PM Daily Market Commentary - 4/18/2016

davefairtex
By davefairtex on Tue, Apr 19, 2016 - 12:05am

Gold fell -1.80 to 1234.00 on moderate volume while silver dropped -0.02 to 16.23 on moderately heavy volume.  Gold tried to move higher in both Asia and London but then sold off once the US market opened and it never really recovered.  A weaker buck should have helped, but didn't.

Gold appears to be drifting lower; today's price action took gold back below its 50 MA, albeit not by very much.  I keep expecting gold to have a brisk sell-off which I will then look at buying, but so far, no sell-off has materialized.  Really, there was not much change in gold's situation today, just more evidence of relative weakness.  Unless we get some news that causes everyone to rush into gold, I think lower prices are likely.  Sometimes these things drift along for a while and then once we're all tired of waiting for something to happen, all of a sudden down they go.

Silver also ended up more or less with no change, except it sold off in Asia and managed to recover prior to the US open.  I'm guessing that pattern had to do with oil, which opened down $2 and steadily rallied through to the close.  Silver remains quite near its recent high, and continues to look strong.

Miners more or less traded sideways today, with GDX off just -0.09% on light volume, while GDXJ was up +0.31% on moderately light volume.  Both miner ETFs remain near their highs, above all 3 moving averages - much like silver - and their charts continue to look quite strong.  The weakness gold is displaying is not evident at all in the mining shares.

Platinum fell -0.71%, palladium dropped -0.70%, while copper rose +0.46%.  Copper has now moved back above both its 9 and 50 MA, but at $2.16 it still has a long way to go to be in any sort of longer term bullish situation.

The USD fell -0.23, dropping to 94.46 and is now back below its 9 EMA.  The dollar's swing low from last week doesn't seem to have resulted in any real upward momentum for the buck; it has fallen for two days in a row now.

The OPEC conference in Doha ended without any agreement - the struggle between Iran vs Saudi over a production freeze remains unresolved.  Oil opened in Asia down almost $2 as a result, but it climbed steadily all day long, and by the close in NY it was only off -0.28 [-0.67%] to 41.47.  Volume was heavy, and to me this price action looks quite bullish.  When a market rallies on bad news, that's about as bullish as you can get.  Based on this, I don't think we've seen the near-term high for oil just yet.  Oil equities were especially bullish, up +1.65%.

SPX rallied strongly today, up +13.61 [+0.65%] to 2094.34, led by the rally in energy.  Dumb money confidence continues to move into excessively optimistic levels, which usually happens near a top, but so far, the dumb money has been right.  VIX fell -0.27 to 13.35.  In recent years, buying the VIX at 12.50 usually does fairly well, but we aren't quite there yet.

TLT fell -0.43%, dropping down rest right at its 9 EMA.   TLT remains in an uptrend, but the ongoing equity market rally is causing it some difficulty.

JNK popped +0.69% today, a new high and a clear sign of even more risk on.  JNK is up more than 10% off its mid-Feb lows.

CRB rose +0.27%, still trying to recover.

No resolution yet for gold.  Risk remains high given the COT report; the commercials will only make money if gold prices decline from here.  Unless some macroeconomic event occurs, I see lower prices ahead.

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8 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
Armstrong: upside silver manipulations

Armstrong asks the question that I always ask: "Why are manipulations only down?"

https://www.armstrongeconomics.com/markets-by-sector/precious-metals/selling-bullshit/

... They were all bullish during the Buffet silver rally. It is a matter of fact I warned our clients they would double silver take it to $7 by January and then crash it again. How many people lost money on that one listening to their nonsense? [I] have no respect for people preaching just one side. They have cheered ever rally which has been a manipulation and people have lost their shirts because they never say sell. I even spoke directly with some of these people and they KNEW also it was Buffet in 1993 and in 1997. Did they come out and warn people do not buy this is a manipulation? NO! They are silent for manipulations that go up. Why? Were they getting paid? Why are manipulations only down?

Try this on for size.  Let's assume you were a big bank, with a bunch of friends at the other big banks, and you and your friends were able to manipulate the market effectively over the longer term.  Would you prefer to

  1. hammer the price down to a low level and keep it there, or
  2. encourage the price to oscillate, so you could buy the lows, sell the highs, and profit on the movement?

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
PM's Feeling Frothy..

Lots happening... New Yuan-based PM fix is supposed to go live today.  D-bank turning State's evidence on PM price fixing is very recent news...

You can view this morning action as an upward manipulation.. or you can view it as the beach ball, which has been held deep underwater by those who bring you the dollar, and the yen, and the Euro, starting to surface.  I think folks know which scenario I defend.   

 

http://www.silverdoctors.com/silver/silver-news/deutschebank-turns-state...

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Where we are in this PM Bull.. some context

Picture

http://www.goldsqueeze.com/home/comparing-the-1970s-gold-bull-market-to-...

Note:  Past performance does not guarantee future performance, but history often rhymes.     

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
silver on a roll

JimH-

It's not "PM" doing well, its silver.  The gold and silver charts are quite different.  Something lit a fire under COMEX silver about 8 trading days ago, and its been moving up strongly ever since.

I can't say what that is - I don't see anything that correlates with silver's move. 

I'm absolutely not saying this particular move is an upside manipulation.  The article's timing was unintentional; I thought it posed an interesting question, that's all.

