PM Daily Market Commentary - 1/27/2016

davefairtex
By davefairtex on Thu, Jan 28, 2016 - 7:30am

Gold rose +5.00 to 1124.90 on heavy volume, while silver fell -0.02 to 14.50 on moderate volume.  The FOMC announcement at 14:00 Eastern was the primary driver of prices today; it was after FOMC that gold had its rally.

Gold continued to move higher, breaking out a few minutes after the FOMC announcement at 14:00 Eastern, once it started to become clear that the equity market would drop as a result of the announcement.  For those that automatically expect gold to get pounded following FOMC announcements, this was likely a pleasant surprise.  I think its as simple as the current negative correlation between gold and equities; when equities sold off following FOMC, that provided a lift for gold.

Silver tried following gold higher following the FOMC announcement, and for a time it succeeded and it even eeked out a new high, but it was unable to hold its gains into the close.  And yet, has not yet managed to rally above its previous high at 14.64, and compared to gold silver continues to look relatively weak.  Given silver's new high yesterday and weak performance, it will be very easy for silver to print a (bearish) swing high tomorrow.

Miners followed gold higher today, with GDX up +1.65% on moderately heavy volume, while GDXJ climbed +1.92% on moderate volume.  The GDX:$GOLD ratio has yet to recover to the levels seen prior to the big sell-off, but GDX is making steady progress and is back to being even for the year - contrast that with SPX which is down 8.5% over the same timeframe.

Platinum rose +0.83%, palladium was up +1.36%, and copper rallied again, up +1.10%.  Copper specifically has risen 6 days out of the last 7 and is now back up to its 50 MA.  Is this an early signal of improvement from China?  Let's see if copper can interrupt the pattern of "lower highs" first.

The buck fell -0.18 to 98.95; the dollar did not particularly like the FOMC announcement, but the selling was not so heavy so this must have been relatively in-line with what the market had expected.

SPX rallied in advance of the FOMC announcement, but sold off immediately afterwards, eventually closing down -20.68 [-1.09%] to 1882.95.  This happened alongside a relatively strong rally in oil, so this suggests there is an underlying weakness in equities that goes beyond energy.  VIX was all over the map today, but closed up +0.61 to 23.11.

JNK fell -0.24%, little changed on the day.  JNK is at a sensitive juncture - it has yet to decide if it wants to move into an uptrend, or roll over into another move lower.

TLT was mostly unchanged, down -0.02%; it remains above its 9 EMA and thus in an uptrend.

CRB rose +0.92%, climbing above its 9 EMA and - like oil - trying to rally after a very long move down.

WTIC rose +1.65 [+5.41%] to 32.16, rising strongly in spite of a bearish-looking Petroleum Status Report.  In fact, the oil rally happened immediately following the bearish report.  Rallies on bearish news do happen sometimes - either the news wasn't as bearish as expected, or the market is just out of sellers.  Perhaps everyone who wanted to go short is already short.  Whatever the underlying reason, this is a good sign if you are looking to go long.

Gold and the miners continue to look good; silver looks less good.  Oil may be putting in a low.  Certainly it seems to have support around the 30 price level.  Copper is starting to recover - give it another week, and perhaps we will start to see a commodity trend change.

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5 Comments

pieffe's picture
pieffe
Status: Member (Offline)
Joined: Nov 3 2013
Posts: 6
silver manipulation ????

Hy Dave...what about  that sharp move down on silver in LMBA fixing today ??? see zerohedge for reference. ..THANKS again for sharing your thoughts on MK behavior. ..

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
silver fix article: ZH

pieffe-

Great article reference - here's the link:

http://www.zerohedge.com/news/2016-01-28/silver-market-disarray-after-benchmark-price-fix-manipulation

Its pretty unpleasant.  The fix was actually set at $13.58 today - while the current price was trading at $14.42.  Insanity.  If I were a silver mine and I had a silver forward contract expiring today, valued at $13.58, I'd be massively annoyed.

Not knowing the details with how the fix was arrived at, I can't say if this was manipulation per se (at least, it wasn't the standard run-the-stops hosing that happens now and then) - it seems more like a side effect of whatever-it-was that took place during the fix operation that seemed to have failed today.

My spike detector doesn't show unusual spike activity happening around the time of the fix.

"There's gotta be a better way"

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1216
Got to wonder...

The LBMA Silver Price – the crucial daily benchmark used by producers and traders around the world to settle silver products and derivatives contracts – was set at $13.58 per ounce.

At the time of the auction, which begins at 12 noon London time, the spot price was at $14.42 per ounce while the futures price on the CME was at $14.415, leaving a number of market participants extremely confused as to what has happened. (link)

I have to wonder just who had to settle today? Any bets that the part(ies) that got hosed were not on the this list of those few entities who 'fix' the price?

The price is set every day by six participants – HSBC, JPMorgan Chase Bank, Mitsui & Co Precious Metals, The Bank of Nova Scotia, Toronto Dominion Bank and UBS – using a system run by CME and Thomson Reuters.

You also have to wonder  if someone or several of them on the price-setters list were on the winning side of today's theft?

We can all rest comfortably though because:

The matter is being investigated internally, FastMarkets understands, so CME has no official comment at this time.

Just another day in the crooked casinos we call """markets"""...

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 772
if you want to defeat the London Fix,

If you want to defeat the London Fix, you need to set up a free market, without futures.
To set up a free market, you must make those who desire to trade, deposit PMs with the trading company in blocks the size that they want to trade.Then they can sell to the tune of that block, until they buy another block from someone else.

Then you assay everything that is deposited, and insure it, and charge your traders accordingly.

Do that, and people can buy lowball futures, take delivery, transfer the PMs to your trading company, and sell.

That will continue until the trading companies start shipping lead-tainted gold.

Then you've got to be prepared to pursue it, against companies that might play dirty.

For example, the British Lloyds of London insured asbestos. When they realized how bad an investment that was, they opened up the investment of auto insurance to wealthy Americans. According to the claims of a lawsuit by the Americans, they then swapped docs, and billed the asbestos the the Americans. However, this was not proven in court, because the American plaintiffs were suddenly all murdered; then the heirs continued the lawsuit, but the law offices in Texas and James City County Va were burgled, so there was no more evidence.

If you feel capable of playing ball with such british lords as that, then feel free to enter the game.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
If you feel capable of

If you feel capable of playing ball with such british lords as that, then feel free to enter the game.

It is indeed cheering that the Aristocracy haven't lost their sense of humour,  Michael

One gets tired of effete  degeneracy. And it is so draining on the families fortunes. You have cheered me up no end. There is hope! 

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