Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Tuesday, July 13, 2021
Climb Aboard! Silver Should Run Up To $38 In Next 30 Days / Commodities / Gold and Silver 2021
By: Lorimer_Wilson
The U.S. Dollar recently corrected upward but now appears ready to continue its move downward and this should light a fire under the price of Silver and see it undergo a 30-day run to around $38 per troy ounce as illustrated in the chart below.
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Friday, July 09, 2021
FOMC Minutes: A Confirmation of Fed’s Hawkish Shift? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The latest FOMC minutes were… mixed. The discussion between hawks and doves continues giving gold no comfort. Who will gain the upper hand?Yesterday, the FOMC published the minutes from its last meeting in June. Investors who counted on some clear clues are probably disappointed, as the minutes can please both hawks and doves. Indeed, the report showed that the Fed officials are divided on their inflation outlook and the appropriate course of action. The dovish side believes that the recent high inflation readings are transitory and they will ease in the not-so-distant future, while the hawkish camp worries that the upward pressure on prices could continue next year:
Looking ahead, participants generally expected inflation to ease as the effect of these transitory factors dissipated, but several participants remarked that they anticipated that supply chain limitations and input shortages would put upward pressure on prices into next year. Several participants noted that, during the early months of the reopening, uncertainty remained too high to accurately assess how long inflation pressures will be sustained.
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Friday, July 09, 2021
Gold: The Tapering Clock Is Ticking / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
With the FED increasingly hawkish and the USDX rising from the ashes, don’t be fooled by the recent upswing in gold. The bears are getting ready.
With the reflation trade getting cut off at the knees, the only asset class not feeling the pain is U.S. equities. However, while shorts capitulate and send the U.S. 10-Year Treasury higher (and the yield lower), the flattening of the U.S. yield curve screams of a potential recession. However, while the development is bullish for the USD Index and bearish for the PMs, investors are putting the cart before the horse.
To explain, while the U.S. 10-Year Treasury yield languishes in its depressed state, J.P. Morgan told clients on Jul. 6 that the Treasury benchmark is roughly three standard deviations below its model-implied fair value. For context, J.P. Morgan believes that the U.S. 10-Year Treasury yield should trade at roughly 1.60%, and, given the three-sigma underperformance, standard normal probabilities imply a roughly 99.9% chance that the Treasury benchmark will move higher over the medium term.
Thursday, July 08, 2021
The Silver Bull Is Not Transitory / Commodities / Gold and Silver 2021
By: The_Gold_Report
Peter Krauth of Silver Stock Investor delves into the silver market and discusses why it "looks primed to rally strongly on the back of multiple drivers."
Transitory. That's something we've been hearing a lot lately.
At its latest FOMC meeting the Fed naturally decided to keep the fed funds rate target at 0.25%.
It also decided not to mess with the $120 billion monthly bond buying program to help "support the flow of credit to households and businesses." Par for the course.
Meanwhile inflation numbers of the previous four months have been anything but typical. The Fed's favored Personal Consumption Expenditures Price Index has soared: in February it was 1.6%, March 2.4%, April 3.6% and in May 3.9%.
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Wednesday, July 07, 2021
The Rise of Precious Metals and Commodities / Commodities / Gold and Silver 2021
By: Monica_Kingsley
S&P 500 closed Friday on a strong note, and as the holiday-shortened week is usually accompanied by positive seasonality, it would be reasonable to expect extension of gains. Is therre any show stopper at the moment? Credit markets are strong and in a risk-on mode – but what about the odd strength in long-dated Treasuries? Are the stock traders getting it right – or the bond ones? Remember that such divergencies can take a long time to resolve, and don‘t require immediate action. It‘s the same with the Industrials and Transports in the Dow theory. So, don‘t jump to S&P 500 bearish conclusions just yet.
The stock market advance is characterized by improving market breadth, and a fresh push of reflationary trades. It would have been all too easy to lose one‘s cool post the June FOMC, and declare value to have topped – while tech amply helped by heavyweights powers the S&P 500 advance, value performance ain‘t too shabby. Even financials are weathering relatively well the retreating yields pressure, counterbalanced by the Fed relaxing share buybacks and dividend rules. Real assets including energy are surging again, and the Fed‘s bluff is being called.
