PM Weekly Market Commentary – 09/25/2020

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  • Sat, Sep 26, 2020 - 06:40am

    #1

    davefairtex

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    PM Weekly Market Commentary – 09/25/2020

On Friday, gold dropped -8.51 [-0.45%] to 1867.45 on moderately light volume, and silver dropped -0.25 [-1.07%] to 23.03 on moderately light volume. The buck moved higher [+0.31%], SPX rallied too [+1.60%], crude inched down [-0.32%], and bonds rose slightly [the 10-Year yield fell -2.0 bp].

The metals sector map had silver leading gold lower, the juniors leading the seniors lower, but the miners were not hit quite as hard as silver. All sectors fell, and most sectors have fallen below the 50 MA lines. The correction is starting to become more serious. Platinum is now back below the 200 MA.

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Gold/Euro $GOLD:$XEU -2.86% 15.92% falling rising rising falling ema9 on 2020-09-18 2020-09-25
Copper $COPPER -4.19% 15.56% falling rising rising rising ma50 on 2020-09-25 2020-09-25
Gold $GOLD -4.74% 23.22% falling rising rising falling ema9 on 2020-09-21 2020-09-25
Palladium $PALL -6.56% 36.28% falling rising rising rising ma50 on 2020-09-24 2020-09-25
Senior Miners GDX -7.11% 36.68% falling rising rising falling ema9 on 2020-09-18 2020-09-25
Platinum $PLAT -9.64% -9.41% falling rising falling rising ma200 on 2020-09-22 2020-09-25
Silver Miners SIL -10.07% 42.78% falling rising rising falling ma50 on 2020-09-21 2020-09-25
Junior Miners GDXJ -10.53% 41.63% falling rising rising falling ema9 on 2020-09-21 2020-09-25
Silver $SILVER -14.70% 28.52% falling rising rising rising ma50 on 2020-09-21 2020-09-25

For the week, gold plunged -93.00 [-4.74%] to 1867.45 on moderately light volume. The confirmed bearish spinning top candle was a probable bearish reversal (50%), forecaster dropped, moving deeper into its downtrend. Gold is in a downtrend in both the daily and weekly timeframes.

Gold/euros plunged -47.30 [-2.86%] to 1606.11 on moderately light volume. The confirmed bearish spinning top candle was a likely bearish reversal (73%), forecaster fell, dropping into a downtrend. Gold/euros is in a downtrend in all three timeframes.

COMEX GC open interest fell -1.6K contracts on Friday, and fell -18K contracts this week. That was -5 days of global annual production in paper removed from the market. Current open interest for GC: 52% of global annual production, down -1.64% this week. 563 GC contracts stood for delivery at COMEX this week.

It was a bad week for gold; the slight bounce on Thursday was not confirmed on Friday. The weekly candle print was ugly, and forecaster is pointing lower in both daily and weekly timeframes. Gold is through both the 9 and 50 MA lines. There was a moderate amount of short-covering, but nothing dramatic. A few managed money longs have been rinsed out, but not all that many.

At least half of the move in gold/USD was a currency effect – the sharply rising dollar is causing a lot of trouble for gold.

Silver plunged -3.97 [-14.70%] to 23.03 on moderately light volume. The confirmed bearish doji candle was a likely bearish reversal (72%), forecaster dropped, moving deeper into its downtrend. Silver is in a downtrend in both the daily and weekly timeframes.

COMEX SI open interest fell -1.5K contracts on Friday, and fell -9.9K contracts this week. That was -20 days of global annual production in paper removed from the market. Current open interest for SI: 88% of global annual production, down -5.70% this week. 764 SI contracts stood for delivery at COMEX this week.

Silver commercial net rose +2.8K contracts, which was -4.0K fewer shorts and -1.2K fewer longs. Silver managed money net fell -2.8K contracts, which was +1.1K new shorts, and -1.7K fewer longs.

The gold/silver ratio climbed +8.48 to 81.09. That’s very bearish.

While gold had a bad week, silver’s drop was the 14th worst week on record. Like gold, Thursday’s silver bounce was not confirmed on Friday. The short-covering in silver was more extensive than in gold, but it still falls short of what is needed to confirm a low.

GDX dropped -7.11% on moderately light volume, and GDXJ plunged -10.53% on moderately light volume. XAU fell -7.62%, the confirmed bearish high wave candle was a likely bearish reversal (70%), forecaster dropped, dropping into a downtrend. XAU is in a downtrend in both the daily and weekly timeframes.

The GDX:gold ratio dropped -2.55%, and the GDXJ:GDX ratio dropped -3.82%. That’s very bearish.

The mining shares did poorly this week also; while the Thursday bounce looked strong, it was not confirmed on Friday. The miners strongly underperformed gold, and the juniors underperformed the seniors. That’s all bearish.

Copper plunged -0.13 [-4.19%] to 2.97 on moderate volume. The swing high2 candle was a probable bearish reversal (58%), forecaster fell, dropping into a downtrend. Copper is in a downtrend in both the daily and weekly timeframes.

