PM Weekly Market Commentary – 11/27/2020

Login or register to post comments Last Post 0 reads   16 posts
Viewing 10 posts - 1 through 10 (of 16 total)
  • Sun, Nov 29, 2020 - 01:20am

    #1

    davefairtex

    Status Member (Offline)

    Joined: Sep 03 2008

    Posts: 2296

    count placeholder2

    PM Weekly Market Commentary – 11/27/2020

On Friday, gold fell -21.08 [-1.16%] to 1790.94 on moderately heavy volume, and silver plunged -0.70 [-2.98%] to 22.77 on moderately heavy volume. The buck fell again [-0.17%] as did crude [-0.70%], while SPX moved higher [+0.24%] as did bonds [the 10-Year yield fell -4.0 bp].

The metals sector map shows a curious bifurcation: palladium/copper/platinum moved higher, with palladium in the lead, while silver led gold lower, the seniors led the juniors lower, and the miners did the best of the group. Gold and the senior miners are now below all 3 moving averages, while the more industrial metals are above all 3 moving averages. What does it all mean? Well, this isn’t a standard PM correction. In a standard PM correction, the miners should be at the bottom with the juniors suffering most, but instead, the miners did best. And platinum also did well too. Something seems fishy about this PM correction – that’s what the sector map is telling us this week.

Sector map post follows.

This week, gold plunged -84.61 [-4.51%] to 1790.94 on moderately heavy volume. The opening black marubozu candle was a low-percentage bullish reversal (25%), but forecaster dropped, moving deeper into its downtrend. Gold is in a downtrend in all three timeframes.

Gold/euros plunged -83.71 [-5.29%] to 1498.10 on moderately heavy volume. The opening black marubozu candle was a bearish continuation, forecaster dropped, moving deeper into its downtrend. Gold/euros is in a downtrend in all three timeframes.

COMEX GC open interest rose +1.7K contracts on Friday, and fell -10K contracts this week. That was -3 days of global annual production in paper removed from the market. Current open interest for GC: 50% of global annual production, down -0.97% this week. 8686 GC contracts stood for delivery at COMEX this week.

Gold broke support on Monday, and sold off through Friday, ending the week below the 200 MA. There was a little short-covering, but not very much. RSI7=18, which is oversold. Friday’s daily candle wasn’t a bullish reversal, nor was the weekly. Forecaster continues to look bearish. There were a fair number of contracts standing for delivery this month – and the month is not over yet – but it is nowhere near what we saw in May & July. The tea leaves suggest we have lower prices ahead.

Silver plunged -1.57 [-6.45%] to 22.77 on moderately heavy volume. The long black candle was a bearish continuation, forecaster climbed, but remains in a downtrend. Silver is in a downtrend in both the daily and weekly timeframes.

COMEX SI open interest fell -2.0K contracts on Friday, and fell -7.0K contracts this week. That was -14 days of global annual production in paper removed from the market. Current open interest for SI: 88% of global annual production, down -4.00% this week. 1174 SI contracts stood for delivery at COMEX this week.

The gold/silver ratio climbed +1.60 to 78.65. That’s bearish.

Silver fell all week too, breaking below last month’s low on Friday’s big move down. Silver has yet to break below the low set back in September, so the chart still looks slightly better than gold. Friday’s daily print was bearish, as was the weekly. There were very few deliveries for silver – that’s been true for a while now. Bearish continuation candles in both daily and weekly, and a bearish forecaster suggests – lower prices ahead.

GDX dropped -4.65% on light volume, and GDXJ plunged -4.39% on light volume. XAU fell -2.51%, the spinning top candle was a possible bullish reversal (37%), but forecaster dropped, moving deeper into its downtrend. XAU is in a downtrend in both the weekly and monthly timeframes.

The GDX:gold ratio dropped -0.15%, and the GDXJ:GDX ratio climbed +0.27%. That’s neutral.

The miners fell on Monday and Tuesday, but rebounded for the rest of the week. Both the Friday daily and the weekly candle prints were relatively bullish, and daily forecaster bounced back into an uptrend on Friday’s move, which was actually +0.57% – this on a day when both gold and silver were down substantially. Miners remain well above the 200 MA.

I conclude from this activity that “someone” has used this plunge in gold and silver as an opportunity to load up on the mining shares. We saw this to some extent on Tueday and Wednesday, but it really became apparent on Friday. Intraday, the miners gapped down hard at the open, then rallied higher right through end of day. The strong performmance in the miners on Friday – on a day when there was little volume due to the holiday-shortened trading hours – was in stark contrast to the behavior of gold and silver.

