PM Weekly Market Commentary – 03/05/2021
On Friday, gold moved up +3.54 [+0.21%] to 1700.24 on heavy volume, while silver fell -0.08 [-0.32%] to 25.29 on moderately light volume. The buck rallied sharply again [+0.39%], SPX shot up too [+1.95%], crude rallied as well [+3.52%], while bonds moved lower once more [the 10-Year yield rose +3.0 bp].
Gold dropped -34.06 [-1.96%] to 1700.24 on heavy volume. The long black candle was a low-percentage bullish reversal (28%), forecaster dropped, moving deeper into its downtrend. Gold is in a downtrend in all three timeframes.
Gold/euros climbed -6.83 [-0.48%] to 1427.30 on heavy volume. The long black candle was a reasonably strong bullish reversal (41%), forecaster was unchanged at. Gold/euros is in a downtrend in both the weekly and monthly timeframes.
COMEX GC open interest rose +5.3K contracts on Friday, and fell -5.9K contracts this week. Current open interest for GC: 44% of global annual production, down -0.55% this week. 2048 GC contracts stood for delivery at COMEX this week.
Gold commercial net rose +30K contracts, which was -27K fewer shorts and +2.8K new longs. Gold managed money net fell -23K contracts, which was +4.6K new shorts, and -19K fewer longs.
Gold fell 3 days out of 5 this week, making a new low on Friday. There was only a slight amount of short-covering, but the overall commercial short position is at an 18-month low. Last time the commercials had this few shorts was when gold was trading at 1400/oz back in early 2019.
Gold D/W/M RSI-7=23/22/42. That’s medium-term oversold.
Mostly, the fall in gold this week was a currency effect.
Silver plunged -1.41 [-5.28%] to 25.29 on moderately light volume. The long black candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. Silver is in a downtrend in both the daily and weekly timeframes.
COMEX SI open interest fell -123 contracts on Friday, and fell -17K contracts this week. That was -35 days of global annual production in paper removed from the market. Current open interest for SI: 88% of global annual production, down -9.65% this week. 2524 SI contracts stood for delivery at COMEX this week.
Silver commercial net rose +11K contracts, which was -12K fewer shorts and -372 fewer longs. Silver managed money net fell -8.0K contracts, which was +4.2K new shorts, and -3.7K fewer longs.
The gold/silver ratio climbed +2.27 to 67.23. That’s bearish.
Silver broke below the 50 MA this week, but seemed to find a bid on Friday – at least somewhat. Silver did make a new one-month low on Friday. There was a massive amount of short-covering this week; we are down to OI levels that match previous lows over the past 4 months. As with gold, we could be nearing a low.
The “silver squeeze” has been entirely unwound – at least in terms of the COMEX price.
GDX rallied +2.09% on moderate volume, while GDXJ fell -0.33% on moderately heavy volume. XAU climbed +2.13%, the high wave candle was a reasonably strong bullish reversal (49%), forecaster climbed, but remains in a downtrend. XAU is in an uptrend in just the daily timeframe.
The GDX:gold ratio climbed +3.97%, while the GDXJ:GDX ratio dropped -2.42%. That’s mostly bullish.
The miners did quite well this week, especially compared with gold and silver. They had the pattern of selling off in the morning, only to rally back in the afternoon, wiping out all the losses. Especially for GDX, it seemed as though there was a bunch of Big Money waiting to buy the mining shares whenever they dropped even a few percentage points.
That’s generally what accumulation looks like: price doesn’t move very much, and volume is large. Since miners tend to lead, I think this is a positive indicator for the PM group overall. Here’s the GDX accumulation look during this week:
And the weekly for XAU. The weekly bullish reversal was highly rated – it could well be correct. The daily forecaster reversed into bullish territory also.
Platinum fell -61.41 [-5.40%], while palladium rose +23.52 [+1.01%]. Platinum sold off fairly hard this week, while palladium actually did reasonably well. Platinum is now in a weekly downtrend – it has entirely retraced the big rally from three weeks ago.
Copper was virtually unchanged, up +0.01 [+0.24%] to 4.10 on moderate volume. The doji candle was neutral, forecaster was unchanged and remains in an uptrend. Copper is in an uptrend in the weekly and monthly timeframes.
There was a lot of volatility, but price didn’t change much at all. One day, a big sell-off. The next, an equally-large rally. While copper is now below its 9 MA, it remains in a strong longer term uptrend.
The buck rallied +1.12 [+1.23%] to 91.98 on extremely heavy volume. The swing low candle was neutral, but forecaster climbed, moving higher into its uptrend. The buck is in an uptrend in all three timeframes.
Major currency moves included: EUR [-1.52%], GBP [-0.89%], JPY [-1.51%], AUD [-0.64%].
The buck staged a major rally this week, all of which happened on Thursday and Friday. The buck closed at a new 4-month high at end of week, and it is now in a reasonably strong uptrend.
