PM Daily Market Commentary - 11/17/2015

davefairtex
By davefairtex on Wed, Nov 18, 2015 - 1:43am

Gold fell -12.30 to 1069.30 on heavy volume, while silver dropped -0.06 to 14.14 on moderately heavy volume.  Gold sold off starting in Asia, with the decline accelerating in NY, where right before noon gold plunged through its 1072.30 low.  Silver largely followed this same pattern, but traders bought the dip in silver, keeping silver from dropping too far.

Gold finally dropped through its 1072.30 lows, but the decline once it broke support was unexpectedly orderly.  It did not look as though there were a huge number of stops just below that support level waiting to be liquidated - either that, or there was a decent amount of stealth buying that happened after the support break.  Being a suspicious fellow, my guess is that the commercials were waiting for this, and covered a large number of short positions on the break below support.  The short covering kept the price from collapsing.  But that's just a guess.  While gold remains very oversold, we could yet see the decline in gold accelerate following the break of support in the next few days.  At least - that would be the normal behavior in these cases.

Another red day for silver - #14 if you are counting.   While silver declined alongside gold, buyers appeared relatively soon after the mid-day drop in NY and pushed prices back up, so that silver's decline on the day was only a few pennies.  The rate of silver's decline has slowed markedly, but COMEX buyers are still not plentiful enough to cause a rally.  Yesterday's failed rally was not helpful in that regard.

Whatever magic was holding up the miners disappeared today; on gold's breakdown, they sold off hard.  GDX dropped -4.80% on heavy volume, while GDXJ fell -3.77% on moderately heavy volume.  While miners made new lows for this cycle, they have not broken to any new multi-year lows.  So there is that.  But today's price action suggests that if gold's decline continues, miners will eventually sell off too.

The buck broke to new highs today, climbing +0.16 to 99.70.  Euro closed down -1.26, closing its day at 106.45.  The Euro has fallen about 10% over the past month.  While gold has done poorly in dollars, it remains well above its lows when measured in Euros.

Equities attempted to rally today which failed, SPX printing an inverted hammer candle and dropping -2.75 to 2050.44.  The failed rally comes at a sensitive time, as SPX was attempting to move above its 200 MA.  These moving averages sometimes provide resistance and/or entry points for short sellers. 

JNK fell -0.14%, mirroring the action in the equity market.

Bond ETF TLT rallied modestly, up +0.17%.  TLT is now above its 9 EMA, but is running into resistance at the 200 MA.  Bonds remain relatively weak.

The CRB fell -0.95% today, marking a new closing low for this cycle.  Commodities continue to have periodic modest rallies followed by larger moves lower.   Downtrend remains solidly in place.

WTIC fell -0.92 to 41.12 today; yesterday's strong rally was at least half wiped out by today's price action.  After the NY session ended, the American Petroleum Institute released their inventory levels of US crude oil stocks which surprisingly fell 0.482M barrels, which caused oil prices to pop modestly.  This is a positive indicator for the Petroleum Status Report due out tomorrow.  Oil is struggling to put in a low here at $40/bbl.

In fact, commodities overall are struggling here.  Platinum broke to new 6-year lows last week and continues to fall, palladium (like silver) is nearing its lows, copper is making new 6-year lows every day just like platinum, and if you add in the strongly rising dollar which appears to be heading for a re-test of 100, it all adds up to an ugly environment for PM.  This is not just about gold.  Everything is dropping.

It occurs to me that this dreadfully extended sell-off just might be forced selling by some big player who is in trouble and is liquidating a large number of positions in the futures markets simply because they have to.  Perhaps Glencore?  If that's true, we're going to have to endure the pain until the liquidation ends - and then the rebound should be fairly impressive.

I do think it is fortunate that gold didn't sell off sharply following the break of support today, but I'm not sure that will continue to hold up if the rest of the commodity complex continues to drop.  The whole complex is quite oversold and "should" rally any day now, but - so far, no rally.  All we can really do is wait.

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.

3 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
pinch me, am I dreaming?

DOJ is pursuing criminal cases against executives over the avalanche of frauds from the housing bubble?  Am I dreaming?

Armstrong says "banker influence" peaked in 2013, and is now on the downhill slide.  I have been waiting and hoping that the banker overreach would eventually lead to consequences.  Maybe now is the time?  Dare I hope?

http://www.reuters.com/article/2015/11/18/us-royal-bank-scot-jpmorgan-mortgages-idUSKCN0T62G520151118#M9VxVbZZbuizbIwZ.97

Federal prosecutors are pursuing criminal cases against executives from the Royal Bank of Scotland Group (RBS.L) and JPMorgan Chase & Co (JPM.N) for allegedly selling flawed mortgage securities, the Wall Street Journal reported on Tuesday, citing unnamed sources.

People familiar with the probes said officials were trying to determine whether the bankers ignored warnings from associates that they were packing too many weak mortgages into investment offerings and whether they can prove that constituted fraud, the newspaper said. (on.wsj.com/1QKB76u)

If filed, the charges would be among the first pursued against specific employees of the largest Wall Street firms over the housing collapse, the WSJ said.

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Silver buying sweet spot is here...

As we go through these paper-driven down cycles, given the hand-to-mouth nature of the Silver supply chain, we can expect Silver to become scarce again as it goes on sale, especially if we actually get $13 handle spot numbers in the paper market.  There is reasonable availability of coins and bars right now, so this might be the sweet spot, right now, before the premiums start rising (again) and hence the actual price to obtain real Silver rises. 

Note that 90% ("junk") Silver never did become available again because, well.. they aren't making anymore of it, and those who do own it are holding firmly.  This represents a little recognized sea change in the Silver market which BrotherJohn spoke about here;

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
davefairtex wrote: DOJ is
davefairtex wrote:

DOJ is pursuing criminal cases against executives over the avalanche of frauds from the housing bubble?  Am I dreaming?

Armstrong says "banker influence" peaked in 2013, and is now on the downhill slide.  I have been waiting and hoping that the banker overreach would eventually lead to consequences.  Maybe now is the time?  Dare I hope?

http://www.reuters.com/article/2015/11/18/us-royal-bank-scot-jpmorgan-mortgages-idUSKCN0T62G520151118#M9VxVbZZbuizbIwZ.97

Federal prosecutors are pursuing criminal cases against executives from the Royal Bank of Scotland Group (RBS.L) and JPMorgan Chase & Co (JPM.N) for allegedly selling flawed mortgage securities, the Wall Street Journal reported on Tuesday, citing unnamed sources.

People familiar with the probes said officials were trying to determine whether the bankers ignored warnings from associates that they were packing too many weak mortgages into investment offerings and whether they can prove that constituted fraud, the newspaper said. (on.wsj.com/1QKB76u)

If filed, the charges would be among the first pursued against specific employees of the largest Wall Street firms over the housing collapse, the WSJ said.

 

Just propaganda.   No chance.  Also did the prosecution window expire due to Holder's Delay and Pay?

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