PM Daily Market Commentary – 03/04/2021
Gold fell -14.10 [-0.82%] to 1696.70 on moderately heavy volume, and silver plunged -0.81 [-3.09%] to 25.37 on moderately light volume. The buck shot higher [+0.77%], crude screamed higher [+4.84%], SPX fell [-1.34%], and bonds plunged also [the 10-Year yield rose +10.0 bp]. Ouch.
Something happened just after noon today – roughly around 12:10 Eastern. Most everything – except crude and the dollar – started to sell off around that time. The buck staged a strong rally – all of the gains in the dollar today came from this move.
Gold chopped sideways until 12:10, after which it dropped about $25 in two hours, recovering some of the losses by the close. The long black candle was a bearish continuation, forecaster climbed, but remains in a downtrend. Gold is in a downtrend in all three timeframes.
Gold/euros inched up -3.20 [-0.23%] to 1414.49 on moderately heavy volume. The long black candle was a bearish continuation, forecaster climbed, rising into an uptrend. Gold/euros is in a downtrend in both the weekly and monthly timeframes.
COMEX GC open interest fell -2.3K contracts. Current open interest for GC: 43% of global annual production, down -0.21% today. 321 GC contracts stood for delivery at COMEX today.
Most of the drop today in gold was a currency effect from that strong dollar rally. There was a small aamount of short-covering, and gold made a new low. No hints of a bullish reversal for gold today.
Silver followed a similar track, chopping sideways until 12:10, then dropping perhaps $1.25 over the next two hours, and then bouncing back somewhat into the close. The long black candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. Silver is in a downtrend in both the daily and weekly timeframes.
COMEX SI open interest fell -1.7K contracts. That was -3 days of global annual production in paper removed from the market. Current open interest for SI: 88% of global annual production, down -0.96% today. 431 SI contracts stood for delivery at COMEX today.
The gold/silver ratio climbed +1.53 to 66.88. That’s quite bearish.
Silver really didn’t like whatever-it-was that happened at 12:10. There was some short-covering, but nothing too dramatic. Candle print was bearish, forecaster got even more unhappy. Silver’s longer term uptrend remains in place, but after breaking the 50 MA yesterday, silver is starting to look bearish.
The miners rallied sharply in the first few hours, plunged at 12:10, but then bounced back fairly strongly in the afternoon, ending the day mostly flat. GDX climbed +0.06% on heavy volume, while GDXJ dropped -0.49% on moderately heavy volume. XAU moved down -0.85%, the long black candle was a possible bullish reversal (34%), forecaster climbed. XAU is in an uptrend in the monthly timeframe.
The GDX:gold ratio climbed +0.89%, while the GDXJ:GDX ratio dropped -0.55%. That’s mildly bullish.
The miners looked surprisingly good today – they didn’t fall all that far during the 12:10 event, and they bounced back fairly briskly in the afternoon. GDX is showing a pattern of accumulation over the last 4 days; that’s “little movement, on high volume.” The last two days have looked especially strong – GDX has chopped sideways, while gold has sold off fairly hard. This only happens when Big Money has decided to step in and buy everything at a particular price. “Somebody” thinks the miners are good value here at these levels.
XAU shows this to some degree:
GDX shows this more clearly – it has volume which helps also. Note too that GDX is now back in an uptrend, just today.
Platinum fell -37.67 [-3.32%], and palladium dropped -13.40 [-0.58%]. Platinum is now in a two-week downtrend; palladium is more chopping sideways.
Copper plunged -0.16 [-3.90%] to 3.94 on heavy volume. The long black candle was a bearish continuation, forecaster dropped, dropping into a downtrend. Copper remains in an uptrend in the weekly and monthly timeframes.
Well this was a terrible day for copper. While copper did suffer somewhat from the 12:10 pm sell-off, most of the initial damage happpened early in the London session. The weekly candle print (still forming) is horribly bearish (swing high2: 74%) too. We’ll have to see what it looks like at end of week.
The buck climbed +0.70 [+0.77%] to 91.62 on moderately heavy volume. The opening white marubozu candle was neutral, forecaster climbed, moving higher into its uptrend. The buck is in an uptrend in all three timeframes.
Major currency moves included: EUR [-0.60%], JPY [-0.75%], AUD [-0.72%].
As mentioned, all the fuss in the buck started at 12:10 PM Eastern. I’m not sure what caused it, but a whole bunch of things tipped over and sank as a direct result. The buck made a new 3-month high today, and it is now starting to look reasonably bullish.
Crude screamed higher, up +2.95 [+4.84%] to 63.92 on very heavy volume. The long white candle was a possible bearish reversal (37%), forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in all three timeframes.
Crude broke out to a new post-pandemic high today – so much for that correction I was worried about a few days ago.
FPUS: 10 mbpd, +300 kbpd this week. There was not much of a production recovery this week from the big drop that happened last week. The US is producing around 3 mbpd less than it was just before the pandemic started in 2020.
OPEC may be back: they are suggesting there will be no production increase in April. With 3 mbpd of US shale off the market…that may be doable.
