PM Weekly Market Commentary – 10/16/2020

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  • Sun, Oct 18, 2020 - 04:57am

    #1

    davefairtex

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    PM Weekly Market Commentary – 10/16/2020

On Friday, gold dropped -9.60 [-0.50%] to 1908.06 on moderately light volume, and silver fell -0.19 [-0.78%] to 24.32 on moderately light volume. The buck moved lower [-0.20%], SPX was unchanged [+0.01%], crude fell [-0.39%], while bonds were mostly unchanged too [the 10-Year yield rose +1.0 bp].

The weekly metals sector map shows gold leading silver, with the miners sandwiched in the middle. Copper did best, palladium worst. I’m really not sure what that means. Maybe some bifurcation of the auto industry (palladium) with more general industrial production (copper). Call this mostly a risk off/safe haven move for PM. Everything except platinum remains above the 200 MA, but most items are below the 50; that paints a picture of a fairly strong correction in the middle of a longer-term uptrend.

[Note: I will post the sector map following the post; the site has an unfortunate habit of taking my HTML tables and not rendering them properly on the first go. No doubt that’s some error on my part – but if I try and edit the post to fix this – my post disappears.]

For the week, gold fell -32.84 [-1.69%] to 1908.06 on moderately light volume. The short black candle was a bullish continuation, but forecaster fell, dropping into a downtrend. Gold is in a downtrend in both the daily and weekly timeframes.

Gold/euros dropped -13.84 [-0.84%] to 1628.34 on moderately light volume. The short black candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Gold/euros is in an uptrend in the weekly timeframe.

COMEX GC open interest rose +1.8K contracts on Friday, and rose +10K contracts this week. That was 3 days of global annual production in new paper added to the market. Current open interest for GC: 52% of global annual production, up +0.97% this week. 3500 GC contracts stood for delivery at COMEX this week.

Gold commercial net rose +3.8K contracts, which was -12K fewer shorts and -8.0K fewer longs. Gold managed money net fell -13K contracts, which was +12K new shorts, and -1.2K fewer longs.

While gold fell this week, much of the move was a currency effect. There were some shorts added – apparently mostly from managed money. Gold ended the week below both 9 and 50 MA lines, although it did not make a new low. While gold has dropped into a weekly downtrend, it is a mild move as of right now. Gold/Euros looks a little better – it ended the week above its 9 MA, and in a weekly uptrend.

Silver dropped -1.05 [-4.14%] to 24.32 on moderately light volume. The short black candle was a low-percentage bearish reversal (25%), forecaster climbed, rising into an uptrend. Silver is in an uptrend in the weekly and monthly timeframes.

COMEX SI open interest rose +619 contracts on Friday, and rose +275 contracts this week. Current open interest for SI: 90% of global annual production, up +0.16% this week. 292 SI contracts stood for delivery at COMEX this week.

Silver commercial net fell -752 contracts, which was +1.0K new shorts and +293 new longs. Silver managed money net fell -1.1K contracts, which was +1.4K new shorts, and +254 new longs. Not much change this week.

The gold/silver ratio climbed +1.95 to 78.46. That’s bearish.

It was a confusing mix of signals this week; the candle looked mildly bearish, forecaster was bullish, gold/silver ratio was bearish. In truth silver is in a no-mans-land sort of trend; direction is uncertain, in pretty much all 3 timeframes.

GDX dropped -2.33% on moderately light volume, and GDXJ fell -3.08% on moderately light volume. XAU moved down -1.95%, the short black candle was a bullish continuation, forecaster climbed, rising into an uptrend. XAU is in an uptrend in the weekly and monthly timeframes.

The GDX:gold ratio dropped -0.65%, and the GDXJ:GDX ratio dropped -0.77%. That’s bearish.

Why did forecaster like this week’s decline? I don’t know. The miners ended the week above the 9 MA, but below the 50. It did make a new high this week, which was a positive sign. Maybe it was that.

Platinum fell -31.74 [-3.66%], and palladium fell -120.26 [-5.11%]. Platinum remains in a downtrend – red headed stepchild/rented mule once more – and palladium has fallen from its recent highs.

Copper fell -0.02 [-0.65%] to 3.06 on moderately light volume. The spinning top candle was unrated, forecaster climbed, rising into an uptrend. Copper is in an uptrend in the daily and weekly timeframes.

