PM Daily Market Commentary - 3/31/2016

davefairtex
By davefairtex on Fri, Apr 1, 2016 - 2:12am

Gold rose +8.90 to 1233.90 on moderate volume, while silver climbed +0.23 to 15.45 on moderate volume.  The falling dollar seemed to help gold and silver today to some degree, although gold still did not look particularly strong.

Although buyers pushed prices somewhat higher today, it was not enough to get gold to close above either the downtrend line or the 9 EMA.  To me it looks like the sellers come out whenever gold tries to rise above that downtrend line.   A good chunk of gold's move higher today was a currency effect from the falling dollar; the chart of gold in Euros looks worse, with the 50 MA acting as resistance.  Momentum remains down.

Silver rallied today and actually managed to keep more of its gains into the close than gold; 15.20 continues to act as support.  I'm not sure where the buyers are coming from for silver, since all the things that silver likes to track fell today.  If it happens for more than just one day we'll have to investigate more closely to see what might be happening.  Right now silver is choppy - there is no clear trend.

Miners fell again today, with GDX off -1.29% on very light volume, while GDXJ lost -0.96% on light volume.  Miners opened higher on gold's rally, but then proceeded to sell off all day long.  It was a low volume affair however; while the selling was constant, it was not particularly intense.  The close was a bit ugly.  It felt like some traders didn't want to hold the miners into Nonfarm Payrolls tomorrow.

Platinum rose +1.27%, palladium fell -0.05%, and copper dropped -0.21%.  Copper's ongoing correction has my attention.  Its not a good sign - silver is doing quite well given the copper downtrend.

The dollar fell again today, dropping -0.24 to 94.58, touching a new low of 94.29 intraday.  Tomorrow we have the Nonfarm Payrolls report out at 08:30 Eastern, and this report will probably set direction for the next week or so.  My guess: if we get a bad report, buck may break 94, which should theoretically help gold.  I am not sure what happens with equities; I guess it depends on how strong a signal we get from payrolls.

The buck has a decent support zone from 93-94.  A close below 93 could lead to a lot of selling; there is a lot of air below 93.

WTIC had a small drop again today, losing -0.19 to 38.11.  Oil has now dropped for 7 straight days.  The selling in oil is not particularly intense, but the daily declines set alongside a falling USD its not a good sign, since a lower dollar should support oil prices to some degree.

SPX closed down slightly, off -4.21 to 2059.74.  The trading range today was quite narrow; it looks as though traders don't want to take any positions ahead of Nonfarm Payrolls tomorrow.  Utilities were the only positive sector, with everything else falling.  VIX rose +0.39 to 13.95.  Momentum indicators suggest the VIX may be nearing a low.

TLT bounced back nicely, up +0.71%.  Hints of risk off, as well as a continuing impact from dovish Yellen-speak.

JNK moved higher again today, rising +0.15%.  Anything with a yield seems to get a bid these days, even with oil dropping.

CRB dropped -0.26%, an unfortunate performance on a day when the dollar fell.  CRB remains in a short term downtrend.

Gold in Euros remains in a clear downtrend.  If the buck continues dropping, it should cushion gold's fall, but for now it looks like the sellers remain in control.  Nonfarm Payrolls tomorrow: be ready, 08:30 Eastern.

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11 Comments

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
The miners are not so much buying the Gold smash today...

My SA is actually up today.... other miners down but not much.  The paper Gold market and price is a joke.  April fools! 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
miners have a bid

Miners definitely are retaining a bid today, as they have done now for many weeks.

Its amusing that you say the paper markets are a joke.  I didn't hear you complaining about them when price was rocketing higher.  I wonder why you only ever complain about the paper markets when the cycle turns bearish?

I know, gold should only ever go up in price.  Everything else might have a price cycle, but not gold.  When the cycle turns lower and gold drops, "the paper markets are a joke", but when gold rises, its all about "virtuous physical buying and shortages."  And this "heads I win tails you lose" philosophy is what passes for "analysis" among goldbug writers.  This well-honed patter is very convenient for them - it means they are always right.  Any projection that goes wrong, they blame on "damn paper markets."

Me, I don't complain about the price the market gives me.  I just try and spot the cycles.  Its a whole lot less stressful.  And (I think) I end up making more money too.  No need to rage against "paper markets" during the downcycle, I just step aside.  And then when the "virtuous physical buying" occurs (i.e. the cycle eventually turns, as it always does), I step back in.

Oh well.  You have your system, i have mine.

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 154
Paper Mkt Manipulation

I always like the back and forth b/t Jim & Dave. 

Personally, I'm somewhere in the middle. I'm very confident that this fraudulent paper Comex game will come apart at the seems at some point... The physical market will, in the end, be what matters...the question is only a matter of timing and the "squiggles" we look at here may or may not give us advance notice.  That said, price and volume to tend to be advance indicators of fundamental news, presenting a challenge for the big players if they want to cover their tracks  

When it unfolds, I wouldn't want to be one who was waiting for some moving average/RSI/line on a chart signal to buy my physical or be long miners. However, for the past few years (rigged or not) the lines on the charts have mattered and using the buy/sell signals that Dave points out here could be used to make a fair amount of extra "fiat" in the meantime, or at least give better entry points for accumulating metal for the long term. 

