PM Daily Market Commentary - 4/4/2016

davefairtex
By davefairtex on Tue, Apr 5, 2016 - 7:31am

Gold fell -6.60 to 1217.00 on light volume, while silver was down -0.15 to 14.90 on moderate volume.  Falling commodity prices aren't doing gold or silver any favors.

Gold traded in a narrow range today, apparently heading for its 50 MA at 1211.  Gold has been unable to close above its downtrend line, but it also has a rough support zone from 1200-1210.  Which will prevail?  I think the odds favor a continued decline.  A drop below 1200 could lead to a lot of selling.

Silver dropped more than gold, finding support at its 200 MA.   Silver remains in a downtrend.  Gold/silver ratio rose +0.35 to 81.65.  When silver moves, it tends to be violent - that test of 14.60 could happen quite soon.  If it fails, things could get ugly.  Silver's fate is probably tied up with the rest of the commodity complex.

GDX dropped -2.93% on moderately light volume, while GDXJ dropped -2.76% on moderately light volume also.  GDX is below its 9 EMA once again.  Risk is increasing, although the miners remain strongest of all PM components.

Platinum fell -1.81% making a new low, palladium dropped -2.74%, and copper was down -1.27% - also making a new low.  Copper is now back below its 50 MA.  It all appears to be headed lower.

The USD dropped -0.09 to 94.52, a very modest drop.  Buck has chopped sideways for a few days now, and may be putting in a low, although so far it has yet to print a swing low.  If commodities are having a tough time with a sideways-moving dollar, things will likely worsen if the dollar actually starts to rebound.

WTIC moved lower along with the rest of the commodities, dropping -1.17 [-3.19%] to 35.46 and making a new low.  Oil has fallen for nine days straight, and the intensity of the drop is starting to increase.  Oil remains above its 50 MA, but that is fast approaching; we will see if it provides any support at all.  Personally I'm interested in buying oil at some point (oil at $35 doesn't seem sustainable long term) but I need to see some signs of buyers showing up before I even think about jumping in.  With these things, I don't have a price in mind - I just let the chart show me when a relatively high percentage buy point appears.  Today's candle was a "closing black marubozu" which has a very poor history of marking a reversal.  It could bounce, but odds are against it.

SPX dropped -6.65 to 2066.13, edging down off its recent high.  Healthcare and tech were up strongly, while energy fell, leaving the market down just slightly.  No change in trend for SPX.  VIX rose +1.02 to 14.12.

TLT rose +0.06%, continuing its slow uptrend.

JNK finally started to fall, losing -0.38% and apparently succumbing to falling oil prices. 

CRB dropped a big -1.33% and closed below its 50 MA for the first time in six weeks.  The commodity downtrend has started to accelerate.

The gold, silver, and commodity downtrend continues, and judging just from CRB, the decline is starting to accelerate.  When copper, platinum, palladium, oil, silver, and gold all fall - its probably best to stand aside until you see buyers start to appear.  So far: not yet.

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5 Comments

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Somebody wants, "Gold in the ground" today

And there is almost no cheaper way to buy ounces still in the ground than Seabridge (ticker; SA).

Up almost 10% on the day right now.  My largest single miner holding  : )

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5070
gold in the ground

JimH-

Can you tell us why you like SA?

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
Don't look now...

...but DB is back on the sick bed...and after all of that happy talk about a Euro recovery and all that.

By eye ball, that's a roughly -20% decline in 3 weeks.

Ouch!

Something is still wrong over there....

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Why SA

Gold in the ground!  Lots of it;

  Macro economics aside, higher gold prices are important for gold producers because they have so much leverage to its price both to generate cash flow as well as its impact on the value of their reserves. Seabridge Gold, for example, has the highest per-share leverage of any gold producer with 0.86 reserve ounces per share, compared to 0.15 from its nearest peer

http://www.fool.com/investing/general/2016/03/04/heres-why-gold-stocks-a...

So you are buying 0.86 ounces in the ground for each (today) $12 share.  When Gold is $10,000 per ounce.. that's going to seem like even more of a bargain than it does today  : )

SA is #12 in terms of total Gold resources (158M ounces) on this list of miners;

http://www.24hgold.com/english/listcompanies.aspx?fundamental=datas&data...

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5070
unhealthy charts

Chris-

I have to agree, that DB chart is really unhealthy-looking.  I take my eye off the beast for a few weeks, and it all heads south.

Price definitely looks like something bad is going on there.  I guess the sale of their derivatives book didn't fix all the problems.

Chart of DB:$BKX tells the sale: DB is seriously underperforming the bank index which itself looks relatively unhealthy relative to SPX.

 

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