While copper has executed a bearish reversal, complete with an unpleasant weekly candle print and forecaster dropping into a downtrend, the strength of that downtrend remains quite weak. Copper is the only metal that remains above its 50 MA. I’m still not convinced about the copper reversal.

The buck rallied +1.73 [+1.86%] to 94.67 on moderately light volume. The confirmed bullish nr7 candle was a likely bullish reversal (63%), forecaster climbed, rising into an uptrend. The buck is in an uptrend in the daily and weekly timeframes.

Major currency moves included: CAD [-1.64%], EUR [-1.98%], GBP [-1.83%], JPY [-1.10%], AUD [-4.13%].

All currencies fell against the buck, which rallied for 4 days out of 5 this week. The buck is now through the 50 MA. The dollar rally definitely seemed to cause the decline in PM; that’s not always the case, but it sure was this week.

Crude fell -1.04 [-2.53%] to 40.11 on moderately light volume. The short black candle was unrated, forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in the daily and weekly timeframes.

EIA Report: crude -1.6m, gasoline -4.0m distillates -3.4m.

US Field Production of crude oil fell -200k to 10.7 mbpd.

All of the losses in crude took place on Monday – it spent the rest of the week mostly chopping sideways. Is crude correcting or not? The monthly says yes, but the shorter term timeframes are more positive. Right now the 50 MA seems to be acting as resistance. EIA reports continue to look bullish.

SPX fell -21.01 [-0.63%] to 3298.46 on moderate volume. The long white candle was a bearish continuation, forecaster dropped, but remains in an uptrend. SPX is in an uptrend in the monthly timeframe.

Energy [-11.37%] led the market lower, along with materials [-5.22%], while tech [+1.91%] and utilities [+0.34%] did best. This was a neutral sector map.

The VIX rose +0.55 to 26.38.

On Friday SPX printed a moderately strong daily swing low (53%), but SPX remains in a daily downtrend. Weekly trend is flat. NYSE advance ratio on Friday’s [+1.6%] rally was 72%, which shows reasonable market breadth. The equity downtrend remains in place, but it is a very weak downtrend at this point.

TLT climbed +0.95%. The confirmed bullish nr7 candle was neutral, forecaster climbed, moving higher into its uptrend. TLT is in an uptrend in the daily and weekly timeframes. The 30-Year yield fell -5.0 bp to +1.40%.

The 10-Year yield fell -5.0 bp to +0.65%. The confirmed bearish nr7 candle was a bullish continuation, forecaster fell, dropping into a downtrend. The 10-Year yield is in a downtrend in both the weekly and monthly timeframes.

Bonds moved higher this week, but trends remain quite weak.

JNK fell -1.69%. The confirmed bearish spinning top candle was neutral, forecaster fell, dropping into a downtrend. JNK is in a downtrend in both the daily and weekly timeframes.

JNK is now below all 3 moving averages; it is clearly signaling risk off.

Physical Supply

The GLD ETF tonnage on hand climbed +19.86 tons, with 1267 tons remaining in inventory.

ETF Discount to NAV:
* CEF -3.27%
* PHYS -0.06%
* PSLV -2.58%
Gold dealer big bar premiums:
* gold [1kg]: +1.27%
* silver [100 oz]: +6.70%

Physical ETFs remain in discount, while bar premiums have not moved much at all, and remain low. The physical buyers are not buying this dip just yet. I see that as bearish for PM overall.

Economic Reports

Fed Balance Sheet: 7093.2B, +28.7B, Liquidity Swaps: 31.9B, -20.3B, Reverse Repos: 200.3B, +118M, Treasury Securities: 4431.5B, +24.5B, MBS: 2024.9B, +19.8B. That’s another $45 billion in Treasury and MBS buying.

Median new home sales price: headline 313K, -15K (-4.80% m/m), SF new home sales: 1.0M, +46K (+4.55% m/m), monthly home supply: 3.30, -0.30. While new home prices dropped 5%, the supply of new homes has fallen to the lowest level in the history of the series dating back to 1963.

Durable Goods, new orders: headline +0.44% m/m, capital goods new orders (excl aircraft): +1.80% m/m, shipments: -0.27% m/m. This projects only a slight improvement over this month.

Summary

Gold, silver, and the miners all sold off hard this week, with most of the damage happening on Mon-Wed. Some dip-buying did occur on Thursday, but it was not enough to cause a reversal. Premiums on the big bars have not risen appreciably; this means that the banksters won’t be too nervous about a bunch of people standing for delivery at end of month. There was a modest amount of short-covering, but not enough to signal any sort of low. If you are looking for a scapegoat/culprit for the drop, blame currency – moves in the buck seemed to coincide with moves in the metals.

Given the dollar rally, the low big bar premiums, the small amount of short-covering – most likely, we will have lower prices ahead.

Risk assets moved lower; copper, crude, equities, and crappy debt all fell, although the moves were not even close to what we saw in the PM group.

Worldwide, equities did much worse than in the US; the Eurozone ETF fell more than 5% on the week. By comparison, US equities dropped just -1.26%. All of the damage in equities happened on Monday.

