PM Daily Market Commentary – 4/28/2014
Gold closed down -7.40 to 1296.20 on moderate volume, silver was off -0.17 to 19.56 on moderately heavy volume. Gold and silver more or less just traded slowly lower today. There was one spike down around 10:10 EDT, but it wasn't connected to any economic release that I know of.
The buck was hit in asia but managed to rebound somewhat, closing down a modest -0.06 to 79.78. The dollar is slowly dropping, with the emphasis on slowly.
The miners sold off today, with GDX down -1.92% on moderate volume. GDXJ was down -3.45% on very heavy volume, closing below Friday's low. Both GDX and GDXJ slowly sold off today, with each rally attempt failing. It was not a good day for the metals, the miners, or the ratios, with all signals bearish on an intraday basis. While the charts of gold & silver look all right, the miners do not look nearly as healthy, and GDXJ in particular has been leading gold. The miners are within a hairs-breadth of putting in a top – if this happens again tomorrow, I think our brief gold bounce may be done.
The Shanghai premium over COMEX rose +0.53 today to 16.29, which is an increasingly bullish sign of physical demand.
The US equity market (SPX) sold off briskly after the first hour of trading today, slicing through the 50 MA on some pretty heavy volume. It then rallied, closing up +6 to 1869. I was surprised by the afternoon rally, since the morning selloff came right after the release of some pretty good economic news – usually when a market sells off on good news, the next stop is much lower. But there you go. A number of former market leaders didn't bounce quite so nicely, so signals are still mixed. When the two leading sectors are utilities and REITS, it isn't confidence-inspiring.
Sample group of silver miners in production cost sample group. 50% of group took a loss in 2013 at an average price of $23.79. $4.42 higher than today's spot price.
Best fit curve extracted from production cost data to predict possible future price movements…
Same chart, but with the addition of silver spot price
Production costs compared to silver price to show profitable and not-profitable periods. (updated 2013)
Production costs compared to oil price to show their important relationship.
Excel file showing production costs….