Investing in precious metals 101

PM Daily Market Commentary – 7/9/2019

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  • Wed, Jul 10, 2019 - 03:02am



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    PM Daily Market Commentary – 7/9/2019

Gold rose +2.19 [+0.16%] to 1407.79 on heavy volume, while silver climbed +0.08 [+0.53%] to 15.13 on light volume. The buck moved slightly higher [+0.11%], along with SpX [+0.12%], crude rallied [+1.35%], while bonds fell [10Y yield +2 bp].

Did Powell testify before Congress today? He did not. I was off by a day. His testimony is scheduled for Wednesday. Sigh.

Gold fell in Asia and the early part of London trading, spiking down to 1387.50 before bouncing back and then spiking higher around 11 am. The high wave candle was a bearish continuation, and forecaster moved higher but remains in a downtrend. Gold remains in an uptrend in both weekly and monthly timeframes.

COMEX GC open interest rose +3,691 contracts.

Futures are projecting a 100% chance of a rate cut in July, a 100% chance of at least one rate-cut by December, an 84% chance of at least 2 rate cuts, and a 41% chance of at least 3 rate cuts. The December rate cut chances continue to slowly decline.

Silver mostly followed gold, except the decline in London was milder. Silver’s long white candle was bearish (42%), but forecaster moved higher putting silver in just a slight downtrend. Silver remains in a downtrend in both daily and weekly timeframes.

COMEX SI open interest fell -730 contracts.

The gold/silver ratio fell -0.41 to 92.86. This is the second day silver has outperformed gold. We are also seeing some short-covering – a drop in the open interest. That’s bullish.

The miners gapped down at the open, then rallied all day long, closing at the highs. GDX climbed +0.90% on moderate volume, and GDXJ jumped +1.92% on heavy volume. XAU moved up +0.91%, the closing white marubozu was The closing white marubozu was a bullish continuation, but forecaster edged down, moving XAU into a very slight downtrend. XAU managed to close the day above the 9 MA, which is a good sign. XAU is now in an uptrend in the weekly and monthly timeframes, but the current trends are not very strong.

The GDX:gold ratio rose +0.75%, and the GDXJ:GDX ratio climbed +1.01%. That’s bullish.

Platinum fell -0.57%, palladium dropped -0.94%, and copper moved down -1.02%. Copper looks as though its about to break down to new lows – dangerous territory – palladium has printed a swing high, and platinum is still trying to recover. The recent moves in copper do not support any trade settlement with China, nor do they support a bullish outcome for equities in general.


The buck rose +0.07 [+0.07%] to 96.85. The short white candle was mildly bearish (33%), and forecaster inched lower, but remains in a very strong uptrend. The buck just keeps grinding slowly higher. The buck remains in an uptrend in both daily and weekly timeframes, and the monthly is right on the edge of a upside reversal too.

Large currency moves included: AUD [-0.62%], CAD [+0.37%], and GBP [-0.43%]. That’s a new low for GBP today, last seen at the start of 2017.

Crude rose +0.78 [+1.35%] to 58.42. While crude rallied during the trading day, a good chunk of the gains came after hours, due to a bullish API report (crude: -8.1m, gasoline: -0.3m, distillates: +3.7m) released at 4:30 pm. The long white candle was mildly bearish (39%), but forecaster jumped higher, moving crude into a moderate uptrend. Crude ended the day back above both 9 and 50 MA lines, which is positive. Crude is now in an uptrend in all 3 timeframes.

SPX rose +3.68 [+0.12%] to 2979.63. SPX fell in the futures markets overnight, resulting in a gap down open, but then rallied for most of the day. The long white candle was bearish (57%), and forecaster inched lower, but that still leaves SPX in a moderate uptrend. SPX remains in an uptrend in all 3 timeframes.

Sector map shows communication services (XLC:+0.62%) and REITs (XLRE:+0.53%) leading, with materials (XLB:-0.98%) and staples (-0.59%) doing worst. This was a relatively bullish sector map – tech and financials both did reasonably well.

VIX rose +0.13 to 14.09.

TLT moved down -0.04%, and it remains in a slight downtrend. TY fell -0.11%, up +0.14%, enough to drop TLT into a short-term downtrend. TY fell -0.15%, the short black candle was a bearish continuation, and forecaster moved lower into what is now a strong downtrend. TY remains in an uptrend in both weekly and monthly timeframes. The 10-year yield rose +2 bp to 2.05%.

JNK fell -0.13%, making a new low, with forecaster moving into a very strong downtrend. While the moves aren’t strong, the forecaster looks pretty unhappy.

CRB rose +0.01%, with 3 of 5 sectors rising, led by livestock (+2.86%).

Not too much happened today – the market looks as though its on hold, waiting to see what Powell will say.  Will the Nonfarm Payrolls report change his mind back to “patient” once again?  I really don’t see a 100% chance of a rate cut in the Fed meeting coming up 2 weeks from now.  It just doesn’t feel right to me.  Things just don’t look that bad.

The buck’s recent rally is certainly hinting at “no rate cut”, and bonds are finally beginning to agree.  But the futures markets haven’t yet started to adjust.  Gold is in a longer term uptrend, but if Powell hints that the Fed probably won’t cut, how far might it retrace?

Then again, gold is also driven by forces outside the US, and the economic prospects outside the US look substantially worse.  Perhaps that is what is keeping gold afloat right now.  Longer term trends for gold remain pointing higher.

Sometimes I wish I wrote just a weekly commentary, so I wouldn’t get sucked into the day-to-day weeds quite so much.  🙂

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  • Wed, Jul 10, 2019 - 06:05am



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    Cross Currents have re-emerged (gold +15)

Powell’s statement was released at 8:30 am, and gold immediately spiked +15, silver +0.15, and SPX +13.   It looks like there is a Santa Claus after all.  So much for my tea-leaf reading ability.

“He says that the outlook has dimmed due to uncertainties about trade, weak inflation, and more…”

  • Wed, Jul 10, 2019 - 03:48pm



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    Thank you

Thank you for your insights and the reasoning behind them. They help provide context that is lacking in many other places.

Kitco shows gold closed at 1421.70, +24.60 from the prior close.

Kitco charts at

  • Wed, Jul 10, 2019 - 05:21pm



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    Retirement crisis

Real Vision put out a nice video that I just saw on YouTube regarding the retirement crisis that is worth a watch. The two most interesting charts to me are the two below. They created a composite index to estimate balance sheet expansion based on expected labor force participation rate decline with the boomers retiring. Who knows if the broke boomers (as laid out in the video) can actually afford to retire, but if trends continue the FED balance sheet will continue to expand. Will that be good for gold/silver? Who knows what manipulations we will see, but it has the hallmarks to be gold positive.

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