Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Wednesday, May 19, 2021
Being a Gold Bull Is Now Far Too Easy - Don’t Be Deceived / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Easy choices lead to a hard life (or at least losses), and because gold’s downside move is delayed, it’s extremely easy to be bullish on gold right now.
It’s easy to get carried away by the day-to-day price action, and it’s even easier to feel the emotions that other market participants are feeling while looking at the same short-term price action. Right now, it’s tempting to be bullish on gold. It’s “easy” to be bullish on gold while looking at what happened in the last 1.5 months. But what’s easy is rarely profitable in the long run.
“Easy choices – hard life. Hard choices – easy life” – Jerzy Gregorek
Let’s get beyond the day-to-day price swings. The Fed has been keeping the interest rates at ultra-low levels for many months, and it has just pledged to keep them low for a long time. The world is enduring the pandemic, and the amount of money that entered the system is truly astonishing. The savings available to investors skyrocketed. The USD Index has been beaten down from over 100 to about 90. And yet, gold is not at new highs. In fact, despite the 2020 attempt to rally above its 2011 high, gold’s price collapsed, and it invalidated the breakout above these all-important highs. It’s now trading just a few tens of dollars higher than it had been trading in 2013, right before the biggest slide of the recent years.
Wednesday, May 19, 2021
Gold Staging New Momentum Base In Preparation For A Big Upside Move / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
In the first portion of this research article, I highlighted the correlation between Gold and the US Dollar as well as the correlation between the US Dollar and the EURUSD and JPYUSD. The purpose of this example was to highlight the different phases of US Dollar appreciation vs depreciation compared to the EURUSD/JPYUSD. The EURUSD and JPYUSD are often compared to the US Dollar as major global currencies. Therefore, when the US Dollar moves into a depreciation phase, we expect to see the EURUSD and JPYUSD move into an appreciation phase.
How this correlated to the price of Gold and the phases of advancing vs declining precious metals is simple to understand. Gold will stall, or more broadly downward, while the US Dollar is within an advancing/appreciation phase. Gold will move higher or begin an upward trend bias when the US Dollar begins to generally weaken or moves into a declining/depreciation phase.
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Tuesday, May 18, 2021
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
Although Gold has continued to drift downward after reaching a peak near $2089.20 in early August 2020, our Custom Gold Inverse Trending Index suggests this weakness has actually built a very strong momentum base – preparing for a big move higher.
The relationship of Gold to the US Dollar is a fairly widely known correlation. When the US Dollar is weaker, Gold tends to rally. When the US Dollar is stronger, Gold tends to be weaker. Yet the combination of EURUSD and JPYUSD (plotted in INVERSE) in combination to the trend of the US Dollar related to Gold is difficult to ignore. Let’s explore this unique correlation a bit deeper.
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Monday, May 17, 2021
Gold Mining Stocks Fundamentals / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
The gold miners’ stocks have powered higher in recent months, solidifying a strong young upleg. But the extended-correction low leading into this latest rally has left sector psychology fairly bearish. Traders are skeptical about gold stocks’ upside potential, wary of another serious selloff. The gold miners’ just-reported Q1’21 operating and financial results reveal whether their fundamentals support further big gains.
The first quarter of 2021 was rough for the gold stocks. Their leading and dominant benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. Its $15.3b in net assets in the middle of this week ran 31x bigger than its next-largest 1x-long major-gold-miners-ETF competitor. During Q1, GDX dropped a sizable 9.8%. The gold stocks were increasingly out of favor as gold itself also lost 10.0%.
The gold miners actually proved quite resilient last quarter, as the majors in GDX generally amplify gold’s material moves by 2x to 3x. Still you couldn’t give away gold stocks in early March as their last extended correction finally bottomed at GDX $30.90. As these miners’ earnings leverage gold price trends, their stocks got sucked into gold’s vexing momentum selloff. But as that passed, the gold miners caught a bid.
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Monday, May 17, 2021
Junior Gold Miners Should be Rallying – What’s Holding Them Back? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Junior miners may soon suffer a breakdown of the short-term support line. So, what’s responsible for their underperformance of gold and stocks?