My take: keep/accumulate a core position of physical (first) and miners (second) and just hold them until this monetary experiment reaches completion, whatever that ends up looking like. In the meantime, if you have a little bit of spare $ that you can afford to lose, use your understanding of "how the fraudulent paper game is played" to make a bit of extra dinero to put into the other forms of capital Chris and Adam talk about. 

My $0.02.

steve

 

 

 

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
not a, "system"

Dave said,

Oh well.  You have your system, i have mine.

I don't have a system.. I have my own understanding of what the market is... what the price means today.  I have nothing against folks who try to time the squiggles.  I do though, as I have voiced many times before, think that commentators who fail to recognize the fraudulent nature of the PM markets, and the low paper prices that result from them, do a disservice to longer term wealth preservation investors.  The whole purpose of the paper price swings and the many years paper reinforced downtrend in the face of stunning fundamentals,  is to scare folks away from owning physical Gold and Silver.  Dave's commentary, which suggests to readers that the price is real, tends to reinforce this message.

What does, "real" mean here?  It does not mean that you cannot get physical at today's price.. for sure you can.  It does though mean that, as Penny states here, once the paper market fails, and the leverage is revealed, all hell is going to break loose.  Nobody knows what price will then balance supply vs. demand, but I think we all know it will be higher than today's price.         

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

I spent my capital buying a place to sleep. That works out at 20% return on investment. 

It is my hope that silver can beat that, therefore silver is my high risk? / high reward gambit. 

lambertad's picture
lambertad
Status: Silver Member (Online)
Joined: Aug 31 2013
Posts: 185
Gold and Bad: A Tale of Two Fingers

I bought a subscription to RealVisionTV the other day and it was well worth the student price of $120 for a year. I'm going to continue subscribing even after I'm done with school just based off of the few hours of interviews I've seen already. Anyway, Grant Williams has a great piece on there called "Gold and Bad: A Tale of Two Fingers", it was basically a play on Ian Fleming's Goldfinger, and it was funny and informative in a way that few people can achieve. I took a screenshot of a chart and here it is. There are of course different ways we could view the chart - heck, maybe it's all just coincidence. Maybe, it's coincidence that Germany received bars that were smelted before delivery. Maybe it's a coincidence that they only got 5 tons back in that first shipment and were told it will take 7 years to get it all back. Maybe it's a coincidence Comex holdings dropped like a rock and gold ETFs started getting rid of gold at just the right time. Let's remember it only took old Hugo 5 months to get his 99 tons from LBMA back to Venezuela. Strange, opaque, unusual, curious, odd, I can think of other adjectives to call this chart and these events, but the one word that doesn't come to mind is transparent. Anyway, the weather is great outside and I have some blueberries and fruit trees that need my attention. Thanks for the discussion Jim and Dave. 

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 154
GDX Candle

Any thoughts on the GDX candle today? ("Bullish ___ *insert Japanese word* Doji"?)

Looked very bullish to me, but not sure what to make of the lower volume... 

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
GDX candle

If this happened in the context of a larger downtrend, this would be a two-candle "thrusting" pattern, which can be as high as a 67% reversal chance.  However, its not in a downtrend, so its not a thrusting pattern.

http://www.candlescanner.com/candlestick-patterns/thrusting/

I do wonder sometimes if I ignore certain elements (i.e. "in a downtrend") how that might change the percentage reversal chance.

I'd agree, if we ignore the low volume, it looks like the basic uptrend is more or less continuing, which matches up with the gdx:gold ratio.  Its definitely not a sell signal for the miners.  They appear to be staying afloat even though gold is having some troubles.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
we agree

That's one place Jim and I agree on.  If traders lose confidence in the connection between COMEX price and the underlying metal, price will skyrocket because it will be as if 1600 "paper gold" tons disappeared from the world markets; that's an instant supply/demand imbalance which can only be fixed through higher prices.

My contention is, that snap in confidence probably only happens when there are much larger problems in the system, and this is something that happens as an "oh by the way".  For instance, if you can't get at your bank deposits due to a serious problem in the banking system, we probably also get a loss of confidence in COMEX as a side effect.

 

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1227
Black and white

Jim and Dave are like the yin and yang of the gold discussion. Jim argues for markets as they should be if fundamentals and reality actually mattered and Dave pragmatically argues for the markets that simply are todays reality. I appreciate both points of view.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
pragmatism

Mark-

Once today's reality changes, I will then be making Jim's argument right alongside him.  Given my pragmatism, I have no problem in adjusting my worldview as the facts on the ground change.  It is only closed-minded people who can't adjust.

I too appreciate Jim's point of view.  I don't dare make trades based on it (there is way too much stress for me when I swim against the current), but I appreciate it nonetheless.

 

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