Analysis Topic: Commodity Markets - Metals, Softs & Oils

The analysis published under this topic are as follows.

Friday, December 06, 2019

Gold Price Forecast – Has the Recovery Finished? / Commodities / Gold & Silver 2019

By: Submissions

Gold prices pushed sharply higher on Tuesday but have stalled ever since. Has the recovery rally completed? I think it has.

Leave it to Trump to go and say something that causes the equity markets to print a two-day drop that wipes out more than a week of gains. But the tone in the markets might be changing.

The US president went from saying that the trade deal might get delayed until after the elections on Tuesday to saying that talks with China are going “very well” on Wednesday. His shift in tone carried through the markets with the S&P 500 recovering and posting on a bullish engulfing candle on a daily chart yesterday.

Friday, December 06, 2019

Precious Metals Ratio Charts / Commodities / Gold & Silver 2019

By: Rambus_Chartology

I can remember there were times during the PM complex bull market before 2011 that sometimes the PM metals would rally but the PM stocks were very weak. Then there were times when the PM stock would rise while the PM metals moved very little. At the time of those occurrences it was bewildering as common sense suggested they should all move together and the stronger the metals moved so should the PM stocks. I don’t have a good answer for the bifurcation at times only that it can happen.

This first chart for tonight is the old ratio combo chart which has the Gold:XAU ratio on top with the XAU on the bottom. When the ratio is rising gold is outperforming the XAU. Going all the way back to 1996 you can see that gold outperformed the XAU in parabolic fashion until the top in January of 2016 which lasted about 20 years. When that 20 year parabolic arc gave way in early 2016 that broke the back of gold outperforming the XAU.

Thursday, December 05, 2019

Supply Crunch Coming as Silver Miners Scale Back / Commodities / Gold & Silver 2019

By: MoneyMetals

Through the first half of 2019, silver significantly underperformed gold. Put another way, gold gained relative to silver – culminating in the gold:silver ratio registering a 27-year high of 95:1.

That market signal was received by the mining industry. Since there are few primary silver producers, and those that do mine silver also typically mine gold and some base metals, precious metals miners had an incentive to invest more into gold production and less into silver.

Precious metals analyst Adam Hamilton wrote in a recent commentary, “As silver wasted away in recent years, its bombed-out prices heavily impaired silver mines’ ability to generate operating cash flows and profits. The silver miners were forced to adapt and shifted their focus and capital into adding gold production rather than boosting silver output.”

Thursday, December 05, 2019

Manufacturing Goes Deeper Into Recession, Yet Gold Remains Muted. Why? / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

The ISM Manufacturing index fell 0.2 point to a reading of 48.1 in November. However, gold struggles to find momentum. What is going on exactly?

U.S. Manufacturing Sector Slumps Further

The Institute for Supply Management announced that its index of national factory activity dropped from 48.3 in October to 48.1 last month. The number was below expectations and it also remained below the 50 threshold, indicating contraction – shrinking for the fourth straight month. In other words, the manufacturing sector is still in recession.

Thursday, December 05, 2019

Gold Will Not Surpass Its 1980 Peak / Commodities / Gold & Silver 2019

By: Kelsey_Williams

When gold’s price reached $850 per ounce in January 1980, it seemed as if nothing would stop the runaway train that was headed straight for $1000 per ounce. But it was stopped, and began sliding downhill quickly.

By June 1982, two and one-half years later, gold’s price had declined by sixty-five percent. At close to $300 per ounce, the price of gold seemed farther away from the $1000 mark than ever before.

At $300 per ounce, the eventual low for gold of $250 was a short distance away. But that downside price did not come until seventeen years later, in late 1999. As far as $1000 gold is concerned, that did not occur until September 2009, almost thirty years after gold peaked at $850 in January 1980.

