PM Daily Market Commentary – 4/12/2017
Gold rose +12.40 to 1288.90 on moderately heavy volume, and silver moved up +0.15 to 18.49 on heavy volume. The metals moved sideways for most of the trading day up until about 3:10pm in New York, when Trump decided to tell us all that the dollar was “too strong”. Bang, buck loses 0.70 in the space of about an hour, sending gold and silver up sharply at the same time.
Boy, if you knew what Trump was going to say at any given moment, that would probably help your trading results.
Entirely because of the Trump comment, gold took another leg higher, printing a strong closing white marubozu which the code felt was bullish. We have to pull back to the weekly chart to see where the next resistance level is for gold. Turns out, its a long way away, at 1338, set on the day of Trump’s election. While the proximate cause of the move today was Trump, gold didn’t just spike higher – it felt as though gold was looking for a reason to rally, and it was able to retain those gains through the close. My sense is, there is a lot that the market is worried about right now, and so the line of least resistance is up.
Open interest at COMEX for GC rose +10,785 contracts.
Rate rise chances (June 2017) remain at 62%.
Silver’s move was a bit less impressive; it moved higher, but ran into selling pressure at the 18.50 resistance area. Candle print was just a long white candle, which the code felt was mostly neutral. Given the all-time-high in the commercial silver short positions, I suspect the commercials are eager to keep gains in silver under control if they can do so. However if the buck keeps plunging, that is by no means a given. The one thing they have going for them is that silver isn’t as popular of a safe haven metal as is gold.
If silver can get through 18.50, we might see a nice pop.
The gold/silver ratio rose +0.09 to 69.71.
Miners sold off as the metals moved sideways, recovering only after the big move higher in the metals. GDX closed the day up +0.86% on moderately heavy volume, and GDXJ climbed +1.44% on moderately light volume. GDX printed a spinning top, which the code felt was mildly bullish. The closing white marubozu from GDXJ was a bit more bullish, but still not anything dramatic. The GDX:$GOLD ratio continues to improve, which is a positive sign. GDXJ:GDX has a long way to go to move back into bullish territory. You can also see that the GDX is still a ways from its previous high, while silver is right at the previous high, and gold is well through it. On a relative basis, GDXJ looks even worse.
Platinum rose +0.39%, palladium fell -0.58%, while copper plunged -2.63%. Today’s move saw copper plunge through 2.60 support. Copper made a new lower low today. Dr. Copper is signaling things are not well in the world economy at the moment. The breakdown is probably good for gold, and bad for silver.
While my data shows that the buck rose today, that’s only because the “pit close” occurs at 14:30 Eastern time, while the big plunge in the buck happened after 15:10. As a result, the big move wasn’t recorded in today’s data. Using other sources, the buck appeared to fall about -0.70 closing at around 99.90, entirely because of Trump’s comments about the dollar being too strong.
While gold’s move was mostly a currency effect, gold-in-euros did manage to make a new high today regardless. Gold in euros is very overbought, with RSI-7=93. That’s a serious danger zone; it says that risk of a decline in gold right now is quite high. Of course the metal could go higher – Korea, Syria, Trump, and maybe even an SPX correction – but once the fuss dies down, the snap-back could be pretty strong.
Crude fell -0.56 to 53.06. Crude did manage to make a new high to 54, but the EIA report didn’t satisfy the market for some reason; the report looked bullish to me (crude inventory draw: -2.2 million barrels, gas inventory draw: -3.0 million barrels) but the market was not impressed, and crude moved slowly lower following the release. Candle print was a bearish engulfing, a 39% chance of marking the top. That’s relatively bearish. Its possible that crude needs to take a rest after climbing so rapidly over the past few weeks; as of yesterday, oil too was quite overbought, with RSI-7=88.
SPX fell -8.85 to 2344.93, closing below its 50 MA for the first since Trump was elected. This is a clear longer-term warning sign – its why we watch the moving averages. Utilities did best (XLU:+0.74%) while industrials were hit hardest (XLI:-1.38%), along with materials (XLB:-1.24%) and financials (XLF:-0.81%). The Trump trade looks to be unwinding.
VIX moved higher again, up +0.70 to 15.77. That’s the highest VIX rating since the Trump election cycle.
TLT continued moving higher, up +0.55% making a new multi-month high. Its clear that bonds – and gold – are the place to be right now that SPX is starting to look a bit ill. TLT is saying risk off a little more loudly right now. If we get a real SPX correction, I’d expect a nice breakout out of TLT.
