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PM Daily Market Commentary – 9/6/2018

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  • Fri, Sep 07, 2018 - 02:00am



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    PM Daily Market Commentary – 9/6/2018

Gold rose +3.01 [+0.25%] to 1207.16 on heavy volume, while silver moved down -0.04 [-0.25%] to 14.18 on moderately heavy volume. The buck fell -0.15%, and the other metals largely moved higher; given that, silver’s performance is looking especially weak right now.

Gold tried to rally today but mostly failed. The shooting star candle was bearish (42% reversal) but forecaster moved up +0.16 to -0.15; that’s still a downtrend. Gold ended the day below its 9 MA, and remains in a downtrend in all timeframes. Really, there was not much change from yesterday.

COMEX GC open interest rose 6,681 contracts. It looks like shorts won the battle today.

Rate rise chances (September 2018) fell to 99%.

Silver also tried to rally, but then succumbed to some serious selling pressure. The spinning top candle was neutral, while forecaster jumped +0.56 to -0.11. Weekly is also improving, but silver remains in a downtrend in all 3 timeframes.  On the chart – either silver is bottoming, or it is preparing to break down again.  Its really hard to say which.

COMEX SI open interest rose +698 contracts.

The gold/silver ratio rose +0.39 to 85.07. The rising ratio is bearish – but the level suggests PM could be at or near a long term low. I’ve said that for a few days now, and it remains true. Other than the 1990-1993 time period, this is the highest value for the gold/silver ratio from 1975-preset.

Miners tried to rally today also, but the rally failed. GDX moved down -0.17% on moderately heavy volume, while GDXJ fell -0.37% on heavy volume. XAU fell -0.25%, but managed to avoid making a new low. The long black candle was somewhat bearish, but XAU forecaster moved up +0.14 to -0.74. That’s still a strong downtrend. XAU remains in a downtrend in all 3 timeframes.

Noticed after I posted – the RSI-7 of XAU is showing what could be a bullish divergence.  That’s when price drops, but the RSI drops a lot less.  If XAU can avoid a further breakdown, then a miner recovery could be imminent.  I know, its been nothing bad bad news for weeks and weeks, but it is during these unpleasant times that we have to dodge those negative emotions and be most on the lookout for reversals.

The GDX:$GOLD ratio fell -0.42%, while the GDXJ:GDX ratio dropped -0.20. That’s bearish.

Platinum rose +0.92%, palladium moved up +0.06%, and copper climbed +0.48%. Like gold and silver, copper too had a failed rally, but copper forecaster issued a buy signal, as did platinum and palladium.  That is cause for some cautious optimism.

The buck fell -0.14 [-0.15%] to 94.65. Not much happened today in the buck; the spinning top candle was neutral, while forecaster dipped –0.15 to +0.27; the buck remains in an uptrend on the daily and monthly timeframes, but is in a downtrend on the weekly.

My sense: the weekly downtrend seems to be “winning” right now. This doesn’t make sense given the current macro environment – what with emerging market currency issues galore – so the answer probably lies in the realm of domestic politics and confidence. Right now, Trump is looking weak going into the midterms; any real achievements he has accomplished will be overshadowed by outrage of the day, along with “anonymous” editorials, unflattering books, and so on.

Trump will soon have a Democratic House that will immediately start impeachment proceedings against him, and his Republican “friends” in Congress would probably be secretly quite happy to see him swapped out for a President Pence that won’t rock the boat in cartel-popular areas like trade, globalization, and immigration. Note: the “impeachment project” doesn’t poll very well among independents, so that’s why the left isn’t advertising this fact, but the market has almost certainly sniffed it out. And, bottom line, that results in a weaker-than-expected dollar.

Crude fell -0.69 [-1.01%] to 67.58. The plunge occurred immediately following what seemed to be a reasonably good EIA report (crude: -4.3m, gasoline: +1.8m, distillates: +3.1m). That’s not a good sign. Forecaster plunged -0.51 to -0.56, which is a much steeper downtrend. Crude is now below both the 9 and 50 MA lines. Crude still remains in an uptrend in the weekly and monthly timeframes.

SPX fell -10.55 [-0.37%] to 2878.05. Prices fell starting around 10 am, and managed to recover somewhat by end of day. The spinning top candle was a bearish continuation, and forecaster was unchanged at -0.26. SPX is still in an uptrend in the weekly and monthly timeframes. Sector map has energy (XLE:-1.85%) and tech (XLK:-0.73%) leading down, while utilities (XLU:+0.57%) did best. That’s a bearish-looking sector map.

Many of the former leaders in tech are more seriously breaking down now: NFLX, FB, TWTR; even GOOG is now below its 50 MA. The conservatives have finally noticed that the left-leaning tech giants have been hard at work muzzling their voices online. “Well, we ARE a private company, so we can do whatever we want – and besides, we aren’t doing that.” But its all very opaque. I’m sure they are hard at work doing just exactly that.

But I think the whole setup is awesome. Conservatives are finally complaining that monopolies are bad – at the same time, they are saying the FBI does bad things to people, and that maybe dialog with Russia is a good idea too. “I’d like three scoops of Irony, please. But hold the perspective.”

VIX +0.74 to 14.65.

TLT rallied today, up +0.37%, printing a swing low (52% bullish). TY agrees, rising +0.19%, also printing a picture-perfect swing low (66% bullish), which caused the forecaster to issue a buy signal for TY. TY is now back in an uptrend in all 3 timeframes, and is also back above the 9 and 50 MA lines. The 10-year yield fell -2.3 bp to 2.88%.

JNK was unchanged, and remains in a relatively strong downtrend.

CRB fell -0.64%, with 3 of 5 sectors moving lower, led by energy (-1.17%). CRB appears headed for a re-test of its recent low, and is below all 3 moving averages. The commodity downtrend isn’t helping the metals at all.

There were some faint signs of hope today – but they were faint, and they came from the “other metals” rather than gold, silver, or the miners.  Trump’s political weakness is dollar-negative, and that should support the metals to a degree.  Turkish Lira stopped moving higher – Merkel vowed “support for Turkey’s economy”, whatever that meant.  Europe really doesn’t want Turkey to default, but I’m not sure what they can realistically do about it.  Perhaps they can send Erdogan some cash.  Or maybe the ECB can print a bunch of Euros and buy some of that Turkish debt.  Now that’s a good idea!

All right, that’s about it.  We have Nonfarm Payrolls tomorrow at 8:30 am.  Signs are it will probably be a strong one – thanks to a wave of debt-funded tax cuts thoughtfully provided by all those deficit-hawk Republicans in Congress.  Next on the list: cutbacks for all the social programs due to entirely unrelated budget limitations.

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