Thursday, December 05, 2019

7 Year Cycles Can Be Powerful And Gold Just Started One / Commodities / Gold & Silver 2019

By: Chris_Vermeulen

Our research and predictive modeling systems have nailed Gold over the past 15+ months.  We expected Gold to rally above $1750 before the end of this year, but the global trade wars and news cycles stalled the rally in Gold over the past 2 months.  Now, it appears Gold is poised for another rally pushing much higher.

But wait, if you’re thinking I’m just another one of those traders who is always bullish on gold, just know I have been telling the truth about where gold was headed (lower) for years, but finally, the tide has changed!

Gold broke down from a bull market in 2012/2013 – nearly 7 years ago.  Now, Gold has broken resistance near $1375 and is technically in a full-fledged Bull Market.  The importance of this is the 7-year cycle and how the rotation in Gold, between the high near $1923 and the low near $1045 represent an $878 price range.  The upside (expansion) rally in Gold may very well move in expanding Fibonacci price structures – just like it did in 2005 through 2012.  If this is the case, then we may expect to see an ultimate peak price in Gold well above $3500.

Tuesday, December 03, 2019

How Far Will Gold Reach Before the Upcoming Reversal? / Commodities / Gold & Silver 2019

By: P_Radomski_CFA

Just when most traders thought that the previous week is going to end in the red for gold, something exceptional happened. The USD Index reversed after rallying, and gold rallied sharply in response. In the end, gold ended the week in the green by forming a clear weekly reversal.

That was actually the second weekly reversal that we saw recently. Why is this important? Because of what happened shortly after we saw the opposite of it not so long ago.

Tuesday, December 03, 2019

Crude Oil Price Sliding Faster Than You Can Blink / Commodities / Crude Oil

By: Nadia_Simmons

Crude oil futures declined sharply on Friday. The steep slide’s result was a breakdown below the lower border of the rising green trend channel. As the prices closed the day below the formation, it’s clearly a bearish development.

Despite this setback, the bulls opened the week with a green gap, which has triggered modest improvement in the following hours. The bulls are fighting to invalidate the earlier breakdown below the green trend channel, and have reached the lower border of the blue consolidation on intraday basis. Prices have pulled back since though, and are currently trading at around $56.00.

Tuesday, December 03, 2019

Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again / Commodities / Shale Oil and Gas

By: Andrew_Butter

Why Shale was once Viable at $45WTI but it’s not anymore. That’s why OPEC can dictate the price again.

• Some shale operators now say they can’t make money at $55; so they are cutting-back. But in 2017 when WTI averaged $50; output-growth was 60% higher than today. How come?
• In 2015, five-hundred frac-spreads, bought and paid for; some from profits, many at fire-sale; were idle; so day-rates plunged; and so, helped by multi-pads and cheap sand, shale re-booted.
• In June 2019 all those spreads were working.  But now, for shale to continue to grow, more are needed. Except at $55 operators can’t pay the pumpers the day-rates they need to buy new.
• CAT is crying and Halliburton is stacking; holding-out for better rates. Rig count has plunged; there’s no point drilling if you can’t find a cheap frac-spread to complete.
• Now OPEC & Co can push the price up to $75 WTI without fear of sparking a third boom. But they may make the mistake they made in 2015; trying to kill-off shale. If they do, they will fail.

Over the past year the penny that shale-oil output growth was going down, not up, finally dropped for most commentators (1-to-7). Although EIA, IEA, OPEC and Rystad Energy are all sticking with their predictions for a 900,000 bpd or so build in shale production in 2020 (8-to-10). They say the slump in growth which started in June 2018, was because of pipeline constraints in Permian (11). But those were fixed in December 2018, yet output-growth kept going down.

Monday, December 02, 2019

The Narrative About Gold is Changing Again / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

Teaser: Let’s face it, we live in a world of radical uncertainty. Yet we’re supposed to make perfectly rational decisions – so, how do we cope with the unknown? We tell narratives, and form our decisions around them! Let’s explore the narratives in the financial markets for it reveals their importance to the gold market.

