PM Daily Market Commentary - 1/5/2016

davefairtex
By davefairtex on Wed, Jan 6, 2016 - 4:51am

Gold rose +3.10 to 1077.00 on moderate volume, while silver climbed +0.12 to 13.85 on moderate volume as well.  Given a strong dollar rally, a drop in commodity prices, and a drop in oil, it was a decent performance by PM today.

Gold was able to close above its downtrend line today; I had to use a thin line and zoom in to verify this magnificent event, so this isn't exactly a conclusive move but its better than a poke in the eye I guess.  Since the new year, gold is making steady progress and if it can continue, we should see a crossing of the 50 MA relatively soon and perhaps even a break above the 1088.30 prior high.  I should be more positive; gold actually was able to rally in the face of a strong dollar today, which is no mean feat.

Silver staged a decent rally today, and managed to keep much of its gains into the close.  This was enough to push price right up to the 9 EMA but not over it.  Given a weak performance in crude oil today and yesterday's bearish-looking inverted hammer candle for silver, I'm actually thinking this was a good showing for silver.

GDX fell -0.50% on light volume, while GDXJ climbed +0.20% on very light volume.  We really can't read too much into today's price action given the light volume, but its nice to see both ETFs remaining at/above their 50 MA lines.

Platinum rose +0.54% and managed to close just above its 50 MA, while palladium fell -1.55% and appears to be headed for a re-test of its lows.

The buck staged an impressive rally, climbing +0.53 to 99.45, and rallying over the previous high at 99.34.  The dollar appears to be moving towards a re-test of the previous high at 100.60, hit immediately prior to the fateful ECB meeting where Draghi didn't print nearly enough money.  One month later, the Euro has lost most of the gains from that post-ECB rally, and appears to be moving back down towards the 105.55 low.

SPX staged a very lukewarm rally today after yesterday's big Shanghai-induced sell-off, gaining +4.05 to 2016.71.  It looked like a bit of short covering, but no major move higher.  Momentum still seems to be down after today's move.  VIX fell -1.36 to 19.34.

JNK rose +0.20%, which was enough to move it back up to its 9 EMA.  Chart still looks weak for JNK.

Bond ETF TLT fell -0.40%; right now, the trend appears to be more or less sideways for bonds.  They are up one week, and down the next.

CRB dropped -0.81%; commodities don't generally like a stronger dollar.

WTIC sold off for most of the day, falling -0.74 [-2.01%] to 36.14.  Oil got a modest end-of-day pop at 16:30 after the API report showed a 5.6 million barrel drop in oil inventories, but it was only enough to drag oil off its lows.  Oil now appears to be headed lower to re-test the 34.53 low set in mid-December.  Its possible the Petroleum Status report tomorrow might provide a reversal, but that positive API report didn't seem to help much, so I'm not counting on it.

PM is crawling higher right now; it doesn't appear to be in any great hurry, but it is moving higher.  Money is flowing into the buck, but not into equities, bonds, or commodities.  Shanghai stopped dropping but was unable to actually rally.  Dollar is rallying strongly right now.  A break to new highs for the buck is likely to be bad news for a lot of different things.

My computer likes gold, silver, miners, and the buck.  It is short equities, oil, and natgas.  It will be interesting to see if PM can keep rising while oil continues to fall.

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14 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5423
recent big moves in CNY (RMB)

The big green candle in Aug 2015 was supposed to be just a one-shot devaluation.  It looks like money is continuing to flee China, for a total of a 5.8% currency move over the past six months.  This currency move doesn't bode well for either the Shanghai exchange, or commodity prices.

Just the past few days we've seen a big move lower in CNY (which results in a jump higher for USD/CNY).

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 654
Does the USA have a secret plan

to bring down China, a la financial manipulations? Or maybe not so secret?  China does SEEM quite new and unsophisticated to all of these Wall Street financial genuises.  Just wondering.

May the FORCE be with us!

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1617
"Nobody cares" by Grant Williams

I love Grant Williams' sense of humor and insights.  If you do too, you're going to love this explanation for why gold is languishing at such low prices instead of soaring on the fundamentals.  NOBODY CARES.

One snippet: more people search the internet for "raw sewage" than for "gold".  laugh

Russellp's picture
Russellp
Status: Member (Offline)
Joined: Nov 26 2015
Posts: 6
Can I appeal to the experts?