I believe this move is all about managed money going long - at least based on the most recent COT reports anyway.  Something lit a fire under them and its still burning strong.  Maybe its just as simple as the unwind of the gold/silver ratio.

The falling dollar might be helping too.

You can view this morning action as an upward manipulation.. or you can view it as the beach ball, which has been held deep underwater by those who bring you the dollar, and the yen, and the Euro, starting to surface.  I think folks know which scenario I defend. 

Yeah, the "goldbug beach ball theory" explains perfectly why the chorus of "buy buy buy" at the top in 2011 wasn't actually wrong.  See, according to goldbugs, price cycles don't exist - well, not for gold and silver anyway.  Well they shouldn't, anyway.  Because gold & silver price cycles don't exist, clearly it is only gold and silver that have been held deep underwater.  The rest of the commodity complex fell on its own during our recent four year bout of China-driven deflation.

Its a beach ball.  Held deep underwater.  Trust us.  We certainly weren't wrong about that buy call in 2011.

I'm happy about silver, believe me.  I just think the goldbug beach ball theory is about as credible as WTC-7 falling down because of steel melting from that office fire.  :-)

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Silver...

"As the market expands to reflect the growing interest in gold by Chinese consumers, so too will China's influence increase on the global gold market."

It may already be working: according to Reuters, one reason for today's spike in silver is due to "heavy buying of silver in Shanghai, and that has triggered buying in gold as well," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

http://www.zerohedge.com/news/2016-04-19/china-launches-yuan-gold-fix-ex...

 

dryam2000's picture
dryam2000
Status: Gold Member (Offline)
Joined: Sep 6 2009
Posts: 293
It's mostly about the USD

I think the main underlying force is USD weakness, although the new Chinese exchanges definitely are not hurting anything.  A lot of problems developed from the marked strengthening of the USD over this last year:  1)  price of oil plunged, 2)  price of oil plunging has caused huge stress in the oil exporting countries highly dependent on those revenues, stress on the US energy companies, and big time financial industry stress related to sower energy industry loans, 3) the EM economies were being blown up, 4) oil was much more costly in nearly all countries because of the global weakness of all currencies relative to the USD.

Managing the USD lower would alleviate many of these stresses, give a boost to the general U.S. equity markets (the favored signaling mechanism to John Q. Public from the politicians in regards to the supposed health of the economy), ease a lot of geopolitical tensions, and the politicians can exclaim how a lower USD will help U.S. businesses be more competitive in the international markets.  Plus, simple math tells us that the most indebted country in the history of the world can not afford interest rates going up the least bit or it's game over pretty quickly, and rates probably need to be a cut back completely to zero (or negative....whatever that means. In my mind, negative interest rates are like taking the square root of negative numbers).

My thinking is very much from a high inflation versus deflation standpoint, and I'm not yet convinced which side the axe is ultimately going to fall although I'm leaning towards high inflation.  Much of where the "markets" are going to go will be highly dependent on the relative value of the USD.  I have to admit I got scared out of my miner positions last Thursday morning with such a big run the past 3 months and the sense the tide was going to turn.....rule to self:  Don't make financial decisions when being distracted by work.  Anyway, after having time to think I went full in at the opening Monday morning.  My financial assets are back to a good balance of USD's, physical, and miners (mainly silver).  Small moves down in the USD will likely give large moves up in the silver miners.  I'm fairly confident the USD will continue to go down for the reasons listed above, and this is the one financial solution that can help stabilize the very serious destabilizing forces from the low oil price.  I would exercise much caution when it comes to shorting these markets, and I would even be cautious "hiding" completely in USD's.  Our friends up north in Canada saw their Loonie drop about 25% over the past year, not unlike a stock dropping 25% or some commodity dropping 25%.  I would only own USD's as an investment if I also owned a solid non-USD hedge such as the silver miners. 

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1227
It is not just PMs

Ok, maybe the 16,000 contract gold dump (7,500 silver) were just profit taking (link).

And the Euro moves make perfect sense to somebody with a dizzying intellect.

And today's initial jobless claims that are the 'best' since 1973(!) are showing us everything is hunkydory (never mind the thousands of pink slips from Intel).

And this commodity trader is probably delusional about soybeans

774K of soybeans traded today and that would be a record by nearly 160K contracts as yesterday set the record at 615K.

Over 88K Jly/Nov traded today and 97K May/Jly traded.  Unheard of non-roll numbers.

Meal volume was 270K and we have to think that was a record as well but not 100% on that one.

And oil

What explains the move in Crude? Ok, I could try and put some sort of “rationality” on the initial move from $26 - $40 (as crazy as it was), but the action in the oil market since Sunday’s “about face” in Doha?  No way anything other than pure, simple and outright manipulation can explain these last 3 days of action in the crude oil market… nothing…

I don't claim to know anything about markets and the more I learn the less I know but all of this news coming well before noon on a single day really stretches the bounds of belief for it being anything approaching 'normal'.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
ECB meeting

Mark!  There was an ECB meeting and announcement today!  That drove everything.  That move in the Euro should have been the clue.  I'm guessing Draghi said something that caused traders to panic out of the Euro.

And assuming that, just because that poster cannot explain the move in oil, therefore "its manipulation", is a massive attack of hubris.  And they were probably short oil, too.  :-)

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