Little wonder when all the central bank did, was influence inflation expectations, and precisely nothing about current inflation – let alone pressures in the pipeline. I‘ve discussed the cost-push pressures building up, leading to inflation becoming unanchored. Add job market pressures beyond the difficulties in hiring, and the issue grows more persistent. While it‘s not biting overly noticeably for the financial markets to take notice the way they did in Mar and early May, left unattended, inflation would come to bite in the not so distant future. The takeaway is that with the constant redefinitions of what transitory should mean now, the concept of Fed as inflation fighter is subject to well deserved mockery.
Look for the lull in Treasury market to continue, it‘s almost goldilocks economy as the monetary and fiscal support rivals wartime footing circumstances. Makes you wonder what would be on the table if we were faced with a recession. Thankfully, that‘s not on the horizon – we‘re in multi-year economic expansiona that won‘t end with the tapering or tightening games this year or next, not in the least.
Wednesday, July 07, 2021
HUI Gold Stocks: The Illusionist's Trick Left Investors Speechless / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The gold miners’ 2021 gains prompted a standing ovation among investors. However, they didn’t notice a magic trick until everything vanished.
The Gold Miners
After the HUI Index plunged by more than 10% and made all of its 2021 gains disappear, the magic trick left investors in a state of shock. But while Mr. Market still hasn’t sawed the HUI Index in half, the illusionist is likely gearing up for his greatest reveal. Case in point: while the Zig Zag Girl captivated audiences in the 1960s, the HUI Index’s zigzag correction leaves little to the imagination. And with the recent swoon a lot more than just smoke and mirrors, the HUI Index’s short-term optimism will likely vanish into thin air.
To explain, despite the profound drawdown, the HUI Index hasn’t been able to muster a typical relief rally. Moreover, with ominous signals increasing week by week, if history rhymes (as it tends to), the HUI Index will likely find medium-term support in the 100-to-150 range. For context, high-end 2020 support implies a move back to 150, while low-end 2015 support implies a move back to 100. And yes, it could really happen, even though such predictions seem unthinkable.
Tuesday, July 06, 2021
US Dollar Strength Holding Back Precious Metals for Now / Commodities / Gold and Silver 2021
By: MoneyMetals
Gold and silver bulls attempted to start a rally last week, but prices were capped by a strengthening U.S. Dollar Index.The buck has been advancing strongly against foreign currencies over the past month. Currency traders are encouraged by the Federal Reserve’s apparent plans to taper asset purchases and begin raising interest rates way out in 2023. Dollar buyers also seem convinced that the recent inflation spike is transitory.
That’s a huge speculative assumption on the part of anyone who holds U.S. currency. The big question investors will have to answer for themselves is whether high inflation is transitory or a strengthening U.S. dollar is transitory.
Monday, July 05, 2021
Gold Price Summer Doldrums / Commodities / Gold and Silver 2021
By: Zeal_LLC
Gold, silver, and their miners’ stocks suffer their weakest seasonals of the year in early summers. With traders’ attention normally diverted to vacations and summer fun, interest in and demand for precious metals usually wane. Without outsized investment demand, gold tends to drift sideways dragging silver and miners’ stocks with it. Long feared as the summer doldrums, they’ve really moderated in recent years.
This doldrums term is very apt for gold’s traditional summer predicament. It describes a zone surrounding the equator in the world’s oceans. There hot air is constantly rising, spawning long-lived low-pressure areas. They are often calm, with little prevailing winds. History is full of accounts of sailing ships getting trapped in this zone for days or weeks, unable to make headway. The doldrums were murder on ships’ morale.
Crews had no idea when the winds would pick up again, while they continued burning through their limited stores of food and drink. Without moving air, the stifling heat and humidity were suffocating on these ships long before air conditioning. Misery and boredom were extreme, leading to fights breaking out and occasional mutinies. Being trapped in the doldrums was viewed with dread, it was a very trying experience.
Gold investors can somewhat relate. Like clockwork trudging through early summers, gold starts drifting listlessly sideways. It often can’t make significant progress no matter what trends looked like heading into June, July, and August. As the days and weeks slowly pass, sentiment deteriorates markedly. Patience is gradually exhausted, supplanted with deep frustration. Plenty of traders capitulate, abandoning ship.