Let’s face it, we live in a world of radical uncertainty. There are not only many known unknowns in the world, but the same can’t be said of unknown unknowns. We simply do not known what we don’t know. In other words, the problem is not risk. The notion of risk implies that we can compute probability. This is what the mainstream economists assume: we know the odds, so there is a single optimizing solution to each problem. But the real issue is that we do not know the probabilities, because we even do not know how the world works. You see, the probability applies in a casino but not in a real world. You are certainly aware of substantial difference between roulette or weather forecasting, and the scope of new inventions or the prospect of war, elections or the asset prices. As Keynes wrote (at least once we agree with him), “About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.”

Saturday, November 30, 2019

Growing Inequality Unrest Threatens Mining Industry / Commodities / Metals & Mining

By: Richard_Mills

In the 1986 classic ‘Platoon’, Charlie Sheen’s character Chris Taylor tells everyone that he dropped out of college to serve in the Vietnam War. This sets him apart from the other grunts and makes Taylor seem noble and patriotic, giving up school to go fight in a war. But his credo is soon shot down by a black soldier nick-named King, played by Keith David, who tells him: 

“You got to be rich in the first place to think like that. Everybody know, the poor are always being f&$#8! over by the rich. Always have, always will.”

Thirty-five years later, King’s world-weary cynicism is just as relevant. The rich are getting richer, inequality is on the rise, and the middle class, which since the 1950s has been the backbone of the US economy, is shrinking. 

Saturday, November 30, 2019

When Fed Says That Everything Is Fine, Smart People Buy Gold / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

The Fed has published this month the newest edition of its Financial Stability Report. Generally speaking, the level of vulnerabilities in the financial system has moved little since the publication of the May edition of the report. The most of the US central banks’ observations are reassuring: investor appetite for risk generally appears to have returned to a level in the middle of its historical range, while the core of the financial sector appears resilient, with lever­age low and funding risk limited relative to the levels of recent decades.

What is very important in light of the causes of the Great Recession, the largest U.S. banks remain strongly capitalized, while household borrowing remains at a modest level relative to income, as one can see in the chart below. Isn’t that splendid news? Isn’t this time different? It’s bad news for the gold market?

Friday, November 29, 2019

Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices / Commodities / Gold and Silver Stocks 2019

By: The_Gold_Report

Money manager Adrian Day looks at three junior resource companies whose stocks are down significantly in the past few months, and attributes some of this to tax-loss selling. He also lists a handful of companies he believes are best buys right now.

Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX, US$0.59) has published an updated prefeasibility study (PFS) on its Mt Todd project in the Northern Territories in Australia, the largest undeveloped gold project in that country. The revisions to the old PFS include updating both the gold price (upward to $1,350/ounce) and the Australian dollar (downward to US$0.70). Both of these revisions help boost the returns on the project, as did other improvements, including on gold recoveries. Using the sensitivity table for today's prices, the project has a net present value (NPV, with 5% discount) of $1.15 billion and an international rate of return (IRR) of over 30%.

Thursday, November 28, 2019

Central Banks’ Gold Buying and Repatriation Spree / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

Central banks’ purchases and repatriations of gold have caught our attention once again. In October, Serbia’s central bank bought 9 tons of gold, following in the footsteps of many other central banks that have been adding to their gold reserves recently, including Russia, Hungary, and Poland.

Nine tons may seem to be a modest purchase, but the transaction was worth $438 million at $1,503 an ounce. And it has raised Serbia’s gold reserves to 30.4 tons, constituting about 10 percent of the country’s total reserves. Importantly, the National Bank of Serbia could carry on with its purchases, as it got clear message from the Serbian President, Aleksandar Vucic to continue boosting gold reserves in order to be better prepared for the economic crisis: “I think we’ll continue doing that because of what we see in which direction the crisis in the world is moving,” Vucic told the press.

Thursday, November 28, 2019

Another Precious Metals’ Reversal Coming Right Up! / Commodities / Gold & Silver 2019

By: P_Radomski_CFA

Gold reversed yesterday, and so did the rest of the precious metal sector. Mining stocks and – what’s important – silver showed strength relative to gold and rallied even more than gold. Silver’s strength is important because it indicates that we are already in the second half of the short-term upswing in the precious metals market. If there only was a tool that would provide us with a more precise time prediction… Oh wait, there is one. And it just worked perfectly yesterday.

Wednesday, November 27, 2019

Checking in on Gold & Silver Sentiment / Commodities / Gold & Silver 2019

By: Jordan_Roy_Byrne

The precious metals sector remains in a correction. The miners have shown some positive signs but are not ready to move yet because the metals likely have more correction ahead.

Technical support levels can provide us with low risk buy opportunities but combine that with sentiment data and we increase our odds of success.

One reason why the sector is stuck in a correction is because the net speculative position in Gold remains stubbornly high at 44% of open interest. Following interim peaks in the 2000s, the net speculative position usually fell to 30% and even 20% at times before Gold began its next impulsive advance.

Tuesday, November 26, 2019

Energy Sector to Bounce Off Cycle Bottom into 2020 / Commodities / Energy Resources

By: readtheticker

Low prices fix low prices, and eventually the shorts will be forced to cover and buy back their shares and force prices higher. This sector is 'this close' to such and event. Both Hurst cycles and Wyckoff supply and demand action are warming up to the bullish side for the energy sector (XLE). This is on the back of growing inflation fears. Inflation sourced from wage growth in the US and world wide central bankers (Japan [BOJ], Europe [ECB] and the USA [FED]) printing money at the same time. You should note this has never happened before, all three at the same time, printing. Yes, the energy sector has suffered from the lower oil prices but soon the shorts will have to judge how much lower energy stocks can go, as you can see the SPDR Energy Etf (XLE) has been unable to get below $50. Demand is present.  What to do? Watch for significant Wyckoff demand foot prints to see price test upper resistance (sign of strength), and then take action from a strong change of character.    

Tuesday, November 26, 2019

Silver Price Trend, Gold Ratio, MACD and Elliott Wave Analysis / Commodities / Gold & Silver 2019

By: Nadeem_Walayat

This analysis continues from part 1 (Silver Trend Forecast 2019 Update ).

Gold Silver Ratio

The Gold / Silver ratio has continued to trend lower, currently standing at 83.8, which implies to expect the Silver price to continue to out perform Gold over the coming months. So whilst Silver is no longer the SCREAMING BUY it was when trading at a ratio of 95, nevertheless is still CHEAP! Whilst we can dream of Silver reaching it's long-term average of 50 which on today's Gold price would suggest $29.6! However my more realistic target for 2019 has been for a move to 80, which in fact was briefly achieved early September. A ratio of 80 would put the Silver price on $18.60 against the current price of $18.07, so only marginally higher, so whilst still favouring Silver, however don't expect Silver to soar once more like it did during August relative to the Gold price.

Tuesday, November 26, 2019

The Prospects of Gold’s Next Upswing / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

The USD Index rallied on Friday, and gold responded with an intraday decline – that’s normal. What’s not necessarily normal is the size of the daily change in gold compared to the size of USD’s rally.

Monday, November 25, 2019

Gold Price Bull Run Trend Analysis / Commodities / Gold & Silver 2019

By: Nadeem_Walayat

This analysis continues from part 1 (Gold Price Trend Forecast 2019 Current State). The gold price has had a strong bull run this year, breaking out of it's long-term trading range of $1370 to $1150, which propelled the Gold price towards a core target zone of $1500 to $1530 though ahead of the time frame I had in mind therefore putting the gold price into an extremely overbought state. The price action since the peak of $1566 appears corrective and thus should be in preparation for Gold's next leg higher with my long-term target of $1800 as of December 2016 less than 15% away from the most recent high of $1566.