Today’s technical part of the analysis is going to be brief, as I have discussed multiple things this week and my comments remain up-to-date. There’s not much to add today, and we’ll go over only one technical chart – the one where we have trading positions – the GDXJ ETF chart. Unlike in the previous days, today I’m going to look at it from the more short-term point of view – through the 4-hour chart.
Before looking at it, please note that yesterday’s (May 13) session was relatively boring in the case of gold futures (they ended the day $1.20 higher), and quite positive for the GLD ETF, at least at first sight, as it closed $0.70 higher. The seemingly odd discrepancy between the two is just a result of different times that are taken into account for calculating both markets’ performance. All in all, yesterday’s session was positive for gold.
Friday, May 14, 2021
Gold: Lose a Battle to Win the War / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Gold scored some victories over the past days, but it’s playing a risky game. One misstep and the yellow metal might lose the war.
Sometimes, a good strategist needs to give up a few battles to eventually win the war. Or, at least, convince their enemy that they’re defeated while preparing a counterattack. Just the same, a chess player may need to sacrifice a piece in order to checkmate a king. Sun Tzu has spoken, and the Art of War translates well here.
In the world of trading, the same rules often apply. A good investor needs to give up a few unfavorable days to eventually score a final victory. Again, controlling one’s emotions and adhering to patience are key. These principles are important when waiting out gold’s temporary upswings in a medium-term downswing, and also when waiting for gold’s eventual ascent. Don’t let short-term intraday moves cloud your vision.
Yesterday (May 11), I wrote that the rally in gold and stocks might have just burnt itself out, and the markets didn’t wait long to agree with me.
Is it 100% certain that the top is in? Absolutely not, as there are no certainties in any market, and sound position management should be utilized at all times. But based on what happened yesterday, and what we saw in today’s pre-market trading, the odds that the corrective top is already in have greatly increased.
Friday, May 14, 2021
Gold to Benefit from Mounting US Debt Pile / Commodities / Gold and Silver 2021
By: Richard_Mills
Gold bugs are closely watching what happens with Treasuries. Last year, the gold price hit a record high of $2,034/oz, largely due to the fact that investors were piling into bonds as a safe haven against pandemic-related uncertainty. A descending US dollar and negative real rates (when bond yields minus the inflation rate fall below 0%) were also important antecedents.
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Thursday, May 13, 2021
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic / Commodities / Commodities Trading
By: Chris_Vermeulen
We recently completed some interesting research related to one of our newest Custom Indexes – the Commodities to Smart Cash Index (C2SC Heat Index) – weighted by the US Dollar and VIX. We’ve been reviewing this new index for months watching it to see how it reacts to various trends in Lumber, Gold, Treasury Yields, the Smart Cash Index, and other weighted values. Recently, we added the Fed Funds Rate to this chart and suddenly things took on a different perspective.
We had drawn horizontal lines on the Commodities to Smart Cash index highlighting historical high, low, and confluence price levels. Historically, when we see a chart that channels in a sideways range, one can often identify high and low price thresholds while also trying to find a confluence level (where a continued rise or decline in price is likely to continue). We can see how the US Fed reacted to rising inflationary concerns almost immediately as the C2SC Index rose near or above 6.5 (the RED Confluence level) throughout the past 25 years. Each time, in 1994, 1999, and 2005, when a period of increasing inflationary trends, the Fed was quick to act to contain inflation. The only time the Fed acted differently was in 2013~2015 and in 2020~now.
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Wednesday, May 12, 2021
Gold Price During Hyperinflation / Commodities / Gold and Silver 2021
By: Kelsey_Williams
Let’s start by defining hyperinflation…
“Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.” (source)
In addition, hyperinflation is described as “an extreme case of monetary devaluation that is so rapid and out of control that the normal concepts of value and prices are meaningless.”
The latter description is much more characteristic of the potential threat that most people envision when they invoke the term hyperinflation.