June and early July in particular have often proven desolate sentiment wastelands for precious metals, devoid of recurring seasonal demand surges. Unlike most of the rest of the year, the summer months simply lack any major income-cycle or cultural drivers of outsized gold investment demand. Yet three recent summers have been big exceptions to these decades-old seasonals, and 2021’s could still prove another.
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Saturday, July 03, 2021
Gold in the age of Inflation / Commodities / Gold and Silver 2021
By: Michael_J_Kosares
Gold in the age of inflation
The star investment of the fifty-year era and the most reliable store of value
There has been considerable, and some would say tedious, discussion on the subject of inflation over the past several weeks. The Fed wants it. The markets await it. Investors and consumers worry about it. If it does come, the Fed thinks it will be transitory. Others believe it will persist. That said, the current discussion ignores an established historical reality: We already live and have lived with it for a very long time. The Age of Inflation began in August of 1971 when the United States disengaged the dollar from gold and ushered in the fiat money era. Thereafter, the inflationary process has progressively eaten away at our wealth and the purchasing power of our money. Now, some of the best minds in the investment business tell us that it is about to accelerate and that if we ignore it, we do so at our own peril.
To mark the occasion of the fiat money system’s golden anniversary, we offer two instructive charts. One is something of a myth-buster in that gold has decisively outperformed stocks during the fiat money era. Many will be surprised to learn that gold is up 4,500% since 1971, while stocks have played second fiddle at 3,375%. The other reveals at a glance the pernicious, ongoing debasement of the dollar and gold’s role as a hedge against it. The dollar lost 85% of its purchasing power since 1971, while gold, as just mentioned, gained nearly 4500%. If that does not serve as vindication of gold’s portfolio role in the era of fiat money, I don’t know what will. At the same time, consensus has it that cyclically, stocks are closer to a top than a bottom, and gold is closer to a bottom than a top.
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Saturday, July 03, 2021
Gold: Bearish Development Just Around the Corner? / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
While we might see a small uptick in gold prices soon, it’s not likely to last long. We should be prepared to open our parachutes any time now.
The decline in gold continues, and while we might see a small pop-up higher here, it’s unlikely to last. And why could gold move slightly higher and correct the recent declines?
Thursday, July 01, 2021
Credit Spreads Declined Unprecedentedly. Will Gold Follow? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
When credit spreads narrow, it’s bad for gold. But this time there is a silver lining we can look for, although it’s quite adverse for the economy.There are several important factors affecting gold prices. Many analysts focus mainly on the US dollar and real interest rates . However, what is sometimes even more important is economic confidence. Of course, the level of economic confidence is partially reflected in the strength of the greenback and the bond yields . However, I would like to focus today on credit spreads , an often overlooked indicator of economic confidence.
Why such a topic? It’s simple, just take a look at the chart below. As you can see, the ICE BofA US High Yield Index Option-Adjusted Spread, which is a proxy for a spread between the yield on below-investment-grade-rated corporate debt and Treasuries of the same duration, has recently declined to a very low level. To be more precise, the analyzed indicator slid from almost 11 in March 2020 to 3.1 at the end of June (the lowest reading since July 2007 , the time just before the Great Recession started).
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Wednesday, June 30, 2021
USDX, Gold: The Hunter and the Prey / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Just before the hunt begins, the hunter needs to be sure its prey feels safe. Will we see a promising short-term rally in gold?
After the USD Index reasserted its dominance once again, its bellowing howl sent shivers down the spine of currency traders. When the U.S. Dollar Index is on the hunt, the precious metals are often its prey. The alpha wolf is poised to lead the pack over the medium term, and the sheep will likely be sent to the slaughter, but the predator needs to gather force first; a peaceful period of prosperity should ensue over the next several days. And this short-term decline could help uplift gold, silver, and mining stocks.
To explain, I warned last week that a short-term decline was likely after the USD Index’s RSI (Relative Strength Index) jumped above 70. And after eliciting some weakness, another pullback to the 38.2% Fibonacci retracement level also aligns with the price action that we witnessed in 2016.