Copper remains near its recent highs. The tea leaves suggest a breakout may be coming next.

The buck climbed +0.61 [+0.66%] to 93.66 on moderate volume. The opening white marubozu candle was unrated, forecaster climbed, rising into an uptrend. The buck is in an uptrend in the daily and weekly timeframes.

Major currency moves included: CAD [-0.49%], EUR [-0.86%], GBP [-0.70%], JPY [+0.31%], AUD [-2.15%].

The buck bounced back this week after falling for two straight weeks; it is back in a very mild uptrend. I’m guessing this is about the rising positive tests over in Europe – or perhaps it is just about the raft of new semi-lockdowns being put in place by the terrified “managers” over in Europe.

Crude rose +0.27 [+0.66%] to 41.03 on moderately light volume. The short white candle was unrated, forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in the weekly timeframe.

EIA Report: crude -3.8m, gasoline -1.6m, distillates -7.2m. This was a bullish report.

Crude dipped early in the week, only to bounce back, ending the week above both the 9 and 50 MA lines. It is hard to know right now where crude is going – it has been chopping slowly lower now for six weeks.

SPX rose +6.67 [+0.19%] to 3483.81 on moderate volume. The spinning top candle was a possible bearish reversal (34%), forecaster dropped, but remains in an uptrend. SPX is in an uptrend in the weekly and monthly timeframes.

Industrials [+1.09%] led, along with utilities [+0.81%], while REITs [-2.27%] and energy [-1.99%] did worst. This was a neutral sector map.

The VIX jumped higher, up +2.41 to 27.41.

The weekly candle print was somewhat bearish; daily forecaster has dropped into a downtrend, but the weekly has yet to reverse.

Armstrong made an interesting “cycle” projection about equities; a rally into the election suggests a reversal following. I’m not quite sure why he feels this is the case, but there it is. He’s also projecting a lot of volatility for the next few months. That could be movement either up, or down. So maybe we’re seeing the calm before the storm.

The 10-Year yield fell -4.0 bp to +0.75%. The opening black marubozu candle was unrated, forecaster climbed, moving higher into its uptrend. The 10-Year yield is in an uptrend in the weekly and monthly timeframes.

Even though bonds rallied this week, it looks like a counter-trend rally. Forecaster (weekly and monthly) both look quite convinced that interest rates will be moving higher – bonds will be falling.

This too lines up with Armstrong’s prediction of a collapse of confidence in government. Are we here yet? Looking at the chart – not quite yet. Boy. The more I look at the DGS10 chart, the more nervous I get.

JNK dropped -0.34%. The short black candle was a bullish continuation, forecaster dropped, but remains in an uptrend. JNK is in an uptrend in the weekly timeframe.

Crappy debt appears to have reversed on the daily chart; the candle code didn’t find the weekly print to be bearish, but it doesn’t look great to me.

Physical Supply

The GLD ETF tonnage on hand climbed +1.04 tons, with 1273 tons remaining in inventory.

ETF Discount to NAV:
* CEF -3.29%
* PHYS -0.68%
* PSLV -3.42%
Gold dealer big bar premiums:
* gold [1kg]: +1.30%
* silver [100 oz]: +6.35%

Physical ETF discounts remain quite large; gold big bar premiums moved higher, while silver premiums remain far below levels seen three months ago.

Economic Reports

Fed Balance Sheet: 7151.4B, +76.8B Liquidity Swaps: 7.5B, -8.4B, Reverse Repos: 190.1B, -9.1B, Treasury Securities: 4485.0B, +15.1B, MBS: 2046.8B, +64.0B. It was a big purchase week for the Fed; mostly this, was about MBS.

Retail Sales: headline +1.85% m/m, retail sales (ex-autos): +1.45% m/m. This was a strong retail sales report – an annualized 22% rate – sales continue to climb far above pre-pandemic levels.

Industrial Production: headline -0.64% m/m, manufacturing: -0.29% m/m. This was a modestly weak industrial production report; production appears as though it might have topped out. It remains well below pre-pandemic levels; down perhaps 7% off the previous highs.

Auto/Light Truck Sales: headline +7.09% m/m, Auto Sales: +5.39% m/m, Heavy Truck Sales: -5.56% m/m. Auto sales have just about returned to pre-pandemic levels.