Regardless of who eventually moves their dogs into the White House (awww, how cute is that?) the amount of money printing coming will be substantial. Trump wants to print, and Team Biden really, really wants to print. We just don’t know the details. It takes time for Big Money to accumulate positions – they need days if not weeks to accumulate a large enough position to move the needle. I believe we are seeing Big Money moving right now – into the miners. Just look at this week’s weekly candle print, and compare it with gold and silver:

Platinum rose +18.60 [+1.91%], and palladium rose +99.51 [+4.08%]. Both metals did well this week; platinum rose in the face of the gold/silver decline, while palladium’s gains came on a big move on Friday. Both metals are in uptrends.

Copper shot up +0.12 [+3.65%] to 3.41 on moderately heavy volume. The closing white marubozu candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Copper is in an uptrend in all three timeframes.

Copper continues to go nuts. This week marked a new 6-year high, dating back to early 2014. On Friday alone, copper jumped +2.71%, a very large move. This is an odd move – so are the moves in platinum and palladium – given the pounding gold and silver took this week.

The buck plunged -0.60 [-0.65%] to 91.75 on light volume. The confirmed bearish nr7 candle was a likely bearish reversal (60%), forecaster dropped, moving deeper into its downtrend. The buck is in a downtrend in both the daily and weekly timeframes.

Major currency moves included: CAD [+0.69%], EUR [+0.82%], AUD [+1.01%].

The buck continues to plunge, breaking down to a new 3-year low just on Friday. The buck is slowly turning into confetti. Looking at the daily chart, the buck started dropping November 3rd, and for the most part has continued falling since then. I believe this move is partly about the election, and partly about the peaking of positive tests over in Lockdown Europe.

Crude screamed higher, up +3.10 [+7.30%] to 45.58 on moderately light volume. The opening white marubozu candle was a reasonably strong bearish reversal (44%), forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in all three timeframes.

This week marked a new 9-month high for crude – most of the gains happened on Tuesday. Crude is in a very strong uptrend right now. Various bits of market-moving news: OPEC+ is supposedly going to extend output cuts for another 3 months (meeting happening this Sunday), and the guy allegedly responsible for the Iranian nuclear project (Mohsen Fakhrizadeh – physics professor, General in the Republican Guard) was assassinated by “gunmen” east of Tehran. It is thought that Israel might have something to do with this act, but truth be told, there are a flock of Sunni Arab nations led by Saudi Arabia who are happy to see Shia Iran’s nuclear program derailed.

Trump’s “Peace in the Middle East” seems to be more about formalizing an alliance of Sunni Arab along with Israel, vs Shia Iran.

Former CIA Director John Brennan wasn’t happy about the assassination.

https://www.bbc.com/news/world-middle-east-55111064

SPX rallied +80.81 [+2.27%] to 3638.35 on light volume. The confirmed bullish nr7 candle was neutral, forecaster climbed, moving higher into its uptrend. SPX is in an uptrend in all three timeframes.

Energy [+7.97%] led, along with financials [+4.53%], while REITs [-0.33%] and utilities [+0.35%] did worst. This was a bullish [-17] sector map.

The VIX fell -2.86 to 20.84.

This week saw a new all time closing high for SPX; it remains in a strong uptrend. Energy did extremely well because of that crude breakout, although the big move in energy took place on Monday and Tuesday, fading into end of week.

If you are perplexed about the crazy-seeming values of equities – Big Money has to hide somewhere. The other choice is government debt, which right now, yields 0.84% for the 10-year instrument. You get more than twice that (1.74%) just from the dividend payments of SPX. Yes you can hide in very short term notes (3-month: 0.08%), but if you run a pension fund, you can’t do this for very long.

What’s more, the larger trend seems to be the deliberate destruction of US small business by the Reset Gang, with the profits and wealth transferred to the large corporations/shareholders – such as Amazon/Bezos, for instance. The more lockdowns we have, the more market share they get. Team Biden is backed by these people. Any guesses what will happen if the Biden Dogs manage to get back into the White House?

Lockdowns. “To stop the corona virus.” And to make Bezos much, much richer.

https://www.usatoday.com/story/entertainment/2020/11/07/joe-biden-wins-white-house-dogs-after-4-years/6192639002/

The 10-Year yield rose +1.0 bp to +0.84%. The short white candle was unrated, forecaster was unchanged at. The 10-Year yield is in an uptrend in the weekly and monthly timeframes.

