PM Daily Market Commentary – 10/12/2015
Gold rose +7.90 to 1163.50 on moderate volume, while silver fell -0.01 to 15.81 on moderate volume also. Gold started its rally in Asia, climbing to a high of 1168.60 before the US market opened; gold managed to hang onto most of the gains by end of day. Silver tried to follow, but sold off by end of day, printing a gravestone doji, the sign of a failed rally.
Gold broke above the old high of 1157 in good order, and pushed all the way up to its next resistance line at 1170 where today's rally stopped. Gold is now up $60 off the 1103 low that was set right before the infamous Nonfarm Payrolls report from two weeks ago. How much more gas is left in the tank? We'll have to check commodities, the buck, and the miners to get some clues. Today's close above the previous high is definitely good news.
Silver appears to be running out of gas. It has now taken 4 shots at the 200 MA. This sort of resistance point is a logical place for the shorts to appear; as we know from the COT report, the shorts have mostly covered, and so this is a good point for them to re-establish their positions. The question is, which force is stronger, longs or shorts. After moving up $1.50, it appears that the longs are a bit tired; right now, the shorts appear to be winning.
Miners gapped up at the open on gold's strength, but then proceeded to sell off for most of the day. GDX fell -2.95% on moderate volume, and GDXJ fell -1.00% on moderate volume also. GDX printed a disagreeable-looking bearish engulfing candle, which – as the name suggests – is bearish. Volume was relatively light so this isn't a sure-thing high, but my computer didn't like it very much; it is now predicting lower prices for the miners.
The USD fell again, dropping -0.12 to 94.76. The dollar is slowly falling; on the other side of the fence, the AUD has been on a bit of a minor tear, up more than 5% in the past few weeks and +0.36% today. Euro too has been slowly climbing. We have the Retail Sales report on Wednesday, Empire State Mfg Survey on Thursday, and Industrial Production on Friday. Bearish reports might keep the buck floating lower; it will be interesting to see how the market responds to the news. I don't anticipate any good news – except perhaps for Retail Sales which could be "just ok."
SPX traded in a very narrow range today, closing up +2.57 to 2017.46. SPX is up almost 140 points off its lows, and looks to be a bit tired. My computer remains long SPX; I'm getting nervous. VIX fell -0.91 to 16.17. What would be the catalyst for lower prices for SPX? Good question.
JNK ran into resistance at the 50 MA today, falling -0.11% and putting in a swing high. This is a good short entry point if you're so inclined. JNK likely didn't appreciate today's oil price correction; it is hinting at risk-off.
Bond ETF TLT rose +0.76% on the day; are bonds sniffing out the high in SPX? The bond rally is a risk-off sign, especially with money leaving the buck.
The CRB fell -1.46% today, a big move, and not one that will be helpful for PM. Mostly this was due to oil.
WTIC was hit hard, falling -2.05 [-4.14%] to 47.44, printing a swing high and closing below its 9 EMA for the first time in 7 trading days. Oil appears to be having a difficult time with the round number 50: 3 shots, 3 failures. My computer is short oil at the moment.
HAA has 100 oz gold bars right now in NYC at 1179.95/oz [+2.23% over spot], and 1000 oz silver bars in NYC at 16.29/oz [+3.76% over spot]. Eagles in NYC are quoted at 20.41 [+30.00% over spot]. Premiums on the big bars were mixed, while premiums on Silver Eagles were up.
The picture for PM is mixed right now. Silver and the miners look weak, while gold continues to move steadily higher. Commodities led by oil may be starting a correction; if so, that would be negative for PM and especially silver. SPX looks tired, bonds are rallying, and JNK may be starting another leg down. I see some warning signs for both PM and equities.
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Nothing is happening over at Kitco, 10 year chart. Still on a toboggan ride. The piece in today's digest about silver's Bottom is unconvincing. Looks like wishful thinking to me. All I saw were squiggles. I think that they were talking their book. This cake is not baked yet.
The only glimmer of light that I can see is that TPTB in Australia really, really want to know who is holding the stuff. And I really, really want them to understand that they are my servants, not my masters.
There is something more to this silver story that I haven't grasped yet. I can feel it in my waters. Let me float my hypothesis that is firmly grounded in my untreated paranoia.
The central banks are colluding to bring in a world fiat currency. Nothing fancy like Special Drawing Rights or some such hogwash.
Think about Zimbabwe using the $ US. Think about supra national entities and the TPP, TTIP or whatever. Think about city-states. And most of all, think about the information and the Internet. And then there's the grandfather of all charts, the Limits to Growth.
Pulling it all together I see my masters doing triage. Who gets to eat and who is offered up to the worms. But first they have to ensure that they separate the adults who can think for themselves from the Neotenic. Unfortunately I belong to the former.
Robey, you can treat your paranoia by recognizing it, and using your logical recognition to help your will override it until it calms down.
Regarding silver, the best analysis I’ve seen has been Elliott waves. If I read them correctly, it looks to me like we had a 5-wave down from the peak until Nov ’11, then a 3 month 3-wave return until Feb ’12.
After that, we got a new, larger scale cycle downwards: wave 1-down to Jul ’12; then a full retrace to Oct ’12. When you get wave 2/5 being a full retrace of 1/5, then 4/5 tends to be a horizontal correction, usually a narrowing cone. So 3/5 down ran to
Jun ’13, and then there was a horizontal correction 4/5 until Jul ’14. We are now in down wave 5/5; I expect it to continue to a price of $10-14 per oz.
That said, when you have that full retrace structure and the narrowing cone, then sentiment is changing. Therefore, I expect the correction to be fairly large. After about a year, I expect silver to go up significantly. Gold likewise.
It just takes patience.
That said , I think Palladium is going up NOW. Let me correct that. pd is in the middle of a retrace to about 650, 660, at which point it will jump up to at least 820, then retrace another 80, and then go up to new highs… and then start bouncing around.