Regardless of the razor wire around the capitol, or the paranoid “Q-Anon” insurrection tales that never seem to come to pass – the dollar has yet to turn into confetti.
Crude jumped higher, up +4.60 [+7.47%] to 66.17 on moderately heavy volume. The closing white marubozu candle was a probable bearish reversal (50%), forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in all three timeframes.
EIA report: crude +21.6m, gasoline -13.6m, distillates -9.7m.
After threatening to correct earlier in the week, crude broke out to a new 2-year high on Friday. Crude ended the week back above all 3 moving averages, and in a strong uptrend.
One reason: OPEC is suggesting there will be no production increase in April. With that drop of 3 mbpd in US shale production over the past year, this seems much more likely to happen.
SPX climbed +30.79 [+0.81%] to 3841.94 on heavy volume. The long legged doji candle was a bearish continuation, forecaster climbed, but remains in a downtrend. SPX is in an uptrend in the monthly timeframe.
Energy [+9.07%] led, along with financials [+4.15%], while discretionary [-2.76%] and REITs [-1.36%] did worst. This was a neutral sector map.
The VIX fell -3.29 to 24.66.
Equities were very volatile this week, selling off hard one day, then rallying hard the next. Energy did extremely well, as did the banksters; increasing rates means better net interest margins for those doing “God’s Work”, while that big jump in crude prices helps all the producers who have been beaten like a rented mule during 2020.
Are we going to have a correction? SPX remains in a mild near term downtrend. SPX is below the 9, but above both the 50 and 200 MA lines.
TLT fell -2.94%. The long black candle was unrated, forecaster dropped, moving deeper into its downtrend. TLT is in a downtrend in both the daily and weekly timeframes. The 30-Year yield rose +13.0 bp to +2.30%.
TY dropped -0.74%. The long black candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. TY is in a downtrend in all three timeframes. The 10-Year yield rose +13.0 bp to +1.57%.
The 10-Year yield rose +13.0 bp to +1.57%. The closing white marubozu candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. The 10-Year yield is in an uptrend in the weekly and monthly timeframes.
Rates are rising. Relentlessly. Fed purchases remain at 20B/week. Clearly it isn’t “enough”. And that $1.9 billion dollar Biden Donor bill is still up on deck. The Donors need their cash, come hell or high water. Because, pandemic. Or whatever.
JNK climbed +0.04%. The high wave candle was a bearish continuation, forecaster climbed, but remains in a downtrend. JNK is in a downtrend in both the daily and weekly timeframes.
Crappy debt was back and forth this week too; it remains in a downtrend, below both the 9 and 50 MA lines. Most likely the tea leaves don’t much like the rising long term interest rates.
The GLD ETF tonnage on hand dropped -24.27 tons, with 1069 tons remaining in inventory.
ETF Discount to NAV:
* CEF -4.66%
* PHYS -0.90%
* PSLV -0.57%
Gold dealer big bar premiums:
* gold [1kg]: +1.75%
* silver [100 oz]: +15.44%
The physical ETFs have dropped back into discount, while big bar premiums at retail remain at high levels. The banksters
appear to have prevailed over this round of the “silver squeeze” – at least for the on-exchange prices. They do not con
trol the physical market, where shortages remain.
Fed Balance Sheet: 7557.5B, -32.6B, Liquidity Swaps: 4.9B, -1.9B, Reverse Repos: 221.3B, +17.8B, Treasury Securities: 4867.3B, +22.7B, MBS: 2133.4B, -47.3B.
Durable Goods, new orders: headline +3.27% m/m (prior +1.23% m/m) capital goods new orders (excl aircraft): +0.37% m/m (prior +1.51% m/m) shipments: +1.88% m/m (prior +2.08% m/m)
Existing Home Sales: headline +0.60% m/m, Mean Sale Price: 338K, -4.3K, monthly home supply: 1.90, +0.00.
Gold and silver both fell this week, while the miners manged to move higher. This divergence in pricing is overall bullish for the PM group, as miners tend to lead. The miners don’t often rally when gold drops. I saw evidence of accumulation in GDX, where prices for GDX moved sideways as the gold price fell, with GDX trading at higher-than-normal volumes each day. That telegraphs a strong bid underneath the miners at current prices. “Somebody” thinks they are a good deal at these prices – they are buying even as the gold price itself falls.
In addition, commercial short interest in gold is at 18-month lows. That’s not a timing indicator, but it does suggest a low is more likely – the more that short interest drops, the more likely a low will happen. This is just based on history. Gold is also oversold.
Risk assets were mixed; crude was the star of the show, making a new 18-month high. Equities rallied too, dragged higher seemingly by crude prices. Both copper and crappy debt went nowhere, with copper seeing a whole lot of price movement, both up and down.
Bonds fell once more. The 10-year has erased the entire pandemic rally at this point – it is now to 1.57%, which still seems a tad ridiculous since one week’s rise in rates can erase an entire year’s worth of interest payments. Unless we get that long-promised deflationary depression…the long bond seems like a bad idea to hold.
