PM Daily Market Commentary - 11/2/2015

By davefairtex on Tue, Nov 3, 2015 - 1:28am

Gold fell -8.30 to 1133.40 on moderate volume, while silver dropped -0.13 to 15.40 on moderate volume also.  PM continued falling today.  I felt it wasn't particularly about currency, or commodities - there were just no buyers at COMEX for gold, which is probably continued fallout from the FOMC meeting last week.

This is the fourth straight day of declines following the FOMC meeting last Wednesday.  Downside velocity has not abated for gold, which suggests there may be more decline ahead.  Gold blew through the 50 MA, tried to rally mid-day in the NY session, but failed and closed at the lows.  Gold is fast approaching its uptrend line; for the uptrend to remain intact, it needs to respect this line.  The line isn't just a squiggle on a chart, it represents the basic willingness of buyers at COMEX to show up and buy the dips because they believe price will continue to rise.  If the uptrend line gets violated, that tells us that there aren't enough COMEX dip-buyers out there to maintain the uptrend.

Buying the dip is a good idea, but only if the uptrend remains intact.

Silver sold off along with gold, but COMEX buyers appeared during the NY session pushing prices back up substantially.  This show of support has silver looking stronger than gold - it remains above the 50 MA and its downside velocity is not nearly as high.

Traders bought the dip in the mining shares today, with GDX finding support right at its 50 MA.  GDX rose +0.40% on light volume, while GDXJ was up only +0.10% also on light volume.  Its definitely a positive sign when traders are buying miners on a day when gold drops $8 - although a certain amount of buying could be because of the overall strong move in the US equity market today.  Computer is less bearish than before on miners as a result of today's action.

The buck was mostly unchanged, closing up +0.02 to 97.00.  The buck is resting right on its 9 EMA.  Upside momentum for the buck appears to be ebbing, but it still remains in an uptrend.

SPX broke higher today, led by a strong rally in energy shares.  SPX climbed +24.69 [+1.19%] to 2104.05.  While SPX has not yet made new highs, it has broken through every resistance line so far, and each minor drop has been met with buying.   My computer remains long SPX.  VIX fell -0.92 to 14.15.

JNK rose +0.22%, but remains below the high made last week.  It is not signaling "risk on".

Bond ETF TLT dropped -0.46%, moving it below its 50 MA.  Bonds look to be in some danger of a breakdown.  The strong equity market is probably responsible.

The CRB fell -0.35%, dropping below the 9 EMA.  CRB appears to be inching lower.

WTIC fell -0.31 to 46.08, remaining above its 9 EMA and 50 MA.  Energy equities had a very strong day, in several cases breaking out to new highs on high volume.   Earnings reports were not as bad as feared for a couple of the majors, XOM in particular, whose downstream segment did quite well - and this sent XOM and CVX into strong rallies.

Right now gold continues to look weak, while silver and the miners look less weak.  We might have to wait for Nonfarm Payrolls on Friday before we get a turn.  Still, if silver or the miners can close above today's high, that will mark a swing low, which would be a definite positive sign.

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Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
$5.4 Trillion worth of Platinum.

Goes whooshing by.

An asteroid believed to be carrying up to 90 million tons of platinum in its core, as well as other rare and precious materials, is about to swoosh past our planet.

davefairtex's picture
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Posts: 5693
whooshing by

I'd say this might tank the price of platinum just a wee bit if somehow mining the asteroids became a reality.

Assuming of course the miners didn't screw up their orbital calculations and cause an ELE by accident.   "Civilization destroyed by a $5.4 trillion platinum asteroid..."

Afridev's picture
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 147
Platinum asteroid

Well, we might as well go out in style devil

DennisC's picture
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 342
Too Bad

It wouldn't even come close to covering the damages.crying

HughK's picture
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 764
A good reminder

It's a good reminder of how many resources are out there and the potential (and need) to start tapping into those resources if we wish to avoid contraction or collapse. I wonder what would happen if the rich and/or powerful countries of the world all moved just 10% of their military budgets over to space exploration...

daydreaming again.

davefairtex's picture
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Joined: Sep 3 2008
Posts: 5693
near-capitulation in gold

No buyers at COMEX for gold - nearing capitulation (RSI-7 = 16), but not quite there yet.  We've broken the uptrend line, which is not a great sign.  Next support is around 1100.  If we close below 1100 (now at 1114, so probably not today) then the uptrend is for sure over, and traders will be back to selling rallies.  Hopefully the COMEX buyers show up before then.

Still, gold miners are holding it together.  Gold is actually down harder than the miners, which is a very rare thing when gold sells off this hard.

Jim H's picture
Jim H
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Posts: 2391
Miner action is surely unique today...

Very interesting.. I will interpret further;  While metals investors don't buy Comex futures, they do sometimes buy miners.  And when they do buy miners, they should buy the miners that are actually operated by folks who understand what Gold is.. meaning not a commodity.  So... If you have the stomach (and speculative investment dollars) and want to buy a miner, JimH suggests you buy the miner that is up the most today;   Seabridge (SA). 

Why?  Read about the ultimate, "Gold in the ground" play.

I would suggest that it is this interview, and the growing awareness of what SA actually is, that is driving SA above the rest today.  And yes, I do own some SA.

Time2help's picture
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Posts: 2890
Squid Vicious
Arthur Robey wrote:

Goes whooshing by.

An asteroid believed to be carrying up to 90 million tons of platinum in its core, as well as other rare and precious materials, is about to swoosh past our planet. 

I'm imagining a massive vampire squid angrily lashing it's tentacles out into space in a vain attempt to snatch said asteroid...

Michael_Rudmin's picture
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Joined: Jun 25 2014
Posts: 926
Much cheaper than mining

Much cheaper than adjusting the asteroid to a NEO, and mining it, is to adjust its orbit away from Earth -- twice. Then sell the info on where to find it.

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5693
gold in the ground play


I like the concept of gold in the ground (minus the many challenges of actually getting it out - many a slip twixt cup & lip, etc).  Is SA just an exploration company, or does it actually pull ore out of the ground and turn it into gold bars too?

I looked at their income statement and I saw income from somewhere, but it wasn't very much.  I also saw a private placement they did this year - presumably to keep the lights on.  And they've been around since 1999 doing this same thing?

Chart certainly looks good.

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