Not much happened this week with bonds. Tea leaves suggest higher yields ahead.

JNK climbed +0.52%. The short white candle was neutral, forecaster climbed, moving higher into its uptrend. JNK is in an uptrend in the daily and weekly timeframes.

It was a new weekly closing high for crappy debt, which generally supports the risk on move in equities. Crappy debt also benefits from higher oil prices – maybe some of those shale drillers won’t die after all.

Physical Supply

The GLD ETF tonnage on hand dropped -25.39 tons, with 1195 tons remaining in inventory.

ETF Discount to NAV:
* CEF -4.76%
* PHYS -2.56%
* PSLV -3.48%
Gold dealer big bar premiums:
* gold [1kg]: +1.36%
* silver [100 oz]: +4.10%

Physical ETF discounts remain wide, premiums of big bar gold at retail are about average, while big bar silver at retail premiums are low. There doesn’t look to be a lot of goldbug dip-buying happening right now.

Economic Reports

Fed Balance Sheet: 7216.5B, -26.6B, Liquidity Swaps: +704M, Reverse Repos: +3.8B, Treasury Securities: 4606.6B, +22.2B, MBS: -47.6B. This was a down-week for Fed money printing, due to the choppy nature of MBS instruments. Still, it appears as though Fed MBS purchases have topped.

Personal Income: headline -0.66% m/m, Personal Consumption Expenditure: +0.48% m/m. Personal income continues to fall, but remains well above pre-pandemic levels.

Durable Goods, new orders: headline +1.25% m/m, capital goods new orders (excl aircraft): +0.74% m/m, shipments: +1.26% m/m. New orders are just about back to pre-pandemic levels; shipments are just now back to pre-pandemic levels.

Median new home sales price: headline 331K, -1.0K (-0.30% m/m), SF new home sales: 999K, -3.0K (-0.30% m/m), monthly home supply: 3.30. Prices for new homes are chopping sideways, while the months-of-home-supply is literally at an all time low.

Auto/Light Truck Sales: headline -0.53% m/m, Auto Sales: +1.71% m/m, Heavy Truck Sales: +7.31% m/m. Headline sales are just shy of pre-pandemic levels; heavy truck sales are back above the pre-pandemic levels.

Summary

Gold and silver were hit relatively hard this week; on a percentage basis, the miners fell almost as hard, but by end of week it was clear that someone was definitely buying the dip in the mining shares. This showed up in the candle analysis, which was at least somewhat bullish. This was not true for either gold or silver.

There was a little short-covering in gold, a reasonably large amount of short-covering in silver, but – perhaps – not enough to suggest a low in either metal. Deliveries at COMEX were much stronger for gold than for silver, but the COMEX deliveries are well short of what they were during the summer. Possibly that is driven by the relatively weak demand at retail.

The buck plunged to a new 3-year low just on Friday. I think that’s (maybe) about the increasing chances a second lockdown for the US thanks to the Biden Dogs – I heard they were named “Lockdown” and “Mandatory Vaccine”, respectively – and at the same time, the peak and subsequent decline in positive tests over in Lockdown Europe. There are a number of other possibilities that are further off into the future, but none of them willl be dollar-positive. In point of fact, most of the “grey swans” in the US political scene are likely dollar negative.

Risk assets did well; it was a new all time high for equities, 9-month high for crude, 6-year high for copper, and 9-month closing high for crappy debt too. All items closed at the highs for the week. I’m guessing that’s the mirror image of the dollar decline.

Bonds did nothing. If not for the Fed’s $20-30 billion/week purchase plan, I think they’d be cratering right now. Bonds are also a bet on the buck, which is not looking so hot right now.

The economic reports looked reasonably strong this week; that flash PMI looked amazingly strong, personal income remains high, durable goods shipments and auto sales are mostly back to pre-pandemic levels, and there are virtually no homes for sale. I’m not sure if that last one is good or bad – it probably reflects unintended consequences of the “Antifa-BLM” election tool. One wonders if Antifa-BLM will go meekly back into the toolbox if “Lockdown” and “Mandatory Vaccine” manage to make it into the White House.

The move in the miners this week suggests that the correction in gold and silver may be coming to an end soon.

But can the correction in PM stop without more stimulus? More fiscal spending probably awaits the outcome of the election, which has yet to be decided, in spite of the loose talk about where the Biden pets will be sleeping next. There is still a lot of headline risk right now. Trump’s lawsuits look compelling to me, as does the one from Sidney Powell. The only remedy is for the Supremes to decertify the election from the fraud-filled states, and that will throw the vote into the House. Will they do it? That’s the $64 trillion dollar question.