So what caused the dollar rally? Here’s what I’m hearing:
* the death of “Notorious RBG” and the prospect of a contentious nominating process for a new justice reduces the likelihood for a compromise stimulus package.
* Concern that rising positive tests in Europe (but only in the “lockdown” countries) could lead to … new lockdowns – or at the very least, new restrictions. Sweden is not seeing such a surge. If I had a Swedish flag, I’d be waving it right now.
https://www.reuters.com/article/us-health-coronavirus-europe-idUSKBN2692E1

The news from Europe feels more than a little deflationary.

Florida made news by removing all COVID-19 restrictions this week, while NYC is considering closing “non-essential businesses” due to an uptick in positive tests. On the NY COVID-19 chart, if you squint you can see the rising positive tests – while hospitalizations remain down 97% from peak (511 now vs 18,000 peak). Why does NY want to push infections into the future at the cost of wrecking its economy further?

Science tells us that transmission happens at home, and on transport, and mostly not at “non-essential business.” They can’t close homes or transport, but they want to close non-essential business. Because, I guess, “science.”

Let’s just call this what it is: COVID Theater.

  • Sat, Sep 26, 2020 - 06:10pm

    #2

    lambertad

    Status Silver Member (Offline)

    Joined: Aug 31 2013

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    federal jury convicts metals traders for spoofing

Federal jury convicts ex-Deutsche Bank traders of fraud for engaging in manipulative trading practices

Sentencing in a few months. It will be interesting to see what their “punishment” is.

  • Sat, Sep 26, 2020 - 08:04pm

    #3
    ao

    ao

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    this is the dip you should be buying

From Jeff Clark, a very savvy trader:

This Is the Dip You Should Be Buying
By Jeff Clark, editor, Market Minute

The price of gold got crushed this week. So, I’m buying it.

Gold started the week at $1,960 per ounce. It closed Wednesday near $1,860. That’s a pretty hard hit. And, it likely shook out all of the “weak hands” just before gold mounts a year-end rally.

Let me explain…

The fundamental reason for owning gold is still as strong as ever…

Federal Reserve Chairman Jerome Powell announced last week the U.S. Central Bank will likely keep short-term interest rates near zero percent until 2023. That’s bullish for gold.

The U.S. budget deficit is likely to be greater than $3 trillion this year. Heck, it could hit $6 trillion if the government grants any additional stimulus packages. That’s bullish for gold.

The Bank of England is considering the possibility of negative interest rates. That’s bullish for gold.

And, the upcoming U.S. election is almost certain to create the sort of chaotic environment that pushes investors into the perceived certainty of gold.

The problem heading into this week, though, was too many people were excited about gold. Too many people rushed into the metal in late July and early August, when gold traded above $2,000 per ounce – there was too much excitement.

And, those “weak holders” needed to be shaken out of their positions before a new rally could get started.

This week’s decline in the price of gold probably did the trick.

Take a look at this chart of gold, including two momentum-based indicators – the short-term relative strength index (RSI), and the commodity channel index (CCI)…

The vertical blue lines on the chart indicate the times in the past year when the two technical momentum indicators reached “extremely oversold” levels.

The previous two times occurred within a few days of gold making an important intermediate-term bottom. The price of gold rallied 15% in four months following this condition last November. Then, it rallied 33% in the five months following the March bottom.

This week’s decline has created the same sort of conditions that led to those rallies.

We may not have seen the absolute bottom for gold during this decline phase, but based on the oversold conditions on this chart, it looks to me like we’re close enough to the bottom to start buying gold.

I expect the price to be much higher in the months ahead.

Best regards and good trading,

Jeff Clark

  • Sun, Sep 27, 2020 - 07:45pm

    #3
    jmone

    jmone

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    PM Weekly Market Commentary – 09/25/2020

From an OZ point of view, last week saw Silver get smashed (down 12%), and a reversal in the strength in the AUD (down almost 4%).  Gold held up pretty well, and the Share Market even made a small gain.

Physical Premiums & Availability:  Availability is still good with product available in most forms and sizes.  The Premium on Retail silver is still very very high.  The current prices have not come down in line with the recent drop in Silver Prices (maybe they are locked into a high purchase price for their stock?).

– Silver 1oz Coin: 33.4% Retail / 16.6% Mint

– Silver 1KG Bar: 11.7% Retail / 3.7% Mint

– Gold 1oz Coin: 4.2% Retail / 5.0% Mint (odd that the Mint is still higher than retail)

– Gold 1KG Bar: 2.2% Retail / 0.5% Mint

If we look at the market since the drop earlier this year,

– Gold really has been the (relatively) stable trading in a 20% range and is currently sitting in the middle of this range and has been for the last month or so.

– Silver is the most erratic and anyone who jumped on the bandwagon in early August is not going to be feeling to pleased at present.  Equities have also been trading in a tight range since June.

– AUD had been steadily strengthen since it’s lows in March but have now turned back down.

  • Mon, Sep 28, 2020 - 06:18am

    #4

    JAG

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    PM Weekly Market Commentary – 09/25/2020

I love the smell of gold and silver miners in the morning.

  • Fri, Oct 02, 2020 - 08:03am

    #5
    woodson

    woodson

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    PM Weekly Market Commentary – 09/25/2020

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