PM End of Week Market Commentary - 11/27/2015

davefairtex
By davefairtex on Sat, Nov 28, 2015 - 2:12am

On Friday, gold fell -14.30 to 1056.10 on heavy volume, while silver dropped just -0.06 to 14.07 on heavy volume also.   Commodities overall had a bad day, and the dollar hit new highs for this cycle.

On the week, gold fell -20.60 [-1.91%], silver dropped -0.08 [-0.53%], GDX rose +0.37%, and GDXJ lost -0.48%.  Platinum fell -2.40% and made new lows, while palladium lost -2.38%.

Gold looked as though it was preparing for a break higher right up until Friday, when it was hit hard for a big loss, making a new multi-year low of 1051.60.  Needless to say, gold's swing low is no longer in play.  I didn't see the move connected to any report release - the first spike lower was at 08:02 Eastern, and the low was reached an hour later at 09:03.  It also did not appear that gold's move lower was tied to the movement of anything else.  While it was a bad day for commodities overall, gold more or less dropped on its own.  This doesn't happen all that often; usually gold moves in concert with other things.  Its enough to make a guy suspicious - a light trading day, right at the end of the month, etc.

Silver made a new low on Monday at 13.86, but since then it has drifted sideways and slightly lower, finding buyers at COMEX whenever it dropped close to 14.  Silver still runs into selling on any move over 14.20, which suggests to me Managed Money is still loading up short.  The commercials have probably covered most of their short position by now, and so we are probably ready for silver to bounce.  I suspect the buck will be the deciding factor.

Miners

The miners moved sideways this week, as they have for the past three weeks, in spite of gold's continued move lower.  On Friday, miners did not sell off that much even though gold was hammered through its previous low.  I can't emphasize enough how different this behavior is from what happened in 2013 and 2014.  GDX has strong support in the 13-13.50 range.  I believe miners are being accumulated by big money.

The USD

The dollar rose +0.45 to 100.07 this week, making a new closing high for this cycle on Friday.  The buck continues to chug higher ignoring my computer's short recommendation, the MACD, and my own feeling that it should have reversed at "round number 100."  USD remains above its 9 EMA, continues to rise, and also continues to put pressure on the commodity complex.

The Euro is currently at 105.95, apparently heading for a re-test of the 105 low set back in March.

US Equities/SPX

SPX moved sideways this week, rising just +0.94 to 2090.11.  The holiday-shortened week saw four days of light trading in a relatively narrow range.   SPX remains above all 3 moving averages.  VIX fell -0.35 to 15.12.  Computer has mixed feelings; it is now short Nasdaq, but remains long SPX.

Gold in Other Currencies

Gold fell in most currencies; gold only rallied in BRL and RUB.  Gold in XDR was off -17.70.


 

Rates & Commodities

Bonds (TLT) continues to move slowly higher, up +0.43%.  TLT is creeping up on its 50 MA.  A cross of the 50 would be bullish.  My guess is, it would take a strong move lower in equities to push bonds higher.  Computer is long bonds.

Junk bonds (JNK) printed a swing low this week, rising +0.28%.  If JNK forms a low here, its a risk on signal, although JNK remains below all 3 moving averages and still looks quite bearish over both the medium and long term.

The CRB (commodity index) fell -0.27% on the week.  CRB looked a bit stronger at the start of the week, but lost all its gains on Friday's -1.32% move lower.  Commodities have been chopping mostly sideways for the past two weeks.  If it can put in a low here, that would help PM.

WTIC rose +0.31 [+0.75%] to 41.77 - it was doing even better until a fairly large sell-off happened on Friday.  Computer is long crude - but only by a slim margin.  We have an OPEC meeting coming up on Dec 4th.

Physical Supply Indicators

* I was unable to collect data on Shanghai this week.

* The GLD ETF tonnage on hand fell -5.95 tons, with 654.80 tons remaining

* Gold dipped briefly into backwardation this week at COMEX, but by Friday is back to neutral.

* ETF Premium/Discount to NAV; gold closing of 1057.50 and silver 14.08.

 PHYS 8.68 -0.71% to NAV [down]
 PSLV 5.42 +0.02% to NAV [down]
 CEF 10.03 -11.35% to NAV [down]
 GTU 37.64 -2.67% to NAV [up]

ETF premiums were mixed, but mostly down.

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) shows no particular premiums this weekend.

* HAA big bar premiums are higher for gold [2.67% for 100 oz bars in NYC], lower for silver [3.57% for 1000 oz bars in NYC].  Silver Eagle premiums rose [23.22% in NYC].

Futures Positioning

Due to the holiday-shortened week, there was no COT report.

