Investing in precious metals 101

PM Daily Market Commentary – 3/14/2019

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  • Fri, Mar 15, 2019 - 02:32am



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    PM Daily Market Commentary – 3/14/2019

Gold plunged -13.56 to 1300.66 on very heavy volume, while silver dropped -0.28 [-1.78%] to 15.18 on heavy volume. +7.71 [+0.59%] to 1314.22 on heavy volume, while silver climbed +0.01 [+0.03%] on moderate volume. The buck plunged -0.42%, crude jumped +2.15%, along with SPX [+0.69%] and junky debt [+0.28%]. It was another risk on day – with a boost from the falling dollar. What happened?

The UK Parliament voted down a hard BRExit, 312 to 278. GBP screamed higher, up +2.00%, and Euro climbed +0.32%. Tomorrow Parliament gets to vote on whether or not to request an extension to the BRExit date of 29 March. Brussels, of course, reminded the UK that there will be no renegotiation of the BRExit deal. Maximum chaos is unfolding exactly as planned. After this experience, nobody will dare to leave the warm, kindly embrace of Mother EU. Well that’s the plan anyway.

Gold fell in Asia, and then was pounded lower in London, with a large, high volume spike breaking support levels just after 9 am. Once the US market opened, gold chopped sideways for the rest of the day. The bearish engulfing was quite bearish (51% reversal), and the daily forecaster dropped, and just barely avoided a sell signal. Today’s move pulled gold below the 50 MA. Gold is in an uptrend in the daily and monthly timeframes.

COMEX GC open interest rose +10,521 contracts today. The relentless increase in open interest continues. Normally commercials cover as price drops – but not now, and not today.

Futures are showing a 1% chance of a rate cut in March, and a 22% chance of a rate-cut by December.

Silver fell a bit harder and longer than gold, finally stopping its plunge a little before 11 am in New York. Like gold, silver also had a bearish engulfing candle (50% reversal), and the forecaster issued a sell signal. Today’s move pulled silver below both the 9 and 200 MA lines. Silver is now in a downtrend in all 3 timeframes. Silver does not look very good right now.

COMEX SI open interest fell -1,097 contracts. Open interest in silver continues to decline. That’s quite the contrast with gold.

The gold/silver ratio rose +0.62 to 85.57. That’s quite bearish.

Miners gapped down hard at the open, fell, tried to rally, failed, and sold off some more. GDX plunged -2.67% on moderately heavy volume, while GDXJ dropped -2.67% on very heavy volume. XAU fell -2.70%, the confirmed northern doji was quite bearish (60% reversal), and forecaster plunged, but remained in an uptrend – at least for now. XAU’s plunge stopped right at the 9 MA. Even after all the fuss today, XAU remains in an uptrend in the daily and monthly timeframes.

The GDX:$GOLD ratio fell -1.65%, while the GDXJ:GDX ratio was unchanged. That’s quite bearish.

Platinum cratered, dropping -2.23%, palladium rose +0.05%, while copper dropped -1.47%. These were some big moves for both copper and platinum, both of whom entered downtrends on today’s move. Both metals may well have helped to pull both gold and silver lower.

The buck rallied +0.25 [+0.26%] to 96.23. The move was mostly about BRExit. The white marubozu was unrated, and forecaster moved slightly lower, remaining in a moderate downtrend.   DX remains in a downtrend in both the daily and weekly timeframes.

Major currency moves: GBP [-0.70%], JPY [-0.41%], AUD [-0.37%]. BRExit was once again the driver.

The UK Parliament voted – in an astonishing display of chaotic activity – to request an extension from the EU, and to reject a second referendum.  Reading the liveblog about the details of the voting process, the whole thing seemed surreal. Both parties are fragmenting right in front of our eyes. Example:

Steve Barclay, May’s Brexit Secretary, voted against the plan he had been arguing for minutes before, and the chief whip (who is in charge of getting MP s to back the government), abstained.

The Guardian had an excellent summary after blogging about it in real time.  I’ve reformatted it a bit and … editorialized a little.  🙂

  • MPs have voted to ask for a delay to Brexit, meaning the UK would not leave on 29 March, as the prime minister had originally planned.

  • May will resubmit Unconditional Surrender to Parliament for a third time after the Commons rejected the chance to take direct control of the Brexit process – but that measure (Commons taking control) failed by just 2 votes.

  • MPs also overwhelmingly rejected an amendment calling for a second referendum. Labour ordered its MPs to abstain, believing the timing to be wrong, and only 85 MPs voted for a referendum that would have had Remain as an option.

  • Five Labour frontbenchers resigned as shadow ministers over the party’s abstention order.   [A shadow minister is someone who has been assigned a cabinet position in government if/when the party gets into power. Resigning as a shadow minister is a big deal.]. Instead of abstaining, they chose to vote against a new referendum!  Why would they resign in order to vote down something that already had overwhelming opposition?  Curious indeed.

It is clear that BRExit cuts across party lines; I have maintained that BRExit will probably rip the two main parties apart along national/globalist lines, and here is the evidence being played out for us in public, and in real time.

Crude rose +0.18 [+0.31%] to 58.98, which is another new high. Trading range was narrow; the short white/spinning top was a bullish continuation, and forecaster edged down but remains in a strong uptrend. Crude remains in an uptrend in all 3 timeframes.

SPX edged down -2.44 [-0.09%] to 2808.48. SPX just mostly chopped sideways, with a slightly lower bias. Really not much happened in equities today. The bearish harami was a bullish continuation, and forecaster remained in a strong uptrend. SPX remains in an uptrend in all 3 timeframes.

Financials did best (XLF:+0.38%) while materials brought up the rear (XLB:-0.75%). Sector map was confused – call it neutral.

VIX rose +0.09 to 13.50.

TLT plunged -0.72%, dropping hard – like gold – and falling below its 50 MA. TLT is now in a strong downtrend. TY hardly moved, losing just -0.03%. Forecaster fell, but remains in an uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield rose +1.9 bp to 2.63%. A curious divergence between the longer-term treasury bonds and the 10-year.

JNK fell -0.06%, moving lower along with equities. JNK remains in a strong uptrend.

CRB edged down -0.01%. 2 of 5 sectors fell, led by PM (-1.17%).

So what to make of all the selling in PM – platinum, silver, and gold?  Are we headed lower?  Are we back to “nobody cares” about holding gold as a safe haven?

Well, gold plunging on a day where the dollar moved lower is definitely not a good sign.  It is possible that the shellacking in platinum helped to drag gold lower – those two are very closely correlated.  Copper is more correlated with silver, and it too had a bad day.  The metals move lower may have to do with the final meeting between Trump and Xi being pushed off to April.

There has also been a whole lot of new paper gold added at COMEX in this past week.  That has slowed gold’s rallies on the good days, and helped gold to tumble further on the bad days.

Ultimately it will depend on the buyers.  If they have decided they don’t want to move into gold right now, the commercials will have their way, and price will plunge.  That could happen.

Perhaps line-in-the-sand for gold is 1280-1285.  A move below that level means the buyers are taking a break.  For whatever reason.  And the current uptrend will be over.

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