Producer Prices: headline +0.72% m/m (prior +0.57% m/m). Big jump in producer prices – but they have only recovered to perhaps 70% of pre-pandemic levels.

CPI All Urban: headline +0.20% m/m CPI less-food/energy: +0.19% m/m. CPI is well above Jan 2020 levels, and continues to climb. Core CPI remains above 2%.

Summary

This week we had a number of interesting economic reports; consumer spending continues to look great, while production remains significantly impaired. It looks as though – in aggregate – the money printing/stimulus operation has been successful in keeping spending at and now even above pre-pandemic levels. Given we have more spending, and less production, that’s almost certainly driving prices higher “in the stuff we buy during pandemics.”

The metals remain in retreat mode. Right now, the current impulse appears to be pointing lower. Viewed from the monthly chart, gold is in the second month of a correction during a strong uptrend. Corrections last 1-3 time periods; we could still have 4-6 weeks left to go before it ends.

Risk assets continue to be a mixed bag. Equities are showing hints of weakness, along with crappy debt, but have yet to meaningfully correct. Crude’s monthly impulse is down, but it is resisting any attempts to sell off. Copper appears as though it should be ready to reverse – but it too refuses to correct. Maybe it just isn’t time yet.

The buck is still trying to figure out where it will go next. I suspect the COVID shutdowns in Europe will prove to be the deciding factor in the near term, and the buck will start to move higher as a result. Of course the US elections are – shall we say – a wild card. Without the elections, I’d say Euro was definitely going to head lower.

More stimulus in the US? Bad Orange President appears to be using stimulus as a club to beat Robotic Nancy with. That does appear to be gaining some traction; for her part, Nancy seems willing to continue talking about shape-of-conference-table issues until the election date is past. Along those lines, Senator Turtle is attempting to pass some narrowly-focused stimulus bills in the Senate. It is unlikely that this will lead anywhere other than as a campaign slogan.

https://2001-2009.state.gov/r/pa/ho/frus/johnsonlb/vii/22443.htm

The official talks still did not begin. South Vietnam raised a series of procedural issues, the most prominent of which were the particular use of flags and name plates, the speaking order of the participants, and the physical arrangement of the conference, including most notably the shape of the conference table. On the latter issue, the North Vietnamese and the National Liberation Front (NLF) insisted on a four-sided table to emphasize equality between the parties, while the United States and especially the GVN favored a two-sided arrangement that did not obviously give the NLF equal footing with the GVN. (250, 260, 264) On January 2, 1969, the North Vietnamese relented on their requirement that made flags and nameplates contingent upon the acceptance by the other side of a continuous round table.

Net-net: we probably don’t get stimulus before the election.

What’s more, I also do not think stimulus will happen until the elections are decided, and that might not happen immediately. If “unrest” is the tool that you believe will help you to achieve your goals, you do not want normal people to be getting checks in the middle of the fuss; you would much prefer them to remain uncertain and unhappy all during the event.

I believe the speed of resolution of the election will depend on just how wide the margin of victory is for the Bad Orange President on the day of the election. RBG’s replacement – ACB – will help settle the uncertainty; 9 Justices are a whole lot better than 8. This reduces the “election victory via lawsuit” threat. Also, if it goes to the House, Red delegations outnumber Blue delegations.

Lastly, the latest October Surprise – “10 held by H for the big guy” – has now been corroborated by Hunter’s erstwhile business partner, who was irritated at having been convicted for fraud, only to have Hunter walk free, uncharged by the New York prosecutors in the same affair; former partner is now throwing Hunter right under the bus by providing 20,000 emails sitting in a gmail account.

https://www.bizpacreview.com/2020/10/17/biden-ex-business-partner-provides-access-to-more-emails-documenting-hunters-trading-on-fathers-influence-985623

The emails included one cc’d to Hunter on May 13th, 2017, that contained specifics regarding “remuneration packages” for a half-dozen individuals who were involved in a business deal with a now-bankrupt Chinese energy firm.

Present in the email was a note that “Hunter has some office expectations he will elaborate” and a proposal for an equity split of “20” for “H” and “10 held by H for the big guy.” Some originally suspected the “big guy” may have been Joe Biden.