And even if I knew how the Supremes will react, I am still unsure as to how gold itself will respond. The buck might rally – a bunch of grey swans get instantly taken off the table if they decertify the fraud-filled states – but gold’s response to this is still an unknown.

The election integrity issue is perhaps a larger issue overall – the things I’ve heard about are evidence of major, systemic, bipartisan fraud in our election system. A real investigation of the corruption might bring down some large number of political figures on both sides of the aisle. One instance of voting fraud had pre-printed ballots with only Biden selected – no down-ballot choices selected. Why? Well, if the systemic fraudsters picked the Dem down-ballot candidates, that would hose a collection of Reps that the corrupt system didn’t want to affect. Reps who might decide to squawk. So – they make sure to hose just Trump. That way, the rest of the Reps remain silent – if they know what’s good for them.

If the Supremes (and/or individual state Legislatures – they have that power) don’t decertify the Fraud States, the Biden Dogs will attempt to sweep this whole thing under the carpet. How that plays out is anyone’s guess.

No matter what the outcome is, there remains lots of headline risk, along with lots of unknowns.

 

  • Sun, Nov 29, 2020 - 01:23am

    #2

    davefairtex

    Status Member (Offline)

    Joined: Sep 03 2008

    Posts: 2296

    count placeholder0

    sector map

Surprising sector map – the more industrial metals did very well, silver led gold lower, but the miners (mostly) outperformed gold.

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Palladium $PALL 4.25% 34.63% rising rising rising rising ema9 on 2020-11-23 2020-11-27
Copper $COPPER 3.65% 29.17% rising rising rising rising ema9 on 2020-11-03 2020-11-27
Platinum $PLAT 1.95% 8.04% rising rising falling rising ma50 on 2020-11-13 2020-11-27
Silver Miners SIL -4.04% 34.48% falling falling rising falling ema9 on 2020-11-10 2020-11-27
Junior Miners GDXJ -4.39% 30.04% falling falling rising falling ma200 on 2020-11-25 2020-11-27
Gold $GOLD -4.51% 21.75% falling falling rising falling ma200 on 2020-11-27 2020-11-27
Senior Miners GDX -4.65% 26.40% falling falling rising falling ma200 on 2020-11-23 2020-11-27
Gold/Euro $GOLD:$XEU -5.29% 12.22% falling falling rising falling ma200 on 2020-11-18 2020-11-27
Silver $SILVER -6.45% 33.08% falling falling rising falling ema9 on 2020-11-17 2020-11-27
  • Sun, Nov 29, 2020 - 01:25am

    #3

    davefairtex

    Status Member (Offline)

    Joined: Sep 03 2008

    Posts: 2296

    count placeholder2

    saturday bitcoin update

Looks like we got that dead cat bounce.  Virtually all timeframes agree with this “lower prices ahead” projection – except the 25-day timeframe which still expects higher prices.

  • Sun, Nov 29, 2020 - 05:52am   (Reply to #3)

    #4
    Mohammed Mast

    Mohammed Mast

    Status Gold Member (Offline)

    Joined: May 17 2017

    Posts: 1206

    count placeholder3

    PM Weekly Market Commentary – 11/27/2020

Thanks Dave.

Boy you seem to be commenting on crypto a lot more these days. What’s the reason for the new interest?

BTW I don’t know if you saw this but The Guggenheim Fund has filed with the SEC to be able to invest almost $500 Million in BTC through Grayscale. At current valuation ($18,000) that works out to about 27,777 BTC. Do you think that will have an effect on the price say short/medium term?

https://www.coindesk.com/guggenheim-fund-files-to-be-able-to-invest-up-to-almost-500m-in-bitcoin-through-gbtc

I know you are an expert on gold so I wonder if you could comment on this idea.

Bitcoin Could Be Mirroring This Extremely Bullish Gold Fractal from the 1970s

Of course you could be spot on about the bounce and BTC could be heading considerably lower. I am kind of hoping for that since I like dips. $13k-$14k would be nice.

https://cointelegraph.com/news/weekend-bull-trap-traders-remain-cautious-as-bitcoin-price-rebounds-to-18k

Traders remain cautious as HODLERS  remain happy.