That brings us to the buck, which had a great week – because of the last two days. The buck made a 4-month high, in spite of all the threatened “armed insurrections” that the Donor Factotums are pretending to be worried about.
Presumably, if the Biden Donors were operating with the consent of the governed, they wouldn’t feel the need for razor wire, and thousands of soldiers armed with automatic weapons to protect their water-carriers. And yet – Washington will be an occupied city for the foreseeable future. The Bad Orange Man was called by many “an autocrat” or “a Nazi”, yet it is the Biden Donors (acting via their sock-puppet, Old White Joe) who has deployed the National Guard on a permanent basis in the Capitol.
Just like “15 days to slow the spread” has lasted now for a year, the ever-changing “upcoming Q-Anon armed insurrection date” will be used as an excuse to keep the Capitol under military occupation in perpetuity. Chris pointed out, sometime last year, that he felt QAnon was a CIA disinformation campaign. Given how tied in the Biden Donors are with the CIA, and how well QAnon has served their purposes, I think this is as close to a sure thing as it comes. If you just look at “who benefits” from all this alleged “QAnon” chatter, the answer is clear: The Biden Donors.
If you can fabricate an “armed insurrection” event (where nobody was actually armed, and the only people who died in the “insurrection” were the protesters – mostly from ill health, with one shot dead by an unnamed police officer — police accountability, anyone?), as your reward, you get to occupy the Capitol for the rest of eternity. Because, Q-Anon!
The US population continues to move towards herd immunity; summer is approaching, and not even Two Mask Fauci will be able to doomtalk the US population into hiding in their basement for too much longer. When will the CNN viewers start to notice he’s all about bad news 24/7 totally independent of “science” or “data”? Does every first-world nation have a Fauci? “Hide hide hide you’re all gonna die!”
California looks utterly finished with the outbreak at this point. Can schools be reopened? Of course not! Because…because…they are running out of reasons.
Which brings me to reasons and favors. Why deploy the National Guard? Why shut down schools? Why close restaurants? What reason do they provide? Does anyone believe these reasons? Why do we comply if the reason makes no sense?
There was a psych study done long ago on the use of “placebic information” and obtaining favors; long story short, if you request a favor (cutting in line to make copies), providing any non-absurd-sounding reason (“placebic information”) for the favor (say: “because I need to make copies”) has a similar success rate to providing an actual reason (“I have a meeting in 5 minutes”). This only works for small favors.
1. Request only. “Excuse me, I have X pages. May I use the xerox machine?”
2. Placebic information. “Excuse me, I have X pages. May I use the xerox machine, because I have to make copies?”
3. Real information. “Excuse me, I have X pages. May I use the xerox machine, because I’m in a rush?
Small Favor (5 pages): (1) 60% success, (2) 93% success, (3) 94% success.
Big Favor (20 pages): (1) 24% success, (2) 24% success, (3) 42% success.
Explained in an article here:
“The Mindlessness of Ostensibly Thoughtful Action: The Role of “Placebic” Information in Interpersonal Interaction”, Journal of Personality and Social Psychology, 36(6): 635-42, 1978.
We are in the process of running a similar n=350-million experiment using “sciency” language as the “placebic information”, and various versions of “give up your schools/travel/business/jobs/life” as the “favor”. We know from the study that providing any reason at all has power – although compliance diminishes as the size of the favor increases. But – critically – simply by asking, you can get big favors 24% of the time regardless what reason you provide.
I’m guessing this baseline compliance rate changes as society itself changes. Right now, we seem to be excessively herdlike. We defer: “they wouldn’t be asking if it weren’t important.”
I predict that the baseline herd compliance rate with “large favor” asks will be substantially lower at the end of this Fourth Turning period.
Even among CNN viewers.
That’s what the Fourth Turning is all about.
Two-Mask Fauci: “Wear two masks! It’s just common sense!”
Morgan has long predicted a “Great Silver Crisis” is coming. While the price of the white metal has backed off recently, it is still way up from last year. Morgan thinks silver is still the most undervalued asset out there, and he expects more frenzied buying as people flee fiat currencies printed to infinity. He also predicts very big price moves higher at some point after years of manipulation. Morgan thinks, “The Great Silver Crisis’ is starting now.”
Morgan warns, “We are reaching a limit on everything across the board with the ‘Everything Bubble,’ the overvalued ‘Everything Bubble.’ What is not overvalued? It’s pretty much the commodities. We are going from a financial economy where 70% is a consumer economy to an economy of what is needed. This is the commodity sector. You need corn, wheat, rice, soybeans, cotton and look at lumber. I mean all these things are going up. The financial system that is running 40% of the economy is just paper promises going back and forth across trading desks all day. We are not a productive society.”
DaveF, could you explain in simple terms what is happening with the strengthening dollar and the rising 10Y yield. What is the money flow pattern?