Fox’s sources have since confirmed that the “big guy” is indeed “a reference to the former vice president,” which raises questions of why the former VP was receiving equity from a Communist China energy firm.

The electorate has had to deal with this virus from China now for 8 long months; anything linking Biden with China is just thermonuclear-bad. And this looks pretty compelling.

This, combined with the astonishingly rapid recovery of Bad Orange President from his bout with COVID-19 – “see, its not all that bad” – probably combines to give him a surprisingly large election-day victory margin.

If it does play out this way, it will serve to diminish the enthusiasm for the bureaucratic fence-sitters who can either support or impede the “unrest” efforts depending who they view is more likely to prevail. Its one thing to play “prevent defense” if you just have to do it for 2 months. It is another thing entirely to have to do it for 4 long years.

Based on all of this, my guess – just a guess – is that things won’t be as chaotic as feared following November 3rd. How will that affect prices? My guess it will be strongly dollar positive – the larger the margin of victory, the harder the buck will rally. I think money is aching to leave Lockdown Europe, but it doesn’t dare pull the trigger until the election mess is settled in the US.

Of course a dollar rally will probably also negatively impact gold.

Anything more than that, I can’t really tell.

Two weeks to go.

  • Sun, Oct 18, 2020 - 05:18am

    #2

    davefairtex

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    PM sector map

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Copper $COPPER -0.65% 18.15% rising rising rising rising ema9 on 2020-10-07 2020-10-16
Gold/Euro $GOLD:$XEU -0.84% 20.80% falling falling rising falling ema9 on 2020-10-14 2020-10-16
Silver Miners SIL -1.60% 58.44% rising falling rising falling ema9 on 2020-10-08 2020-10-16
Gold $GOLD -1.69% 27.19% falling falling rising falling ema9 on 2020-10-16 2020-10-16
Senior Miners GDX -2.33% 47.08% rising falling rising falling ma50 on 2020-10-15 2020-10-16
Junior Miners GDXJ -3.08% 54.32% rising falling rising falling ma50 on 2020-10-16 2020-10-16
Platinum $PLAT -3.53% -2.98% falling falling falling falling ma200 on 2020-10-13 2020-10-16
Silver $SILVER -4.14% 37.79% falling falling rising falling ema9 on 2020-10-16 2020-10-16
Palladium $PALL -4.86% 36.52% falling rising rising falling ema9 on 2020-10-13 2020-10-16
  • Sun, Oct 18, 2020 - 06:00am

    #3
    Steve

    Steve

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    IMF Announcement – A New Bretton Woods Moment?

Important …

This video message from Kristalina Georgieva, the Managing Director IMF, appeared on the IMF website on October 15, 2020.

https://www.imf.org/external/mmedia/view.aspx?vid=6200738336001

“Today we face a new Bretton Woods moment.”

 

  • Sun, Oct 18, 2020 - 08:05am

    #4

    thc0655

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    IMF announcement

When do I get a chance to vote against Kristalina and the IMF? 🤬🤬🤬

This is probably the reason the elite are in such a hurry in the last 11-12 months. The old game is almost up, and they’re positioning to be kings and queens after The Big Reset.

“Happy Hunger Games! And may the odds be ever in your favor.”

  • Sun, Oct 18, 2020 - 10:23am

    #5

    davefairtex

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    title vs content

I saw the video.  The call to action was…completely lacking.  I mean, did I miss the new Bretton woods TODO list?  The great reset buried in the details?

I might have dozed off mid-viewing, but the only thing I really saw was a sort of “donate more money to us” thing.

It felt like all hat and no cattle.  As the saying goes.

Did I miss the good stuff?  I did kinda get distracted mid-viewing.

  • Sun, Oct 18, 2020 - 11:37am

    #6
    Steve

    Steve

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    Call to action

I believe the call to action is buried in code words.  Not readily decipherable for the non-elite eye.

  • Sun, Oct 18, 2020 - 11:47am

    #7

    thc0655

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    Pliable platitudes

Maybe they learned their lessons from the rollout of The Green New Deal: too much specificity gives people too many reasons to disagree and rebel. They seem to have learned to stick with pliable platitudes which will be enough to convince the gullible 50%. After they get their power and funding then they can claim that nearly anything they do is in service to the nice-sounding platitudes.

