PM Daily Market Commentary – 2/10/2014
Gold closed up +7.70 to 1274.70 on light volume, and silver closed up +0.05 to 20.06 on heavy volume. The gold/silver ratio rose +0.24 to 63.56. Gold rallied slowly all day long closing near the highs; silver had a bit more drama, trying to break above 20.30 and failing, selling off into the close. Copper (down -0.83%) likely was a troublemaker for silver, which is once again looking a bit ill.
Gold is not far from a breakout; 1280 is the level to cross, but volume on COMEX gold is not so impressive which weakens gold's bullish case a bit. Still – I'm sure the big guys are eyeing all those short stops clustered above 1280. I wouldn't be surprised to see (at a minimum) a spike through 1280 in the near future. Really though we need an actual close above 1280 to put more than a momentary scare into the shorts.
The USD closed down -0.04 [-0.04%] closing right above its 50 MA. It has dropped 5 days out of the last 6, although the moves have been mild. A move through the 50 MA will be bearish for the buck, but likely bullish for PM.
GDX broke cleanly above its 3 week consolidation today, closing up +3.30% on heavy volume. GDX opened up, and rallied hard for the first hour, and then traded sideways for the rest of the day. GDXJ had most of its gains on the open, gapping higher but then trading mostly sideways into the close. GDXJ was up +4.20% on the highest volume in the past six months.
I love to see breakouts on good volume. Longside traders are buying the breakout, while the shorts are being stopped out and are covering.
While I like to hear people talking about how "money is circling the mining shares" (the gang from Sprott has been saying this a lot recently), it is quite satisfying to see this sort of talk confirmed in the price & volume data.
Contrast the high up-day volume (and the substantially lower down-day volume) on the GDX breakout with what is happening with SPX. Volume is declining as price moves higher, which is not good for the bulls. Can the upside momentum be sustained through the 50 MA? A failed attempt to close above the 50 MA will – most likely – lead to a short assault on US equities. My dream scenario: a break above the 50 gets sold, printing some sort of tombstone doji candle on high volume.
Watch for the Obama administration complaining about China "hoarding" gold. Like those evil food and water hoarders at Peak Prosperity.
"February 11, 2014 4:47 am
China’s 500-tonne gold gap fuels talk of stockpiling
By Simon Rabinovitch in Shanghai
The China Gold Association published data on Monday showing that Chinese demand for gold surged 41 per cent to 1,176 tonnes last year, making it all but certain that China overtook India as the world’s biggest consumer of bullion.
Yet Chinese import and production volumes were even stronger. China imported 1,158 tonnes of gold via Hong Kong, more than double its 2012 total. Domestically, production of bullion rose 6 per cent to 428 tonnes, making China again the world’s top producer. On top of that, China also imported gold directly through Shanghai, though these numbers have not been published.
Adding up the reported and estimated figures, Na Liu, of CNC Asset Management, calculated that China’s “apparent gold consumption” exceeded 1 ,700 tonnes in 2013, more than 500 tonnes higher than reported.
“We would not be surprised to hear the People’s Bank of China announce a new, significantly higher figure, if it chooses to do so,” Mr Na said.
The PBOC has said that its gold reserves have been steady at 1,054 tonnes since April 2009.
Tom Kendall, precious metals analyst at Credit Suisse, said it was generally assumed that the Chinese government purchases the majority of domestic production for state reserves."
I continue to like my estimation of 10,000 mt of Chinese gold by 2015 COY. A nice, round number.
It is interesting, isn't it, that when you accumulate and preserve what the government wants you to, you're called a saver. Good. When you accumulate and preserve what they don't want you to, you're a hoarder. Bad, bad, bad!
A few days ago, four of us posted some thoughts on buying oil as a means of preserving our core holdings. Kind of still working on a SET of TARGETS
There were: rockstar82, oliceguy, jim h, and myself. Now my question is this: Do our members GO BACK to these postings to keep the conversation going, or do they just fade into the mist? Since I want to keep the conversation alive and growing, AND UP TO DATE, I wonder what to do.
For example, some time ago Chris was interviewed along with Dr. Kent Moors, of Energy Advantage, and since then I have received his monthly NEWSLETTER. He presents his Energy Advantage Investment Portfolio (see http://www.oilandenergyinvestor.com) with an on-going reporting of his 33 stocks–quite impressive!
So, to those three above and the rest of the PP Community, I pass this on. BUT, the question remains: WHAT is the best way to keep subjects ALIVE and RECENT?? Keep going back to the old postings OR do as I am now doing? Any suggestions?
Kenneth, I think that the best approach would be to create a Group for this.. similar to the way I created the Bitcoin group..anybody can do this! Then there is a central repository for info. specific to this topic going forward (or at least that is the idea, as Bitcoin discussions invariably break out in other threads as well).
You could reference some of the previous discussions via links in a post on the new Group.
The group could/should have a pretty narrow focus, i.e. Hard Asset Investing: Oil
I would join : )
Hopefully such a group could be formed, specifically regarding oil assets, of whatever kind, maybe adding natural gas, as it seems to be headed for great importance, here and around the globe.
Jim, you are certainly more capable of establishing this type of group moreso than I, and maybe even of the others who seem interested.
Are you game? I hope so. Does Dr. Ken Moors (above) interest you at all in this endeavor? He seems to specialize in all components of oil and gas.
Good luck, if you have the time and interest. I would do whatever I could to assist.