Investing in precious metals 101

PM Daily Market Commentary – 3/12/2019

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  • Wed, Mar 13, 2019 - 03:53am

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    davefairtex

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    PM Daily Market Commentary – 3/12/2019

Gold rose +8.47 [+0.65%] to 1306.51 on heavy volume, while silver climbed +0.13 [+0.85%] to 15.45 on moderate volume. The buck fell [-0.30%], equities moved higher [+0.30%] along with junky debt [+0.20%]. It was a mild risk on day – but in spite of that, gold and silver did well, as did bonds. Curious.

Gold moved steadily higher today, making a new high for this cycle. The closing white marubozu was a bullish continuation, but forecaster fell sharply, just barely managing to remain in an uptrend. Maybe that’s a delayed reaction to yesterday’s drop. Gold remains in an uptrend in both the daily and monthly timeframes, and gold/Euros is in an uptrend in all 3 timeframes.  Looking at the chart, gold really needs a close above the 50 MA to avoid a reversal.

COMEX GC open interest jumped +14,631 contracts today. That’s 7 days of global production in new paper – a fairly significant increase in open interest.

Futures are showing a 1% chance of a rate cut in March, and a 20% chance of a rate-cut by December. That’s a bit more bearish than yesterday.

Silver’s rally topped out a bit earlier than gold, with silver making its day high – which was also a new high – around 9 am. The long white candle was a bullish continuation, and silver’s forecaster also plunged, barely managing to remain in an uptrend. Silver is now back above the 9 MA. Silver remains in a downtrend in the weekly and monthly timeframes.  Silver is struggling a lot more than gold right now – it remains well below the 50 MA.

COMEX SI open interest fell -820 contracts.

The gold/silver ratio fell -0.22 to 84.45. That’s slightly bullish.

Miners moved strongly higher, with GDX up +1.75% on moderately heavy volume while GDXJ rallied +2.06% on very heavy volume. XAU climbed +2.04%, making a new high, and ending the day at the high. The white marubozu candle was a bullish continuation, and forecaster moved higher into its uptrend. Today’s move was enough to cause XAU weekly forecaster to issue a buy signal, which puts XAU in an uptrend in all 3 timeframes. The miners are looking pretty good right now; they are above all 3 moving averages, and not all that far from the previous high.

The GDX:$GOLD ratio rose +1.09%, while the GDXJ:GDX ratio climbed +0.31%. That’s bullish.

Platinum jumped +2.09%, palladium climbed +0.30%, while copper moved up +0.84%. The other metals did fairly well, with platinum as the surprise winner. This resulted in a relatively strong swing low for platinum (57% bullish) and a buy signal from the forecaster. Platinum’s moves have been extremely strong – in both directions – of late. Today was no exception.

The buck fell -0.29 [-0.30%] to 96.38. It was a wide trading range; the spinning top candle was a bearish continuation, and forecaster plunged, issuing a daily sell signal for DX. The buck remains in an uptrend in the weekly and monthly timeframes – but the weekly appears as though it could issue a sell at any moment.  Looking at the longer term, we can see the higher lows/higher highs pattern, which is the sign of an uptrend.  The buck really needs to break below the previous low (roughly 95.30) to change the longer term trend.  Given where the EU is overall, I think that’s not all that likely.

Today’s major currency moves were mostly about BRExit: EUR +0.37%, GBP -0.72%, CAD +0.34%.

Today the UK Parliament voted down Unconditional Surrender by a 149 vote margin. That’s measurably better than the prior defeat – a record 230 vote margin, but its still a resounding defeat. GBP’s trading range was almost 3 full points. Vote tomorrow: a decision on whether to rule out a hard BRExit.  Labor sure could decide to rescue May, but I suspect that there may be some truth to the tale that Labor leader Corbyn is a closet BRExiteer.  By standing back, he can let May get blamed for BRExit, watch the Tories rip themselves apart, and – possibly – enter government soon after without ever revealing his position.  Its a thought anyway.

Crude rose +0.31 [+0.54%] to 57.56. Crude tried to rally today, but largely failed, with the relatively bullish API report coming at end of day helping a little (crude: -2.6m, gasoline: -5.8m, distillates: +0.2m). The report was good for about 20 cents of today’s 31 cent move. The short white candle was a bullish continuation, and forecaster shot higher, moving into a strong uptrend. Crude remains in an uptrend in all 3 timeframes.

SPX rose +8.22 [+0.30%] to 2791.52. SPX tested both directions today, selling off in the futures markets overnight, then bouncing back to make a new high, only to sell off again towards end of day. The short white/spinning top was very mildly bearish (29% reversal), and forecaster moved higher, and remains in a tentative uptrend. SPX remains in an uptrend in the daily and monthly timeframes.

Sickcare led (XLV:+0.73%) along with utilities (XLU:+0.69%), while industrials did worst (-0.83%). Today was a neutral sector map – financials and tech were in the middle of the pack.

VIX fell -0.56 to 13.77.

TLT rallied +0.70%, a good-sized gain, with TLT making a new high. TLT remains in an uptrend. TY also rallied, climbing +0.20%. TY made a new closing high, the confirmed bullish NR7 was indeed bullish, and forecaster moved higher into a strong uptrend. TY is in the process of breaking out above its recent trading range. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield fell -3.8 bp to 2.61%. That’s the lowest yield on the 10 year since Jan 3, 2019. Bonds are looking quite strong right now.  Really strong, actually.

JNK climbed +0.28%, with the swing low candle print a likely bullish reversal (62% chance), and forecaster issued a buy signal. Like SPX, JNK is back into an uptrend.

CRB rose +0.45%; 4 of 5 sectors rose, led by agriculture (+2.03%).

So both bonds and equities rallied today, but of the two, bonds looked significantly stronger. What’s more, the futures markets are telling us that traders are feeling gradually more bearish about the economy overall, with an increasing chance of a rate cut this coming December. While some of gold’s rally could be ascribed to the currency moves, today’s rally was not all about the buck.

And let’s not forget about the miners. They did quite well today, outperforming both gold and silver, which is a positive sign. Forecasters for the miners also look quite strong – stronger than for either of the metals.

My gut tells me that Monday’s big equity market move may be petering out, and money appears to be shifting to the safe haven assets.

How much of the current fuss is about BRExit? That’s tough to know.  Certainly some of it.

And of course there’s the ECB and its negative-rates-forever policy.  That will urge money to continue flowing in o the buck, US debt assets, and gold.

I think we should probably watch the miners.  They are indicating improving fortunes for the metals.

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