SPX fell -51.25 [-1.34%] to 3768.47 on heavy volume. The long black candle was a possible bullish reversal (32%), forecaster climbed, but remains in a downtrend. SPX is in a downtrend in both the daily and weekly timeframes.
Tech [-2.26%] led the market lower, along with discretionary [-2.16%], while energy [+2.33%] and utilities [-0.09%] did best. This was a very bearish sector map.
The VIX climbed +1.90 to 28.57.
Well unlike yesterday, today’s sell-off was broad-based; NYSE advance ratio was just 22%. Ouch. And it was led by tech & discretionary, which we never like to see. If you’re bullish, of course. The candle print was mildly bullish, but SPX broke below the 50 MA for the first time in 5 months. The downtrend is starting to pick up steam. Monthly is still in an uptrend – at least for now.
And did I mention the miners actually did fairly well? That’s pretty unusual in an equity-market sell-off. It’s hard to say what this all means – rotation, or a more general correction. Utilities up top hints at a more general correction.
TLT dropped -0.64%. The long black candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. TLT is in a downtrend in both the daily and weekly timeframes. The 30-Year yield rose +7.0 bp to +2.32%.
TY dropped -0.50%. The closing black marubozu candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. TY is in a downtrend in all three timeframes. The 10-Year yield rose +10.0 bp to +1.57%.
Well that ten-year sure looks unhappy. And on a day when equities sold off too. Something is definitely broken there. That, or people have figured out “why on earth would I want to hold Treasury bonds when Powell is out there saying he’s going to let inflation run, and run, and run…” Maybe he means it this time.
FWIW, bonds also sold off around 12:10 pm.
JNK dropped -0.46%. The long black candle was a possible bullish reversal (32%), forecaster dropped, moving deeper into its downtrend. JNK is in a downtrend in both the daily and weekly timeframes.
Crappy debt had a bad day too, making a new 3-month low. It also started sinking at 12:10 pm, although it managed to bounce back a bit by the close.
The GLD ETF tonnage on hand dropped -4.08 tons, with 1078 tons remaining in inventory.
ETF Discount to NAV:
* CEF -4.11%
* PHYS -1.16%
* PSLV -0.66%
Gold dealer big bar premiums:
* gold [1kg]: +1.95%
* silver [100 oz]: +15.15%
While physical ETFs are now all in discount, big bar premiums at retail are now very high – even gold is now hovering around 2%. It looks as though goldbugs are buying the dip in physical form.
PSLV volume rose slightly to 9M shares; about 3.6x normal. Candle code for PSLV shows a 50% bullish reversal. RSI-7:21 = oversold. PSLV has fallen for 6 of the last 7 days. Hmm. Interesting. Silver-at-a-discount, courtesy of the banksters.
Gold and especially silver moved lower today, with gold making a new 9-month low. The miners appeared well-bid, as they have been for the past four days. This flood of money going into the miners, especially on days when the equity market sold off, suggests that a low for PM is probably not far away. Most of gold’s plunge today was a currency effect.
The buck shot higher – that mysterious event at 12:10 pm was likely the cause – making a new 3-month high.
Risk assets were mostly down; equities, crappy debt, and copper all fell fairly briskly, while crude rallied, probably on news that OPEC wasn’t going to raise production at its upcoming April meeting. That, and US crude production is down 3 mbpd from peak.
Bonds fell hard again. Rates are moving higher.
And now for the news items that caught my eye:
Word of the day #1: Qualified Immunity.
The House passed a bill to abolish qualified immunity for police. Not for government workers. Not for prosecutors – like, say, Mueller. And not for Federal agents. And most definitely NOT for the Capitol Police. But for the guys patrolling our neighborhoods? They will have their qualified immunity removed. If the bill passes the Senate.
Thanks to this loophole, federal courts have upheld qualified immunity to Fresno officers accused of stealing more than $225,000 in cash and rare coins, an Idaho SWAT team that bombarded an innocent mom’s home with tear gas grenades, and a Georgia sheriff’s deputy who accidentally shot a 10-year-old boy while aiming for the family’s dog.
Related: Pelosi’s “security review” of the Capitol police force is complete. Should we expect an imminent defunding? A reimagining? Will they all be replaced with “social workers?” Will all that funding spent on the structurally racist “Capitol-Pigs-In-a-Blanket” finally be put to better use? Will they all be “Fried like Bacon?”
Oh yeah. And by oh yeah, I mean, of course, no. Defund the police for thee, but not for mee. A quarter-billion increase in security funding. Per year. And another quarter-billion up front. Far from defunding, this is basically doubling it up. If you are losing the consent of the governed – say the election frauds become a bit too visible – then you really must consider increasing security for your factotums.
* Improvements in surveillance & communication [16M]
* 48% increase in capitol police officers [+101M/year]
* a new 1-3 battalion-sized “quick reaction force” ([4+0-130M/year] [1 battallion is roughly 800-1200 men]
* physical security improvements (barriers, etc) [+235M]
When I saw that – quite large – “quick reaction force”, I said to myself: “Hey, didn’t they have one of those back in the Roman era?”