JNK rose +0.08%, a somewhat surprising move with SPX and crude both falling. Its neutral right now.
CRB fell -0.33%, printing a bearish engulfing right at the 50 MA. 3 of 5 groups fell, led by the plunging industrial metals group which was led by the big drop in copper.
Momentum is still to the upside in the metals. Those pesky miners are still lagging, but at least the GDX:$GOLD ratio continues to improve. That’s something. Gold and TLT are both currently acting as safe havens; the dollar, not so much. Declining rate-increase chances and the (slowly) unwinding Trump trade make the dollar look a bit less attractive. Still, gold is now overbought. At some point, the buyers in this particular up-cycle will run out of cash, and the balance will shift to the commercials, who I’m sure are loading up short as price rises.
When the RSI gets into the 80s (and the 90s, if your currency is the Euro), its not a time to be buying. Its not a sell signal, but it does tell us that risk is increasing. “Buying breakouts” tends to be a sucker bet in the metals – at least most of the time.
After all, peace might break out at any moment, and then where would you be?
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Has anyone experience buying PMs online in the form of simple jewelry? ie.chains etc.
We have plenty of bullion/coinage just interested in a different form.
No I haven't. But I know there's a company in Australia – Goldstackers – who sell plain rings and necklaces, and simple pendants in various Karat – I think catering somewhat for the local Indian customer base. I do not know if they ship overseas or store locally for OS customers, but it could be worth investigating.
I often look in the window of the local jewellers when they have massive markdowns (in the order of 50%) and wonder what would be worth buying, and what wouldn't. But I am usually too busy, and too lazy to do the math to figure out if there are any bargains or quality items.
I also look at what's in the local antique stores but don't have the knowledge to buy with wisdom.
As far as jewellery goes, I really don't wear any much so it would be investment only, which takes out some of the fun. My wedding and engagement rings are 9K white gold and total no more than a days average wage AUD. They were bought in a time of poverty and for robustness not show. They are now quite banged up (think gardeners hands!) and the teency, tiny stone chips are long lost – sentimental value only and relatively worthless to anyone else.
Ditto the very overpriced 925 silver earrings I was given for my 21st Birthday many, many, moons ago.
I do consider plain jewellery a less conspicuous store of wealth than bullion or coins, and think of stories heard from WWII era of jewellery being used to facilitate passage to safety etc.
Best of luck in your search.
Has anyone experience buying PMs online in the form of simple jewelry? ie.chains etc.
I would encourage you to go off-internet. Long ago (15 years?) I went to Chinatown in San Francisco to buy a 23k gold chain from a gold shop there. I think I got it for around $60 over melt value, if memory serves.
Naturally, there's a cash price and a credit price.
There is usually a Chinatown in every major city. I haven't done a survey, but I suspect there are gold shops in every Chinatown.
Certainly in Asia its fantastically easy, and you can get each piece for about $20 over melt, but that wasn't what you were asking.
You could always combine a jewelry-buying trip and a vacation all rolled into one. Bring the whole family, and then have everyone go back through customs looking like Mr. T. 🙂
"I pity da fool."
Any bets on whether we see a sharp pullback in PMs today or tomorrow? My guess is that we'll see one or both days down. Seems like we usually see a fairly weak day or two near the end of a given week.
Mike Maloney and his team over at GoldSilver.com offer 22K and 24k "bullion jewelry", specifically made for folks who want to hold their gold in discrete, easily transferrable form:
When Trump recently visited China, he could have been agitating for a floating yuan, less affixed to the dollar. It might be easier to coerce implementation of this strategy than to impose restrictive tariffs — and would have the same effect.
When he is talking down the dollar, I think one can assume something like this is going on.
Something new: GLD is up 0,5% GLDJ is down 2,5% )) and i'm making a progress – even not trying to find any sense from it, just observing.))
Trump dropped a big bomb over there. Stocks taking a hit. We might get 3 countries in a week, if we can sneak a tomahawk into NK before the end of the day.
Wow. So while I think the product looks awesome, and I would trust the people involved, the prices are extortionate.
They are selling a 1-oz 24k gold bangle for $1910. With gold at $1290, that's $620 over melt per ounce!!
I pick Chinatown. You can probably get the XRF test done by some jeweler on whatever you buy for less than $50. In asia, that test is $10 per piece.