Investing in precious metals 101

PM Daily Market Commentary – 1/19/2017

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  • Fri, Jan 20, 2017 - 01:13am



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    PM Daily Market Commentary – 1/19/2017


Gold climbed +0.60 to 1204.30 on moderate volume, and silver fell -0.04 to 17.03 on moderately heavy volume. Both gold and silver sold off early, but rallied back to close the day just about flat.

Gold was driven lower by a relatively strong dollar rally, marking a low around 10 am at 1195.40, finding support right at the 9 EMA. At that moment, the buck topped out, and as the buck reversed direction, gold recovered. Candle print on the day was a “high wave/doji” which turned out to be a “southern doji” – candle code found it to be quite bullish, with a 72% chance of marking the low. Even though the buck closed up +0.22, gold still managed to get back to even. This looks like a bullish outcome to me.

Open interest at COMEX for GC fell by -2,327 contracts.

Rate rise chances (May 2017) rose to 38%.

Silver fell along with gold, but silver bottomed out a bit earlier: at 08:42 silver was driven down to 16.74, finding support at the 50 MA, before bouncing back to end the day just slightly down. Candle print was a “high wave”, which looked a lot like a bullish takuri line. Code says this is bullish: a 51% chance of marking a low here. Code points out that today was also a swing high, but the code gave this swing high its lowest rating: a 20% chance of marking a top. Conclusion: more bullish than bearish. Since gold outperformed silver, that drove the gold/silver ratio up +0.22 to 70.72, which is mildly bearish for PM.

Miners more or less moved sideways today, with GDX down -0.56% on moderate volume, and GDXJ off just -0.11% on moderately light volume. Although the selling drove the mining shares below their 9 EMA lines, by end of day the miners managed to close back above them. GDX printed a “spinning top” candle, which the code thinks is actually fairly bullish: 47% chance of being a near-term low. That’s certainly a better projection than I would have expected. That said, I’m noticing that the momentum in the miners is starting to weaken; the MACD is starting to turn down, and I’m seeing a bearish divergence in the RSI (lower RSI peaks, vs higher GDX prices). A close below that 9 EMA would probably lead to a lot of selling in the mining shares.

Platinum fell -0.50%, palladium rose +0.73%, and copper fell just -0.15%. While copper closed right at the 9 EMA, platinum is now below its 9, and palladium moved higher off its own 9 EMA. Metals are still bullish, with platinum being the weakest of the lot.

USD rose +0.22 to 101.10, but that’s only after being up as much as +0.80 points (to 101.71) earlier in the day. Mostly, the dollar looked like it had a failed rally today. Candle print was a spinning top, which is neither bullish nor bearish – no clue as to where things go next. The buck was unable to close above its 50 MA, or the 9 EMA. Buck remains in a downtrend until it can execute at least one of those moving average crossings.

Crude rose +0.03 to 52.13, virtually unchanged on the day. Candle print was a doji, which is somewhat bearish in this context. Crude remains below its 9 EMA. The petroleum status report was relatively bearish, showing a 2.3 million barrel build in crude inventory, along with a 6 million barrel build in gasoline inventory. This initially drove crude down about 70 cents, but it rebounded to close just about flat by end of day. I’d say that’s a generally bullish outcome, but its in the context of a crude downtrend. While crude remains above 50, it does not appear as though it is setting up to make new highs just yet.

SPX fell -8.20 to 2263.69. Candle print is just a “long black” candle which isn’t particularly bullish or bearish. That said, today’s price action did take SPX relatively conclusively below its 9 EMA. Utilities led the market lower (XLU:-0.88%) while the industrials were the sole green sector (XLI:+0.73%). One measure of sentiment, the XLY:XLP ratio, remains bullish. (That’s the consumer discretionary sector vs consumer staples sector). VIX rose +0.30 to 12.78.

TLT fell -0.69%, following through off yesterday’s swing high. TLT is now back below its 50 MA. If bonds & gold continue to be correlated, this doesn’t bode well for PM.

JNK fell -0.27%, printing a bearish engulfing candle that took JNK well below its 9 EMA. Candle code suggests this is bearish (as the name implies) with a 64% chance of making a top here. That’s risk off. Could this be a bearish “tell” for equities?

CRB fell -0.20%, a mild drop that pulled CRB slightly below its 9 EMA. CRB remains in an uptrend, but it really needs rising energy prices to keep the commodity rally moving.

If we look at the miners, it appears that the PM uptrend is weakening, but if we focus on gold, the trend appears to be stronger.  A glance at the MACD indicator tells us this – as does the GDX:$GOLD ratio, which is fading.  A close below the 9 for either item would move things to look substantially more bearish.  Right now, the $gold:$XEU chart (gold-in-Euros) is showing that the rally in the yellow metal is not just a currency artifact.  Its probably a good idea to keep an eye on that too.  An equity-market sell-off would probably be bullish for gold.

And of course we have the Trump inauguration coming tomorrow: protesters, unprecedented security, an unhappy CIA – and we may remember what happened the last time the CIA was unhappy with the President.  Grassy knolls, a “lone gunman”, a magic bullet, and a Vice President that seemed really careful to toe the line after the fact.  What really goes on behind the curtain?

I suspect any chaos would end up being gold-positive – and probably quite dollar-negative.

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  • Fri, Jan 20, 2017 - 06:32pm


    Jim H

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    one word: Palladium

today is not the first in recent months when Pd has reared it's head up… something is brewing.  Might be LENR related… just a speculation.   

  • Fri, Jan 20, 2017 - 09:42pm



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[quote=Jim H]

today is not the first in recent months when Pd has reared it's head up… something is brewing.  Might be LENR related… just a speculation.   



I thought you didn't do speculation, Jim  😉 

  • Sat, Jan 21, 2017 - 08:14am



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[quote=Jim H]

today is not the first in recent months when Pd has reared it's head up… something is brewing.  Might be LENR related… just a speculation.   


yes pd has been very strong lately, wish i'd bought more last year.

some days i see gold, silver, and platinum all heading south, while palladium jumps higher unexplicably.

over the last 30 years, the pt/pd ratio has bounced back and forth from 5/1 to parity

now it's down to almost 1.2 / 1, it seems like it is a good time for a futures trading pair, long platinum and short palladium.


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