Hi,

New here to PP, and the Gold and Silver group.  I have been acquiring physical PM as funds allow, but am wondering what might be the best thing for my IRA?  I am pretty much done with that racket as far as contributions go, and I just have a few bucks sitting in a money market settlement fund at the moment.

Is there a PM ETF that people here feel ACTUALLY HOLDS THE PM?

Or, might something like GDX or GDXJ be a good idea?

Thanks in advance,

 

Russ

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5423
PM ETF

Russell-

Best I can tell, the Sprott ETFs actually hold their PMs.  My evidence is that - not that I have tried it myself - people can actually turn in the shares and take delivery of actual physical bars.

The symbols for these ETFs are PSLV and PHYS.  And right now the premiums are pretty reasonable.  Assuming you can buy individual items for your IRA.

Jim?  Do you have any feelings about this?

(FD: I own some PSLV right now in my own IRA)

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5423
gold breakout

So we have ourselves a gold breakout today.  Right now our favorite metal is trading at 1093.90, having broken above the prior high of 1088.30.  If we close here, that's relatively bullish - gold will have popped above its previous high, and will be clearly above its 50 MA.

It amazes me that gold is doing so well given the fact that crude has been pounded below its previous low, and is now trading in the neighborhood of $33.80/barrel.  OMG.  (I am shaking my head even as I write this)

I never would have believed oil at $33.80.  Thank God for my computer model, which kept me from foolishly buying low priced oil that seems to be dropping in price every day...price is so low I just can't bear to short it, but price just keeps falling and falling.

I'm not sure oil is at a capitulation low just yet.  My gut says we need another day or two.  The Petroleum Status Report shows that while crude inventories dropped -5.1M barrels, gasoline inventories rose 10.6M barrels this week.  Its an embarrassment of energy riches.  We can tell our grandchildren about this sort of thing: crude at $33.80 and falling, unleaded gasoline at $1.25 - and falling.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5423
nobody cares

Tom-

There aren't enough thumbs up I could possibly push to express my agreement with Grant's position on this matter.  The man is a genius.  He says it so much better than I do, but I agree with him on every particular.

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Sprott Trusts PHYS and PSLV

Dave asked,

Jim?  Do you have any feelings about this?

Based on my reading of the prospectus for each, and commentaries by others on the same subject, these are as real as they get.  I own both in IRA's.  You have to be a fairly big holder to take physical out of PHYS.. ie.. they are not going to split a bar for you.. but if you are a big holder they can't stop you from removing your Gold.  As well, the Gold is held outside the banking system, at the RCM.  I like that   : )

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Just a reminder folks...

Of how Dave and I differ on our view of this Gold market.  When it comes to Western investor sentiment.. I agree with Grant W.. nobody cares.  But.. Eastern investors do care.. .they are buying like crazy.  The current price in no way reflects this demand.. it rather reflects an artificial reality created by the paper futures market. 

Dave thinks today's price is a reasonable balance point between supply and demand.  I disagree most vehemently, and I take the same line as Jesse does here;

When gold finally breaks out of the Banks’ grip you won’t be able to chart its moves fast enough. It is being smothered by a blanket of undeliverable derivatives, and the realization and reckoning of this overhang will be nothing short of spectacular, a sort of 2008 in reverse.  -“Jesse” of Jesse’s Cafe Americain in an email exchange

http://investmentresearchdynamics.com/the-federal-reserves-salvation-arm...

It's going to get interesting soon....

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Dunno

Perhaps BB was right. Gold is an archaic relic and we are off-loading it to the Chinese as fast as we can. (I am always amazed how much damage I can do with this language invention.) 

I don't know if these charts that I ripped off Kitco are inflation adjusted, or even how one would obtain inflation coefficients that remotely reflect reality.

If these were classic bubbles then silver is closer to reality than gold. 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Arthur

You are looking at the charts.. they are propaganda.  Go ahead.. let yourself be lulled.  Let yourself be drugged by them.. most others are. 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Jim.

Lulled? Me? You've got the wrong person there Jim.

I am hedging my bets, chasing all sorts of rabbits down their holes. The things I have turned up would astound you. 

Not much point living in an echo chamber.

Your obedient ferret

Arthur. 

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 654
PHYS: a big holder #8

JIm.  A definition of this please.  How many ounces or whatever?

Russellp's picture
Russellp
Status: Member (Offline)
Joined: Nov 26 2015
Posts: 6
Thanks Everyone!

I have a limit order at a slight drop for both CEF and PHYS.  I liked what I read and heard about both of them, now if the PM market would only settle back a bit so my order will go through!!!

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