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Tuesday, May 11, 2021
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The GDX and HUI Index are enjoying a blissful moment. With HUI behaving civilly, will the GDX cling to the unrealistic and try to leap to cloud “ten”?
With the GDX ETF punching a hole through its glass ceiling, the senior miners are now witnessing an environment that’s beyond their wildest dreams: sunshine, clear skies and a utopia that’s eluded them since the beginning of the New Year. However, while leaving paradise is often more difficult than arriving, the GDX ETF’s recent vacation is likely coming to an end. And with the senior miners about to resume the daily grind of real life, their optimism will likely fade with the tropical sun.
To explain, while the GDX ETF remains on cloud nine, the HUI Index (a proxy for gold mining stocks ) has already left the resort. With the latter’s long-term outlook still intact and its broad head & shoulders pattern remaining on schedule, I wrote previously that the right shoulder would likely form after the HUI Index reaches 300. And after closing at 301.72 on May 7, the BUGS (after all, HUI is called the Gold Bugs Index) are currently living up to expectations.
Please see below:
Thursday, May 06, 2021
Gold & Silver Begin New Advancing Cycle Phase / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
Before going into detail regarding my latest research and cycle phases, I want you to think of these cycle phases as Advancing and Declining cycle trends. They act as a “build-up of trend”, then an “unwinding of trend”. In each instance, trends can be either Bullish, Bearish, or Neutral in nature. My research team and I believe a new Bullish Cycle Phase has begun in Gold and Silver. If our research is correct, the next Advancing Cycle Phase may prompt a broad rally in Gold and Silver.
Understanding Cycle Phase Analysis & Trends in Metals
We interpret these cycle phases as unique trend segments involved in a broader cycle scope. For example, over a longer-term rally, we may see many Bullish Advancing and Declining cycle phases take place – one after another. Conversely, we may see many Bearish cycle phases take place in an extended downtrend. Another type of cycle phase can also exist, the Reversal Cycle Phase – where price Advances in one direction and Declines in the opposite direction. This type of Rotation Cycle Phase exists as the current completed Cycle on the Gold chart, below.
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Thursday, May 06, 2021
USDX, Gold Miners: The Lion and the Jackals / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The USD Index let out a roar heard across all markets. The king of the financial jungle arrived, along with the greenback’s largest single-day gain.
Just as the African landscape sometimes needs to show the strongest of its inhabitants, so does the less remote but equally ferocious financial environment. This time, the USDX seems to have won the fight – its fangs and claws turned out to be the sharpest, and so are the rallies. There is nothing left for gold and its acquaintances than to run through the forest… run.
Sometimes, even jackals need to find shelter to lick their wounds in patience, waiting for a better time to come back to fight. However, they will come back eventually – they always do.
Tuesday, May 04, 2021
Gold & Silver Wait Their Turn to Ride the Inflationary Wave / Commodities / Gold and Silver 2021
By: MoneyMetals
As President Joe Biden pushed massive new spending initiatives in his address before Congress, investors shrugged off rising inflation risk. They pushed the S&P 500 up to a new record close on Thursday.
Gold, meanwhile, continues to be capped under the $1,800 level – at least for the time being. Silver shows a slight weekly gain and trades a little over $26 per ounce.
As trading closes out for the month of April, precious metals bulls will be hoping for a more fruitful May. Although May is typically a quiet month in markets – not known for producing major crashes or price spikes – it can represent a seasonal turning point.
The old adage, “sell in May and go away” is premised on the stock market entering a seasonally weak period that typically lasts through October.
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Tuesday, May 04, 2021
Gold Can’t Wait to Fall – Even Without USDX’s Help / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Gold started its decline without anyone’s assistance. And when the USDX takes off, that downhill tumble can only increase.
The USDX declines and the precious metals sit by idly, twiddling their thumbs. If they had the strength that’s being talked about, they should be soaring by now, or getting ready to. So, what’s their problem?
In the previous days, I discussed the signals coming from the precious metals market or for the precious metals market, as they kept on emerging, and we just received yet another round of indications. And yes, they also confirm the bearish outlook for the following weeks - or a few months.
Sunday, May 02, 2021
Will Powell Lull Gold Bulls to Sweet Sleep? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The Fed left its monetary policy unchanged. However, the lack of any action amid economic recovery is dovish – good news for gold.On Wednesday (Apr. 28), the FOMC has published its newest statement on monetary policy . The statement wasn’t significantly altered. The main change is that the Fed has noticed the progress on vaccinations and strong policy support, and that, in consequence, the economic outlook has improved.
Previously, the US central bank said that indicators of economic activity and employment “have turned up recently, although the sectors most adversely affected by the pandemic remain weak”, while now these indicators “have strengthened”, while “the sectors most adversely affected by the pandemic remain weak but have shown improvement”. So, the Fed acknowledged the fact that the economy has significantly recovered .
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Saturday, May 01, 2021
Are Technicals Pointing to New Gold Price Rally? / Commodities / Gold and Silver 2021
By: MoneyMetals
Although we tend to focus more on the fundamentals here at Money Metals, the technical indicators can offer important insights. Such as right now.
Many traders, investors, and momentum players will closely examine the market trend to determine if and when to enter or exit the market.
A market with a strong technical foundation can launch to dizzying heights, while a market displaying weak technicals will have a tough time putting together any sustainable upside.
The gold market has been primarily range bound for the last two months. The $1700 and $1800 levels have acted as support and resistance. Medium term, though, gold has been in a downtrend since its $2,100 high last August.
Friday, April 30, 2021
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents / Commodities / Gold and Silver 2021
By: MoneyMetals
If you're still waiting to buy physical silver to start a stash, you're now playing financial Russian Roulette... with four rounds in the cylinder.
The chat rooms talk about buying silver and gold when they decline in price. "If silver goes down to 22, I'm all in!" "When these 'excessive' premiums drop a few dollars, I'm backing up the truck."
1) Emotion and Sentiment
Believe it or not, buying on a price drop goes against human nature.
It is a bit strange, because if you go to the store and find your favorite grass-fed beef on sale, you'll probably see how much you can stuff in the freezer. But back to the metals.
Thursday, April 29, 2021
Silver Price Enters Acceleration Phase / Commodities / Gold and Silver 2021
By: The_Gold_Report
Peter Krauth of Silver Stock Investor discusses silver's rise and what may lie ahead.
Spot silver is trading around $26 per ounce…but you can't buy any at that price.
Instead, you'll have to pay almost 50% more.
That's right. If you want silver right now, you'll need to pay at least $35 per ounce.
If you prefer government mint coins, and you're willing to wait a month to get them, you'll have to pay upwards of $37 per 1 oz coin.
In the past year, premiums on physical silver have tripled from normal levels. Bullion dealers have been overwhelmed. Product shortages are now commonplace, with customers waiting 3 weeks or longer for shipping.
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Thursday, April 29, 2021
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Indicators are pointing to gold and mining ETFs running out of breath. They don’t seem to have what it takes to the move to the finish line.
Despite gold, silver and mining stocks’ recent corrective upswings, the precious metals are running out of steam. After bursting off of the lows – while failing to recognize that it’s a marathon and not a sprint – the precious metals’ late-week breather signals that their stamina isn’t what it used to be.
Moreover, with false breakouts and sanguine sentiment causing an adrenaline rush that’s likely to fade, the precious metals’ transformation from stalwart to sloth could leave investors feeling increasingly dejected.
Case in point: with the HUI Index (a proxy for gold mining stocks ) already verifying the breakdown below the neckline of its bearish H&S pattern – which didn’t occur until later in 2008 – the miners’ outlook is actually more bearish now than it was then.
Wednesday, April 28, 2021
Gold Prices – Don’t Get Too Excited / Commodities / Gold and Silver 2021
By: Kelsey_Williams
GOOD NEWS… The rebound in gold prices from their recent low has awakened new fervor among those looking for the elusive moonshot. The ‘obvious’ signs of much higher inflation have emboldened those who are inclined to predict ever higher gold prices.
Contrastingly, the chart of GLD prices pictured below doesn’t look all that great…
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