Moving Average Trends [9 EMA, 50 MA, 200 MA]

Do I see some green in the trends map?  Silver miners did well this week.  Who knew?  Miners are clearly outperforming.  While metal at the COMEX is being pounded lower and lower, the miners continue to do relatively well.  Interestingly, gold is now performing worse than silver, at least over the last 52 weeks.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Silver Miners SIL 2.06% -29.60% rising falling falling rising ema9 on 2015-11-24 2015-11-27
Senior Miners GDX 0.37% -26.26% falling falling falling rising ema9 on 2015-11-27 2015-11-27
Silver COMEX.Silver -0.11% -9.51% falling falling falling falling ma50 on 2015-11-04 2015-11-27
Junior Miners GDXJ -0.48% -25.07% falling falling falling falling ema9 on 2015-11-27 2015-11-27
Gold COMEX.Gold -1.75% -10.04% falling falling falling falling ma50 on 2015-10-30 2015-11-27
Platinum COMEX.Platinum -2.28% -30.95% falling falling falling falling ma50 on 2015-11-03 2015-11-27

Gold Manipulation Report

I don't have access to my more detailed gold and silver database so I was unable to run the manipulation report.  I did see three different 1-minute spikes Friday morning; they didn't happen "after hours" but they definitely served to smash gold through support.  My guess is, Friday's move fits the profile of a deliberate operation, even though it didn't happen at the usual time.

Summary

Gold's swing low from last week was negated by Friday's breakdown.  The ever-rising dollar isn't helping, commodities refuse to rally, and it does appear that someone is deliberately moving gold lower.  At the same time, miners are being accumulated.

The gold/silver ratio fell 1.06 to 75.06, a small improvement but still not enough to turn the ratio bullish.  GDX:$GOLD ratio rose this week - it is moving slowly higher, which is unusual in the face of dropping gold prices.  GDXJ:GDX moved lower, and is neutral.

No COT report this week.

Gold and silver big-bar physical shortage indicators are unchanged; in the west, ETF premiums were mostly lower, and GLD tonnage dropped.   Big bar premiums for gold at HAA were higher, silver's premiums dropped, while silver coin premiums rose, but not by all that much.

The rally that I expected off gold's swing low didn't happen.  There just weren't enough buyers at COMEX to push price through that 9 EMA.  I also blame the ever-rising Dollar.  My guess is, Managed Money is the force pushing prices lower, but we will only know for sure once the COT report comes out Monday.  This is another great example of why that 9 EMA crossing is an important signal to wait for.  My computer is now short both gold and silver, but it remains long the miners.  I personally wouldn't short gold here - but neither would I jump in long.  Not until I see that 9 EMA crossing.  And even then, gold remains in a long, medium, and short term downtrend, so caution is still warranted.

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3 Comments

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1216
China's yuan set for IMF reserve status

Thoughts on how this might affect the apple cart of currencies and the PMs?

 

http://www.bbc.com/news/business-34957580

China's yuan set for IMF reserve status

The International Monetary Fund (IMF) is expected to announce on Monday that China's currency, the yuan, will join the fund's group of international reserve currencies.

Just the US dollar, the euro, Japan's yen and the British pound are currently part of this select band.

Earlier this month, IMF head Christine Lagarde backed the yuan's inclusion.

If the decision is made, the yuan is likely to join the basket next year, experts said.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Online)
Joined: Jan 2 2010
Posts: 1428
Mark Cochrane wrote:Thoughts
Mark Cochrane wrote:

Thoughts on how this might affect the apple cart of currencies and the PMs?

 

http://www.bbc.com/news/business-34957580

China's yuan set for IMF reserve status

The International Monetary Fund (IMF) is expected to announce on Monday that China's currency, the yuan, will join the fund's group of international reserve currencies.

Just the US dollar, the euro, Japan's yen and the British pound are currently part of this select band.

Earlier this month, IMF head Christine Lagarde backed the yuan's inclusion.

If the decision is made, the yuan is likely to join the basket next year, experts said.

This will cause holders to sell US bonds and buy Chinese bonds.   Will the US let this happen when unfunded liabilities are about to explode?   I see a good chance of global war first.  Of course the FED could step back in with QE4!

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5070
IMF reserve status

I think there is some confusion here on how all the parts work together.

The XDR is a fixed-percentage basket of currencies.  It is being expanded to include the RMB.  That doesn't interact at all with the decisions of the individual central banks as to the composition of their reserves.  After this decision by the IMF, any central bank can decide to have their reserves be 100% USD, or 100% RMB, or 100% GBP - or any other allocation they want to have.

In short, nobody will be forced to buy anything.  Nothing needs to change, unless they want it to - and they could have had RMB as their reserves prior to this decision.  As stated in the article:

Initially, the currency's inclusion would be largely a symbolic gesture, analysts said.

I suspect it does have reporting requirements, in that those central banks that do buy RMB for their reserves will now have to break them out in the stats.

 

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