above its 50 MA and the 9 EMA and that's good, but in order to seriously break out of its longer term downtrend it must close above 1157 at a minimum, and ideally above the August 24th high of 1170.

Silver had a great day, vaulting above its previous high of 15.47 and rallying all the way to the previous high of 15.71 where the rally stopped.  While the buyers were not able to push prices above the next old high in the list, the move was impressive, and silver stands at the door of actually starting a medium term uptrend.  The shorts had a bad shock on Friday, and the strong follow-through on Monday has to have them nervous.  I have seen silver run for many days at this same velocity, and I'm sure the shorts are concerned about that very outcome.  They will not stick around if 15.75 falls.

Miners were a bit split today; while GDX had a great day, shooting up +4.35% on heavy volume, GDXJ was only able to manage +1.71% on moderate volume.  The seniors have managed to push past a recent high suggesting a short term uptrend is now starting, and if they can maintain this pace for another couple of days, GDX will confirm a double-bottom pattern which would be an important longer term trend reversal signal.

The volume picture for the senior miners is looking especially good, with the up-day volume substantially higher than the down-day volume.  Miners are clearly following silver, not gold, and this has moved the GDX:$GOLD ratio into a clear short term bullish mode.

The USD rallied +0.28 today to 96.24, climbing right back up to its 50 MA.  Prior to the NY open the buck sold off, but it managed to find buyers who managed to push prices back up into the green by end of day.  The buck is looking surprisingly strong, given the poor payroll numbers from Friday.

SPX had a very strong day, rallying +35.69 to 1987.05, alongside most of the world equity markets which also had strongly positive days too.  SPX is advancing on its 50 MA; a close above the 50 and/or the previous high at 2020 would be a bullish sign.  It appears that the threat of a Fed rate hike has been weighing heavily on the world, and the removal of this threat has caused relief rallies in many areas. 

JNK also had a strong rally today, climbing +1.10% on very heavy volume, marking a swing low.

Bond ETF TLT sold off hard, dropping -1.36% and closing below the 200 MA.  This move underscores the return to risk.  It looks like bonds have topped out, at least for now.

The CRB climbed also, rising +1.17% and supporting the risk-on picture.  CRB remains in a downtrend, but a few more days of this and that might change.

WTIC moved slowly higher today, rising +0.54  to 46.20 and moving to the middle of its recent 44-48 trading range.  Brent managed to close above its 50 MA for the first time since June, which is a bullish sign.  Energy equities have been on fire since Friday and they continued moving higher today as well.

HAA has 100 oz gold bars right now in NYC at 1161.08/oz [+2.20% over spot], and 1000 oz silver bars in NYC at 16.17/oz [+3.54% over spot]. Eagles in NYC are quoted at 20.22 [+35.77% over spot].  Premiums on the big bars fell, and premiums on Silver Eagles dropped quite a bit.

Is all of this risk-on excitement due to a bad Nonfarm Payrolls report and the Fed rate rise that now most likely won't happen?  I think so.  The fact there were no Fed governors giving speeches this weekend about how a rate rise should be expected by the next meeting regardless of payrolls is perhaps "the dog that didn't bark" - a lack of evidence that is a kind of evidence.  It appears that the market will now unwind the "Rate Rise discount" and once that unwind is over, we will see where things end up.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

6 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5065
silver dragging gold higher

Looks like silver is managing to drag gold higher today; copper, oil, silver are all rallying together.

Silver popped above 15.75 resistance and is now right at the 200 MA.  If it can close here, silver will be in a medium term uptrend.  It is interesting that silver, much more so than gold, is the big beneficiary of the "no rate increase" lottery.

Miners look ok but they might be getting a bit tired.

 

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1513
Silver Eagle premiums

I just got an email from Texas Precious Metals.  They had been out of stock on silver Eagles but they just got in a shipment of 15,000 (that's only 30 monster boxes).  Get this: the premium per coin is up to $4.97 when you buy 500 or more!!  Remember back in May when it was $2.75?  Freakin amazing!  I keep wanting to get another monster box or two (at the bottom of the market before it turns up for good) but these premiums have me on the sidelines collecting FRN's and nibbling at some other hard assets/preps.  I wonder how far off the next step will be: you can't get any silver at any price or premium, and you just have to sit and watch while the price shoots for the moon.  I still have hope, though, that a crash in the stock and bond markets will cause a temporary collapse of the silver price and create one last window of opportunity.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5065
other types of silver

HAA selling 1000 oz bars for 16.41/oz (3.62% premium).  100 oz bars are 16.87 (6.72%).  Current silver eagle premiums appear to have dropped to 30.81% ($20.72).

How about this:  Buy a 1000 oz bar now from your coin shop, and then once the eagle premiums come down, swap the 1000 oz bar at spot from that same shop, and then pay the guy the (presumably more reasonable) premiums for the eagles.  Would that pay for itself?  I think it would.

Losing 7% on the 100 oz bars and then another 6% on eagles beats losing 30% right now.

 

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 772
I will fail to see a real silver rally, until...

... until silver pierces its current trend.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

When I look at the trend set by the period from Jul '11, until now, I see two parallel lines, a high and a low. When I see the high line pierced, then I will consider the PM crash to be potentially over.

That typically goes for gold, silver, and platinum. Palladium seems to be out.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Looking at Kitco's 2 year

Looking at Kitco's 2 year silver graph, it looks like noise to me. 

If the climb-out is too steep I shall be spooked. I remember the last moonshot. 

Why do people not like Kitco?  Is their information inaccurate? 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
And in Aussie Dollars, a mystery.

The Aussie Dollar and silver seem tightly coupled. Here is a graph from the Perth mint.  My guess is that silver being a commodity and the Aussie Dollar is very sensitive to commodities. Therefore if silver goes down, so does the Aussie Dollar.

A good example of  false correlation. 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments