Analysis Topic: Commodity Markets - Metals, Softs & Oils

The analysis published under this topic are as follows.

Saturday, May 25, 2019

Patient Approach Remains Appropriate for Fed. How Will Gold React? / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

The Fed released the minutes from its last meeting. What are the Fed’s views on the economy, global risks and inflation? What do the learnings imply for the US monetary policy and in turn, the gold market?

Minutes Show That FOMC Members Are Still Patient

The minutes from the May FOMC meeting show that the Fed is still patient. The downside risks for the global economy diminished and the financial conditions improved. As a result, the US central bank decided to keep its patient approach to the monetary policy in place:

Friday, May 24, 2019

Technical Analyst: Gold Price Weakness Should Be Short Term / Commodities / Gold & Silver 2019

By: Clive_Maund

Technical analyst Clive Maund charts gold and explains why he believes gold will turn higher later in the summer. Gold and silver dropping back again late last week had investors in the precious metals sector feeling despondent, especially as their fears were magnified by at least one analyst calling for gold to drop to the low $900s or even lower, which is normal when prices sink, but our charts are instead suggesting that gold and silver are close to completing giant bottoming patterns that started to form (in the case of gold) as far back as 2013.

We can best see gold's potential giant base pattern on a 10-year chart. It can be described as a complex Head-and-Shoulders bottom or as a Saucer, and is best considered to be both, or perhaps as a hybrid having the characteristics of both patterns. In any event, as we can see on this chart, it appears to be drawing close to breaking out of it, which will be a very big deal if it happens, because a base pattern of this magnitude can support a massive bull market. As for timing it could take several months and it is most likely to happen during gold's seasonally strong period from July through September. To maintain the bullish case it must stay above the Saucer boundary.

Friday, May 24, 2019

Silver Price Looking Weaker than Gold / Commodities / Gold & Silver 2019

By: Clive_Maund

Technical analyst Clive Maund charts silver and finds that it looks "considerably weaker than gold."Technical analyst Clive Maund charts silver and finds that it looks "considerably weaker than gold."

Silver looks considerably weaker than gold, although that is normal at this stage in the cycle. It is still considered likely that it is forming a Double Bottom with its lows of late 2015, and if so then the support at those lows should hold.

Friday, May 24, 2019

Downward Reversal in Oil Is Knocking on the Door / Commodities / Crude Oil

By: Nadia_Simmons

Crude oil hasn’t closed higher yesterday and the previous series of rallies appears to face stiff headwinds. Is this it, or can the oil bulls pull a rabbit out of their hats? After all, they’ve reversed Monday’s downswing already. Or does the prospect of wide spectrum U.S. - China uncertainties have the upper hand? It’s making itself heard across the board and crude oil is no exception. Let’s assess the technical picture now.

Friday, May 24, 2019

Powerful Signal from Gold GDX / Commodities / Gold and Silver Stocks 2019

By: P_Radomski_CFA

Gold and silver declined a bit yesterday, but mining stocks reversed and closed the session higher. It seems that the miners showed strength, especially that they formed a bullish reversal candlestick. But did they? The reversal candlesticks should be confirmed by strong volume and what we saw in the GDX ETF yesterday was the lowest daily volume of the year. In fact, the GDX volume was lower than any volume that we saw in 2018. And 2017. And 2016. And even 2015. The last time when we saw as low a volume was on May 21, 2014 (yes, exactly 5 years earlier). So, how should we read this price action?

It is not the reversal or relative strength that is the powerful signal from the GDX. It’s the extremely low volume reading. What makes it so important right now, is that since March 2013 there were only four similar cases and they were all followed by exactly the same thing.

Quick declines.

Thursday, May 23, 2019

Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

In May, the WGC published a new edition of its quarterly report on gold demand. It features interesting data about the changes in gold demand and supply. What does the Gold Demand Trends Q1 2019 say about the gold market in the first quarter of the year? How will its conclusions be reflected going forward in the gold price?

WGC Publishes Report on Gold in Q1 2019

According to the newest WGC data, the supply of gold was virtually unchanged (modest growth in mine production and recycling were offset by a decline in hedging), while the gold demand rose 7 percent year-over year to 1,053.3 tons in the first quarter of 2019.

Wednesday, May 22, 2019

Global Economic Tensions Translate Into Oil Price Volatility / Commodities / Crude Oil

By: Chris_Vermeulen

Our continued efforts to alert and assist fellow traders to the incredible setups that are currently happening throughout the globe with regards to increased global economic tensions are starting to take root.  We are hearing from our readers and follower and we love the comments we are receiving.  Near April/May 2018, we started predicting that the end of 2018 and almost all of 2019/2020 were going to include incredible opportunities for skilled traders.  We made these predictions at about the same time that we issued a series of incredible calls regarding the future market moves in 2018 & 2019.

Wednesday, May 22, 2019

Crude Oil, Hot Stocks, and Currencies – Markets III / Commodities / Crude Oil

By: Chris_Vermeulen

In our continued effort to help skilled traders/investors understand the future risks associated with geopolitical market turmoil, the EU Elections next week and the continued US/China trade war, this Part III of our Sector Rotation article will highlight certain sectors that we believe may continue to perform over the next 12 to 24+ months and help traders/investors survive any extended price volatility/rotation over that same time. Read Part I, and Part II.

Currently, the US stock market has weathered a bit of a jolt in terms of price rotation.  After many stock indexes reached new all-time highs, the news of Iran Oil Sanctions, US/China trade talks failing and the political turmoil in DC as an incredible 2020 US Presidential election cycle heats up, investors are watching the markets for any signs of strength or weakness.  Meanwhile, the US Dollar continues to strengthen against other global currencies in an incredible show of “King Dollar” strength and dominance.  All of this plays into one of our favorite narratives that we started discussing over 30 months ago – the Global Capital Shift.

Tuesday, May 21, 2019

Gold’s Exciting Boredom / Commodities / Gold & Silver 2019

By: P_Radomski_CFA

The last few trading days in gold were quite interesting, but overall gold has been a quite boring market in the last couple of months. Gold’s volatility index dropped to new lows as the current back and forth movement is just a small part of the same kind of movement on a broader scale. It’s more of the same. And when gold’s volatility gets very low, interesting things tend to happen next over 80% of the time. In other words, the situation in gold is now so boring that it’s a signal on its own. In today’s analysis, we’ll dig into details.

It’s time for gold’s boring, yet effective signal.

Monday, May 20, 2019

Gold, MMT, Fiat Money Inflation In France / Commodities / Gold & Silver 2019

By: Kelsey_Williams

“Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan and Canada are not operationally constrained by revenues when it comes to federal government spending. In other words, such governments do not need taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency.”  Investopedia

Of course governments are not ‘constrained’ by revenues. They have always been able to “print as much as they need”.

Modern Monetary Theory is not ‘modern’. Far from it. 

In the late eighteenth century, France was deeply in debt. A general lack of capital and confidence had taken its toll and the economy was lacking in signs of activity. Growth was stagnant.

The conditions were such that it would be reasonable to expect a return to better times without interference by government. Unfortunately, that would require patience and restraint by the politicians. Most politicians cannot resist the cries of “do something”. Even if the cries are non-existent, the government will hear them.

Saturday, May 18, 2019

What Does the New Fed’s Regime Imply for Gold? / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

The Fed promised that the quantitative easing would be only temporary and that it would reduce its ballooned balance sheet to the pre-crisis level. Now, as the Fed adopted an interest targeting with ample-reserves, we know that this is not going to happen. We invite you to read our today’s article about the new Fed’s regime and find out how it works and what it implies for the US monetary policy and the precious metals.

The discussion about the US monetary policy concentrates on the changes in the interest rates and Fed’s balance sheet. But what is also very important is how the US central bank implements its monetary policy, especially that in recent years the Fed has started operating in a new monetary policy implementation regime. Let’s analyze that change and its implications for the economy and the gold market.

Before the bankruptcy of the Lehman Brothers, life was simple. And the economic textbooks adequately described how the US central bank conducted the monetary policy. In short, the FOMC set a target for the federal funds rate and reached that target through small purchases and sales of securities in the open market. The commercial banks had to hold some reserve balances to meet the reserve requirements. Banks who lacked these reserves, borrowed them in the federal funds market from banks who had excess liquidity. As the reserves were scarce, the Fed could affect the level of the federal funds rate and move it to the target level through changes in the supply of reserves, known as open market operations. For example, when the Fed observed that the market rate is above the target, it purchased the government bonds adding reserve balances to the banking system and creating downward pressure on the market rate.

Friday, May 17, 2019

GDX Gold Mining Stocks Fundamentals Update / Commodities / Gold and Silver Stocks 2019

By: Zeal_LLC

The major gold miners’ stocks are drifting sideways with gold, their early-year momentum sapped by the recent stock-market euphoria.  But they are more important than ever for prudently diversifying portfolios, a rare sector that surges when stock markets weaken.  Their just-reported Q1’19 results reveal how gold miners are faring as a sector, and their current fundamentals are way better than bearish psychology implies.

The wild market action in Q4’18 again emphasized why investors shouldn’t overlook gold stocks.  Every portfolio needs a 10% allocation in gold and its miners’ stocks.  As the flagship S&P 500 broad-market stock index plunged 19.8% largely in that quarter to nearly enter a bear market, the leading gold-stock ETF rallied 11.4% higher in that span.  That was a warning shot across the bow that these markets are changing.

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports.  Required by the US Securities and Exchange Commission, these 10-Qs and 10-Ks contain the best fundamental data available to traders.  They dispel all the sentiment distortions inevitably surrounding prevailing stock-price levels, revealing corporations’ underlying hard fundamental realities.

Friday, May 17, 2019

Where Next For Gold After Touching the $1,300 Mark? / Commodities / Gold & Silver 2019

By: Arkadiusz_Sieron

On Monday, the price of gold has briefly jumped above $1,300. For the next two days, the yellow metal has been holding near that important psychological level, although it failed to rally subsequently. Let’s take a look at the trigger(s) of the upward move. The reaction of the gold market over the following days is pretty telling...

China Strikes Back

It has been a hot week! Indeed, just look at the chart below. As you can see, the price of the yellow metal leaped to $1,300 on Monday, even surpassing briefly that key level. What happened exactly?

Friday, May 17, 2019

Is the Trade War a Catalyst for Gold? / Commodities / Gold & Silver 2019

By: Jordan_Roy_Byrne

Although most of the precious metals sector has trended lower in recent months, Gold has held up well. It and the other, weaker components of precious metals got a boost on Monday when China retaliated with tariffs of its own.

There has been little follow through since.

This begs the question, will a trade war lead to a new bull market in precious metals?

The short answer is yes if it leads to a downturn and Fed rate cuts.

Rate cuts coupled with higher inflation due to the tariffs is a very bullish combination for precious metals.

Thursday, May 16, 2019

Gold Ratio Charts Offer The Keys to the Bull Market / Commodities / Gold & Silver 2019

By: Rambus_Chartology

Today I would like to update some ratio combo charts which may give us a sense of the bigger picture. Its like putting the pieces of a puzzle together where the small pieces don’t look like much by themselves but when they’re all added together it paints a clear picture. These ratio combo charts are just a piece of the puzzle that may add some clarity to some of the individual sectors.

Lets start with the TIP:TLT ratio chart in black with the TLT in red, which I use for the inflation/deflation debate. Most investors have their own individual stocks they like to look at in trying to answer the age old question, are we in an inflationary or deflationary cycle? When the ratio in black is rising it shows signs of inflation and when it’s falling deflation becomes possible.

On the left hand side of the chart you can see how the ratio in black topped out while the TLT was bottoming in 2011. Also at the bottom of the chart I have added the GDX and the CRB index with the 30 week ema which also topped out in 2011. Since the 2011 high the main trend has been down for the ratio chart in black which shows deflation. In July of 2016 both the ratio and the TLT topped out beginning a consolidation phase that would last for about 2 1/2 years with each forming a triangle consolidation pattern. In November of 2018 both broke out of their respective triangles signaling that we may see some deflation in our future. Again, at the bottom of the chart you can see the CRB index along with the GDX are currently trading below their 30 week ema which is not the end of the world but short term negative. The bottom line is that as long as the ratio in black keeps falling the odds favor a possible deflationary event maybe in the cards in the future.

Wednesday, May 15, 2019

Crude Oil Price Fails At Critical Fibonacci Level / Commodities / Crude Oil

By: Chris_Vermeulen

Crude Oil recently rallied up to the $63 level and failed. This level is a key Fibonacci price level based on our proprietary adaptive Fibonacci price modeling system.  It represents a Fibonacci Long Trigger Level that would suggest that a new bullish price trend could setup if and when the price of Crude Oil rallies and closes above this level.

The fact that Crude Oil rallied above this level early on Monday, May 13, and failed to hold above this level suggests this is a failed price rally and a failed attempt to rotate higher.  The failure of this price move suggests that Crude Oil may fall below current support, near $61, and begin a new downside price leg over the next 10+ trading sessions.

This Daily Crude Oil chart highlights the narrow price range, between $61 and $64.75, where a range of support and resistance levels are found with our proprietary Fibonacci modeling system.  The fact that this failed price rally cleared the $63 level, then fell sharply afterward suggests that support for any upside price rally in Crude Oil is very weak.  We would expect the price to rotate lower and retest the $61 level before breaking this level and moving much lower to find ultimate support.

Wednesday, May 15, 2019

US China Trade Impasse Threatens US Lithium, Rare Earth Imports / Commodities / Rare Earths

By: Richard_Mills

On Friday the United States made good on its threat to ratchet up the trade war against China, after the two parties failed, after weeks of negotiations, to reach a deal.

The Trump administration hiked tariffs on $200 billion worth of Chinese imports to 25% from 10%, adding to the $50 billion in goods already being taxed at that level. The tariff hikes went into effect at midnight on Thursday.

The negotiations appeared to be going well up until a couple of days ago, when Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer accused the Chinese of reneging on earlier commitments.

Nobody outside the trade delegations knows what went on behind closed doors in Washington, but it appears to us that the American team just got played. Dealing with China, or other Asian nations for that matter, is different from negotiating with fellow North Americans, or Europeans. It’s important to come across as respectful, and calm. Shrewdness is valued. Bluster and strong-arming are frowned upon.

Chinese negotiators will seldom agree to the first draft of a deal; the more common practice is to go back on what was discussed and amend the agreement, knowing full well that the other side won’t accept. But that’s ok. Like a chess game, the Chinese delegation was likely awaiting the next US move. Instead the American delegation slammed its fist on the chess board, immediately ending the game.

Wednesday, May 15, 2019

Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' / Commodities / Gold & Silver 2019

By: The_Gold_Report

Sector expert Michael Ballanger muses on the effects of Twitter and political maneuvers on the markets, and specifically on a favorite gold explorer.

I have a confession to make: There are no free markets anymore; there are only interventions. Of course, I bow to Gold Anti-Trust Action Committee (GATA) cofounder Chris Powell, who coined that brilliant phrase a few years ago, because it was certainly my exposure to GATA in 2005 that changed my perception of the insidious role of the bullion banks in controlling price and sentiment.

That, in fact, has since been expanded to include not just gold and silver but LIBOR, Fed funds, corporate bonds and, finally, stocks. The delivery method used to be one of the hired mouthpieces on CNBC, like former reporters Charlie Gasparino or Maria Bartiromo, but both have moved on and were replaced not by reporters with a "scoop," but rather central bank governors themselves. This has been the case for most of the pre- and post-global financial crisis period—up until the election of the current president, who has, along with several cabinet members such as Larry Kudlow and Smilin' Stevie Mnuchin, discovered that sending out messages to either roil or calm markets is best carried out via Twitter.

Wednesday, May 15, 2019

Crude Oil Bulls Attempt to Repair Yesterday’s Damage / Commodities / Crude Oil

By: Nadia_Simmons

We have seen a pretty sharp oil reversal yesterday. The U.S. session sent oil bulls packing. Not giving up, they’re attempting a comeback today. Geopolitical news to their rescue: the drone attacks on key Saudi pipelines. Emboldened by this tailwind, do the oil bulls stand a chance of reversing the tide of recent declines?

Wednesday, May 15, 2019

Our Long-Anticipated Gold Momentum Rally Begins / Commodities / Gold & Silver 2019

By: Chris_Vermeulen

Over the past 6+ months, we’ve been covering the price rotations in precious metals very closely.  We’ve issued a number of amazing calls regarding Gold and Silver over the past few months.  Two of the biggest calls we’ve made were the late 2018 research post that suggested Gold would rally to above $1300, then stall.  The other amazing call was our research team’s suggestion that April 21~24 would see Gold setup an Ultimate Base, or what we were calling a “Momentum Base”, near $1250 to $1275.

We issued both of these markets calls many months in advance of these dates/price levels targeting these moves.  In both cases, we issued these market calls well over 60 days prior to the move actually taking place.  The accuracy of these calls can be attributed to our proprietary price modeling solutions as well as the skill and techniques of our research team.  Don’t mind us while we take a few seconds to take credit for some truly amazing precious metals calls over the past 6+ months.