Hope you had a good Thanksgiving

  • Sun, Nov 29, 2020 - 05:40pm

    #5
    wotthecurtains

    wotthecurtains

    Status Silver Member (Offline)

    Joined: Feb 27 2020

    Posts: 248

    count placeholder3

    PM Weekly Market Commentary – 11/27/2020

So, I mentioned a few days back that Jim Rogers had recently said that he loved gold but wouldnt buy it now because he had heard about people in India having to sell their gold to buy rice.

Next up, I listened to a few TF Metals podcasts which covered recent days as being a Cartel Operation like so many I have watched since 2013.    Basically, we have (or rather we had) a ton of contracts standing for delivery on the Comex and the “goldbug conspiracy theory” is that many of those contracts can be deterred if prices are smashed in the paper markets until the contract holders are well out of the money.

Will be interesting to see what happens on Monday and throughout the next week.

 

My “money” is with the TF metals narrative but if weakness continues Ill be thinking more about a big physical gold surplus that needs to be worked off.

 

But even if the TF Metals narrative is correct, that still means the Cartel is back.  The majors have all been duly wrist slapped for manipulation and are now right back to rigging the markets, especially during quiet holiday hours.

 

It was a nice 5 month break there.

  • Sun, Nov 29, 2020 - 11:35pm

    #6

    davefairtex

    Status Member (Offline)

    Joined: Sep 03 2008

    Posts: 2296

    count placeholder0

    btc update sunday

Tea leaves seem to be saying, as price rises, the likelihood (and projected severity) of a reversal is increasing.  This is true in all timeframes except 25-day, which is neutral.   Today’s candle print (long white) is a bullish continuation.

  • Mon, Nov 30, 2020 - 06:36am

    #7

    JAG

    Status Platinum Member (Offline)

    Joined: Oct 26 2008

    Posts: 626

    count placeholder2

    Silver is getting close!

Spot Silver is approaching my $21 capitulation target! I’ve moved some money around and I’m waiting to pounce on some more silver miner call options (but yes, I will be more patient this time, lol).

DF: I conclude from this activity that “someone” has used this plunge in gold and silver as an opportunity to load up on the mining shares

I noticed that last week too, in the options markets, the big silver miner prices were stronger than the gold miner prices.

My only concern is that I think the weakness in gold and silver is portending another stock market crash in Spring 2021. VIX calls are certainly moving towards ‘cheap’ again.

It looks like bitcoin burped and is now headed back to retest its highs. Interestingly, I saw a guy showing that if bitcoin gets a little above it’s high and it reverses it will complete the dreaded butterfly of death TA pattern. LOL.

The amount of bullsh*t about bitcoin on YouTube recently should indicate something.

 

  • Mon, Nov 30, 2020 - 07:44am

    #8
    Steve

    Steve

    Status Bronze Member (Offline)

    Joined: Jun 27 2009

    Posts: 195

    count placeholder1

    Investors are liquidating gold to fund their BTC purchase.

It looks like investors are liquidating their gold holdings to fund their BTC purchases.

Has a change in strategy taken place or is this just one of the teeth on a ratchet between the gold and BTC?  Will we next see BTC down and gold up?

  • Mon, Nov 30, 2020 - 07:54am   (Reply to #8)

    #9
    VTGothic

    VTGothic

    Status Silver Member (Offline)

    Joined: Jan 05 2020

    Posts: 422

    count placeholder0

    PM Weekly Market Commentary – 11/27/2020

steve wrote:

It looks like investors are liquidating their gold holdings to fund their BTC purchases.

Has a change in strategy taken place or is this just one of the teeth on a ratchet between the gold and BTC?  Will we next see BTC down and gold up?

Relatedly, Raoul Pal Tweeted last night:

Raoul Pal
@RaoulGMI · 13h

Ok, last bomb – I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20). I dont own anything else (except some bond calls and some $’s). 98% of my liquid net worth. See, you can’t categorize me except #irresponsiblylong Good night all.

More context on current “change in strategy” located on PP here.

 

  • Mon, Nov 30, 2020 - 09:17am

    #10
    jvanname

    jvanname

    Status Bronze Member (Offline)

    Joined: May 23 2020

    Posts: 83

    count placeholder0

    PM Weekly Market Commentary – 11/27/2020

This is really quite sad. Bitcoin has a mining algorithm that was never designed to advance science. This means that Bitcoin is based on bad cryptography. This also means that Bitcoin attracts unintelligent people who hate science and who love waste. No reasonable person would want anything to do with this disaster.

Viewing 10 posts - 1 through 10 (of 16 total)

Login or Register to post comments