Which brings me to Word of the Day #2: Praetorian Guard
During the Republic, there was a reason that no Army troops were ever allowed to be stationed within the walls of Rome. The reason for this became clear during Empire, when the officer in charge of the Praetorian Guard was routinely able to whack the current Emperor, and then auction off the position to the highest bidder. This happened repeatedly.
Praetorian Cohorts intervened on numerous occasions in the struggle for the imperial succession. Lacking troops of its own, the Senate had no choice each time but to accept the choice of the Praetorians as well as that of the various legions. The new emperor was always proclaimed by the Praetorians before being ratified by the Senate and the legions stationed in the various provinces.
After the establishment of the Pratorean Guard under Augustus, it was some 300 years before an Emperor (Constantine the Great) was finally able to disband the Guard. And he only did this with an army at his back.
General Honore – the man conducting Pelosi’s “security review” – has clearly read history. My question is: who will command this critical unit? Perhaps General Honore himself? Perhaps the General secretly imagines that he too can auction the Presidency off to the highest bidder? Perhaps General Honore imagines himself as a “Biden Donor Control-of-Government Insurance Policy” against a possible 2024 re-election of the Bad Orange Man? Or maybe the future commander will be one of his friends – someone else equally “reliable.”
Selection of the person holding this post is – shall we say – key. This was not mentioned in the document – a curious oversight.
As was true 2000 years ago, the question is always: Quis custodiet ipsos custodes? Or – “who watches the watchers?”
Will it be another 300 years before the US Capitol is purged of the modern day Praetorian Guard?
But at least the miners look pretty good.
Why my charts didn’t come through, I have no idea. I don’t dare edit the post, or else it might just vanish entirely. And this one took two tries too. Must be a site bug.
“Will it be another 300 years before the US Capitol is purged of the modern day Praetorian Guard?”
LOL. In 300 years there wont be a USA. We’re living in the last days.
Man DF, you really put the triple-whammy jinx on the miners for today, lol. At least it wasn’t me this time, ha ha.
Very excellent report. I appreciate your work brother.
Another thing happened at 12:10 pm yesterday, my home owners insurance (ALLSTATE) decided to f*ck me over and give me just barely over $1k to fix all the water damage in my house. That won’t even pay for the cost of the sheetrock.
I’ve paid them over $60K in premiums over the last 18 years and they want to give me $1K for these damages. Even $10K wouldn’t cover the cost of the repairs.
It’s time for plan B: Get to work on my tiny house, repair and sell my house, buy some land in the boondocks and get the hell out of the system as much as I can.
I’m not looking forward to living in a tiny house, but living this freaking “American Dream” is worse.
Sorry for the bitching.
Yup. I dont know why anybody bothers with insurance other than theres just some out-dated idea that you’re supposed to have it.
This is across the board from health insurance…car insurance…to home insurance. The premiums get higher and higher and they always screw you when it comes time to pay up. Maybe once upon a time insurance was a legitimate industry but like every other institution in this crumbling society, it’s broken.
It no longer serves the function it was designed to. The only purpose it serves is to redistribute wealth from you to the industry. Its just most people havent figured that out yet. Thats what you get when you create huge government subsidized industries. They have no market based incentives….like banks, etc.
If there is one word that can get my blood boiling in a hurry it is ‘insurance’. Biggest f’ing scam ever. I used to think it was a necessary evil but am shifting to think it is just evil – forget the necessary, given how they screw people over left right and centre. Case point with Jag. Ugh.
If you think that is bad, give this a read to get a deeper look at how the evil is evolving ever more quickly.
Blackstone and the hedgefunds are the modern day Praetorians who will appoint who they wish, when they wish, how they wish, aided of course by big brother big tech.
JAG said “It’s time for plan B: Get to work on my tiny house, repair and sell my house, buy some land in the boondocks and get the hell out of the system as much as I can.”
Yep. Converting a 25′ shuttle bus (like you’d take from the airport to Hertz, say) into a tiny home. In part I am, uh, repurposing monies from a loan I had for other reasons to fund the build/conversion. It has 2.4 kW of solar on the roof, lithium phosphate (don’t burn/blow up yay!) battery array, and we’ve just installed the fridge and are working on a kitchen to go with the BR at the back of the bus. It’s small and I’ve had to get rid of most of my earthly crap (the rest lives in a storage container nearby) but my “mortgage” on the loan is $91/month.
Once the kitchen is built (a month, give or take) I’ll start in on the garden and the bee hives. Good luck to you on the tiny home, bro, and May Fortune smile upon us all!
VIVA — Sager
I’m telling ya, there’s a bid under the miners. They are back in the green now.
This is what accumulation looks like. Prices plunge in the morning, everyone flees, the big money buys at a discount, and prices just don’t really fall at all. By end of day, of course.
True for GDX, a bit less so for GDXJ, and – SIL is continuing to decline.
Great to hear from you old friend! Are you still in the islands you lucky butthole?
I think you are living my dream out there. I’m very jealous.
A 2.4 KW array sounds perfect. It must be a pretty big bus to hold that many panels. If you are on the dry side of the island that should be more than enough power.
Good luck to you. I wish you all the best.