PM Daily Market Commetnary – 12/7/2015
Gold fell -15.10 to 1070.70 on moderately light volume, while silver dropped -0.32 to 14.23 on moderately heavy volume. PM traded sideways in Asia, and then sold off during London and New York, dropping steadily until the market closed.
But it was not just PM that dropped – pretty much everything except bonds sold off today, with oil in the lead.
While gold lost a good chunk of its gains from the big Friday rally, it did manage to find support on the 9 EMA. In addition, volume was relatively light, which suggests no massive sell-off even though the price drop was fairly large.
Silver had much the same pattern as gold, losing much of Friday's gains, but it too managed to find support at the 9 EMA.
Same story with the mining shares; GDX endured a big loss, dropping -4.25% on moderately heavy volume, while GDXJ fell -3.52% on moderate volume, but both closed above their 9 EMAs at end of day. GDXJ suffered an especially big sell-off intraday, but managed to recover much of its losses by the close.
To me this was entirely a commodity-driven sell-off. Not only did gold, silver, and the miners fall, but copper was down [-1.49%], as was platinum [-2.68%], palladium [-1.99%], natgas [-5.13%], and oil [-6.25%]. The overall index CRB dropped a massive -2.55%, making a fairly dramatic new all-time low. Today, PM was a follower rather than a leader. Oil was leading the charge lower.
WTIC fell -2.51 [-6.25%] to 37.63; once oil lost round number 40, price simply collapsed, first dropping through 40, and then through the prior low at 37.75. This move was follow-through after Friday's disappointing OPEC meeting, where no agreement could be reached on limiting production. Now that the 2015 low has been breeched, the next support is the Feb 2009 low of 33.55.
USD climbed +0.33 to 98.67, recovering a small part of the losses suffered after the ECB announcement on Thursday. The dollar is slowly trying to recover; since Thursday, Draghi has attempted to push the market higher by talking threateningly about (basically) QE infinity, but so far at least the market remains generally unimpressed.
SPX dropped -14.62 [-0.70] to 2077.07, falling below its 9 EMA. Today I think equities took a back seat to commodities. VIX rose +1.03 to 15.84.
JNK dropped a big -0.68%, and looks as though it will test the previous low that is less than 1% away from today's close. JNK does not like falling oil prices.
Bond ETF TLT rallied, climbing +0.97% and moving back above its 3 moving averages once again. Bonds have been all over the map recently, but they are now back to bullish territory.
It appears as though it will be tough for gold to rally in the face of what is a fairly dramatic drop in commodity prices. This is why I put the OPEC meeting on my list of "important events to watch" – gold and oil, while they aren't perfectly correlated, do seem to influence one another. While that COT report shows that gold is definitely ready to rally, and buyers at COMEX do seem willing to go along, we might just need to mark a low in oil (and commodities) before it will take off.
The last important event on the calendar for December is the Fed meeting on Dec 15-16.
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Gerald Is suggesting a bottom for gold at $1015 because that is the cost of production. I eyeball that in for May or June 2016.
But archeological discoveries show that the Romans buried theirs in the back yard when their empire collapsed. Fat lot of good that did them.
From Jim Rickards: "The truth is, my predictive model uses a mathematical code that was actually suppressed by governments for 21 years. But given what’s happening, I can’t stay silent anymore. That’s why I’m showing any American that wants to listen how to use this predictive model. And no, it’s not another book you have to buy. Instead, I’ve put everything about how to access this model on a website."
After the above he says the website will be taken down in 24 hours and the hard sell begins. Has anyone investigated this model?
I've read a lot of Rickards and I like his stuff. I haven't investigated this 'new model', but sometimes his hard-sell does make me question his motivations.
It seems to be his spin on beyesian inference, a way of combining new evidence with existing beliefs -Wikipaedia.
and learn a hell of a lot about the BIG Picture BUT I do not spend one penny on his financial services–seems too greedy and pushy. His 2 books and his The Big Drop were turning points for me. His bar-bell strategy (preparing for BOTH deflation and inflation simultaneously) SEEM well-thought out. But if you bought into his portfolio you would have lost a lot of money by now. I keep watching his recommendations though, just in case. He keeps saying that 10% gold is sufficient but surely, after reading Chris's two posts today, one might be thinking of increasing that percentage. Mike Maloney suggests 80% silver/20%gold buying at present, as he thinks silver will GREATLY outperform gold in the future.
Thank Quantum Consciousness that most of us here can purchase the metals, whereas probably 90% of the world's population CANNOT! Very sad state of affairs. Very sad.
I was one of the initial subscribers to his new "Intelligence Triggers" service, so got it for $500 (normally $2500).
As far as his "secret formula," it really isn't anything special or sophisticated… mostly marketing hype.
Every other Tuesday he puts out a long-term Options trade recommendation (LEAP). If you go back and look at the track record of "Closed Positions" in the Intelligence Triggers portfolio, you would have made ~30% profit over the past 6 months had you put equal $ amounts into each trade. That's why I kept the subscription beyond the 60day trial period. I just put a small $ amount into each recommendation.