  • Sun, Oct 18, 2020 - 02:36pm

    #8
    jmone

    jmone

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    PM Weekly Market Commentary – 10/16/2020

Oz Update:  It is interesting how the outlook is different depending on your perspective (Country).  This week was a good week for Gold up 1.07%, the ASX up 0.89%, a push for Silver remaining unchanged but the big move was the AUD got slaughtered down 2.22%.  Apart from the strength of the USD, for us the move was from the RBA indicating they may reduce rates in their Nov Meeting.  Betting has the rate move to 0.1% closing the gap with many other countries.

On a YTD basis, Gold is still trading in a pretty right range and the ASX continue to test post crash highs and for the last week mostly posted daily gains…lets see if it can hold onto those this week.  I got some market updates from ANZ Bank that still sees the AUD in the Mid 70’s by the end of the year, but I’m not so sure.  With rates coming down and some turmoil with our largest trading partner it would have to be other currency getting weaker than ours faster!  For those that thrive on volatility, then Silver is still your go to (but not for me).

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 and if anything is increasing.  I don’t know how “silver stackers” plan to make any money with such big margins to earn back.

– Silver 1oz Coin: 35.5% Retail / 15.9% Mint

– Silver 1KG Bar: 14.7% Retail / 3.5% Mint

– Gold 1oz Coin: 4.7% Retail / 5.0% Mint

– Gold 1KG Bar: 2.7% Retail / 0.5% Mint

 

Other News:

Perth Mint / Westpac Bank / Euro Pacific Bank (Peter Schiff) : This is not a good look and there is plenty of “We have/are breaking all ties with Euro Pacific” statements coming out.

China Trade:  Looks like China not only has the formal trade sanctions (Barley, Beef, Wine) but also now informal pressure on their importers to not buy our Coal.  Rumour has it the CCP have drawn up a list of items to lean on us for not being nice.

  • Mon, Oct 19, 2020 - 06:25am

    #9

    JAG

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    Voting

DF: I believe the speed of resolution of the election will depend on just how wide the margin of victory is for the Bad Orange President on the day of the election.

I’m happy that you are so confident in your boy. As I’ve said way too many times, I have never voted. That is because who the President is has no affect on my daily life.

Well, Trump does have an affect on my daily life. Despite avoiding news like it’s the plague (it literally is the plague these days), everyday day I have to hear him brag about himself and talk sh*t about other people. No other president has ever done this.

It’s a minor annoyance, but it builds up so much over time that I’m embarrassed to be an American. Trump’s third grade social skills have actually made me come to appreciate ‘normal’ politicians, and I can’t stand politicians.

So I’m going to cast a vote for the first time in my life today, not that it really means anything. Sorry, I know everybody on this site is pro-Trump and I’m the lone wolf, once again. I guess it’s just my nature.

 

  • Mon, Oct 19, 2020 - 09:25am

    #10

    davefairtex

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    just maybe

Well I’m not voting because I’m a lone wolf, or because I’m happy to be in a herd.

I don’t want forever-lockdowns that ignore lockdown deaths, sacrificing the youth of the country to some mysterious larger goal of perpetually pushing infections off into some distant future.   I don’t want a mandatory annual (untested) vaccine.  I don’t want someone who “follows the science” – which comes straight from Pharma – which as we know now, ends up in a whole lot of people dying in order that Remdesivir gets the cashflow.  I don’t want a pre-bribed President who will sell us and our jobs out to the CCP.  I really don’t want the incredibly synthetic “President Harris”, which is the likely outcome after maybe 6 months to a year.  I don’t want to tear every building down in the country, only to rebuild it all green.  (No net addition to wealth, but a vast amount of spending – the “broken window” theory run amok).  I really don’t want a UBI and the MMT that will be required to fund it all.

I’m willing to overlook the Bad Orange Man’s clear social shortcomings [I agree; he’s rude] because I actually think his policy selections are closer to the right ones for the country.

My ideal personality-packaging would look a lot more like Obama with his charming personality (especially in foreign policy), but with a more Trump-like policy selection.

Sadly, that choice wasn’t on the ballot.

Still, I understand people who think differently. Trump is definitely annoying.  Biden implicitly promises a return to the way things used to be.  And I really do understand people that are hoping that – just maybe – if you vote for Biden, he will put everything back to normal again.

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