PM Daily Market Commentary – 4/29/2014
Gold closed down -0.50 to 1295.70 on moderate volume, with silver off -0.09 to 19.47 on moderately heavy volume. PM was hit in London, and then rallied right before the NY open – although gold's rally was more enthusiastic than silver's rally. Silver still hasn't confirmed that low last Thursday. Perhaps it will retest the low again at 19, which would be unfortunate if you're a silver long.
The buck rallied during London trading, closing up +0.11 to 79.89. This was driven by a brisk drop in the euro, which was off -0.40 today closing right at its 50 MA. If the euro falls through that 50 MA, that could lead to a significant rise in the buck and eventually that will likely take a toll on gold.
The miners recovered most of yesterday's losses, with GDX +1.33% on moderate volume, and GDXJ up +2.77% on heavy volume. GDXJ still has me worried, since it looks like it is forming a lower high, which would be a bearish sign overall for PM. A rally above 37.50 would fix the problem, while a move below 36 would likely lead to a PM selloff.
The Shanghai premium over COMEX rose +3.56 to 19.85, a big move to a very high level. The last time premiums were this high was back in late December 2013, right around the gold low at 1180.
So silver looks bad, the miners could go either way, gold itself seems unsure, but the Shanghai premiums are quite elevated – and the last three times the premiums rose to around +20, gold bottomed soon afterwards. So which indicator should we believe in?
The US equity market rose +8 points to close at 1878, only 12 points away from yet another all-time high. The normal market leaders however are not leading, which calls into question this scenario. While price continues to move up, the ratio indicators point to risk off. Again, a conflict with indicators and price.
To make matters even more interesting, we have an FOMC meeting happening today and tomorrow, with the minutes released at 1400 EDT tomorrow. Will we see something more than "more tapering"? Its always exciting to wait for the latest in lever-pulling from our central planners.
As a very unsophisticated trader I watch the green line of Kitco's 2 year graph which seems to have bottomed out. Which, of cause means nothing.
Nicolle Foss thinks it could go to $2/Kg in the medium term as debt/money goes "poof" but in the long haul should be a good investment.
I gain faint comfort from the thought that a 3 bedroom house has historically sold for 16 kg silver.