Investing in precious metals 101

PM Daily Market Commentary – 12/29/2016

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  • Thu, Dec 29, 2016 - 11:10pm



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    PM Daily Market Commentary – 12/29/2016


Gold rose +16.50 to 1159.00 on moderate volume, while silver climbed +0.14 to 16.20 on moderately light volume. A swing high in the buck helped propel gold and silver higher, with gold leading the charge.

Gold moved steadily higher in Asia, and then smashed through 1151.70 resistance a little after 11 am in the US, with 5444 contracts (or 16 tons of paper gold) changing hands in one minute. This is another example of “manipulation to the upside.” It appears that managed money continues to have their stops run by the commercials.  Candle print was an opening white marubozu, which is bullish, as is the break above the recent consolidation zone. Gold appears to be following the miners higher – that’s also bullish.

Rate rise chances (May 2017) remains at 30%.

Gold open interest at COMEX rose +6,970 contracts.

Silver rallied too, but continues to under-perform gold. Candle print was a short white candle, which is bullish – or at least, not bearish. Today, silver managed to both print a swing low, as well as close above its 9 EMA, both of which are bullish. Silver under-performing gold is not bullish; I’m guessing that’s because there is no big pile of managed money shorts for the commercials to run.  The gold/silver ratio rose +0.38 to 71.54.

Miners had a fantastic day, with GDX up +7.46% on very heavy volume while GDXJ rose +9.23% on extremely heavy volume. Candle print for GDX was a relatively rare “strong line”, which is bullish. GDX closed right near the highs for the day, gaining 1% in the last two minutes of trading. All this looks bullish. Miners are beginning to be a bit overbought, and today’s rally stopped just below the 50 MA. Back in November, the 50 acted as resistance; a breakout above the 50 would be bullish.

Platinum rose +0.21%, palladium rose +1.32%, and copper dropped -0.76%. While gold is rallying, the other metals are not looking nearly as strong. I’d like it a lot better if platinum were rallying along with gold, but platinum is dragging along the bottom, seemingly unable to move higher.  That’s a bad sign.

USD fell -0.54 to 102.70, dropping through the 9 EMA and printing a two candle swing high on the day, which is a 48% chance of marking a top. This clearly helped gold, although gold’s move higher was not just a currency effect. If the buck continues lower, that should help gold to rally.

Crude rose +0.19 to 53.85, printing a spinning top candle which was more bullish than bearish. The Petroleum Status Report showed an inventory build of just 0.6 million barrels, much lower than projected by the API. The inventory report release caused oil to sell off somewhat, but by end of day the buyers had bid the price back up into the green.  Oil might be getting a bit tired.

SPX rose +0.66 to 2249.26, printing a doji candle on the day. Actually, it was a “doji star” pattern, which turns out to have almost a zero chance of being a low. Utilities did best (XLU:+1.35%) while financials trailed (XLF:-0.73%). It looks like the hunt for yield may be coming back, at least to some degree. VIX rose +0.42 to 13.37.

TLT rose +0.35%, following through from yesterday’s close above the 9 EMA. TLT appears to be struggling higher after a three-week consolidation.

JNK rallied +0.14%, rising slightly but not yet back to the 9 EMA.  JNK appears to be at the start of a downtrend.

CRB fell -0.07%, the rally in PM offset by a drop in industrial metals.

The buck appears to have topped out.  Miners screamed higher, trailed by gold, and then silver. Everything is above the 9 EMA, with the miners knocking on the door of the 50. Tomorrow is the last trading day of 2016.

I suspect if the buck continues lower, we will see higher prices out of gold and especially the miners – although with the miners somewhat overbought, now would probably not be the best time to jump in long.

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  • Fri, Dec 30, 2016 - 05:21pm


    Cold Rain

    Status Gold Member (Offline)

    Joined: Jul 26 2016

    Posts: 302

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    Of Course

Good to see silver and the miners fall out of bed on the last day of the year.  Would be nice to see silver close above $16 on the year.  Sigh.  Gold is not doing too poorly…yet.  Miners failed again at the 50 day.

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