Tuesday, June 29, 2021
Is There a Next Housing Bubble That Will Make Gold Shine? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Home prices are surging, making some investors worry about the housing market. These fears seem to be exaggerated, but bubble-like conditions are widespread.House prices are surging. As the chart below shows, the S&P/Case-Shiller U.S. National Home Price Index has reached 239 in February 2021, the highest number in history and about 30% higher than during the 2006 peak.
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Tuesday, June 29, 2021
Gold Miners require a unique macro-economic backdrop / Commodities / Gold and Silver 2021
By: Gary_Tanashian
When gold stock bulls complain about a “smack down”, a “hit” or a “smash” against the poor gold stock sector what they should be thinking about is what a relatively small market the gold stock universe is compared to the multitude of galaxies populated by cyclical and risk on stocks and commodities and the massive bond market. The gold stock sector’s noise to trading volume ratio must be far and away the biggest bull market on the planet (I know because I am part of it :-)).
And once in a while the sector actually warrants all that noise. Like in 2001 when markets were beginning a bear phase and economies were faltering. Like in Q4, 2008 when gold stocks were crashing to unwind previous inflationary excesses, leading stocks and commodities into a terrible crash and rebounding first. Like in March of 2020 when the miners crashed and ‘V’ bottomed to lead what is to this day an ongoing economic recovery born of the inflation that gold and gold stocks first sniffed out.
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Sunday, June 27, 2021
Powell Didn’t Come to Gold’s Rescue – Now What? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Powell’s testimony to Congress failed in generating a rebound in gold prices; thus, the bearish trend could continue.On Tuesday (June 22) the Fed Chair testified before the Select Subcommittee on the Coronavirus Crisis, U.S. House of Representatives . Before Powell’s appearance in Congress, there were some hopes that he would soften the Fed’s hawkish signals from the previous week. However, these hopes only partially materialized.
This is because Powell’s testimony was basically a confirmation of the last FOMC meeting . In particular, he reiterated the view that higher inflation would be transitory, as “a substantial part or perhaps all of the overshoot in inflation are from categories directly affected by reopening.”
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Friday, June 25, 2021
Fed’s Liquidity Circus and Gold / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Fed pumped so much money into the financial system, that the latter started sending it back. How will this and Fed’s more hawkish tone impact gold?
With Jerome Powell, Chairman of the U.S. Federal Reserve (FED), testifying before Congress on Jun. 22, his prepared remarks signaled that the FED remains on autopilot. Despite saying that “job gains should pick up in coming months as vaccinations rise,” he added that “we at the FED will do everything we can to support the economy for as long as it takes to complete the recovery.”
And while Powell supported our thesis by saying that “labor demand is remarkably strong and over time we will find ourselves with low unemployment and wages going up across the spectrum,” when asked if inflation is transitory, he responded:
“[Perhaps] all of the overshoot in inflation comes from categories such as rising used car and trucks, airplane tickets, hotel prices that have been affected by the reopening of the economy. [And while] these effects have turned out to be larger than we expected , the incoming data are consistent with the view that these factors will wane over time .” For context, of course inflationary pressures will “wane over time.” That’s not up for debate. However, “when” is the key question.
Friday, June 25, 2021
Fed 'Narrative Nonsense' Rattles Precious Metals Investors / Commodities / Gold and Silver 2021
By: The_Gold_Report
Sector expert Michael Ballanger explains how recent statements by the Federal Reserve could prove hazardous to one's wealth. In the past week, precious metals investors, speculators and traders have been forced to apply all kinds of salves, balms and ointments to jangled nerves, rattled resolve and battered net worth statements, all directly the result of an unexpected shift in the official narrative on interest rate policy released during Wednesday's Federal Open Market Committee (FOMC) statement.
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Thursday, June 24, 2021
Central Banks to Keep Buying Gold / Commodities / Gold and Silver 2021
By: MoneyMetals
The move away from the Federal Reserve Note as the global reserve currency of choice has continued in recent years, with fresh developments increasing the greenback’s stiff competition.
This has led to massive central bank buying of gold, and that trend appears set to continue in 2021. According to a recent report from the World Gold Council, 21% of global central banks plan to purchase gold this year.
Thursday, June 24, 2021
Will Gold Survive Hawkish Fed? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The recent Fed’s hawkish turn is fundamentally negative for gold prices but there is still some hope.The hawkish counter-revolution within the Fed continues. On Friday, St. Louis Fed President James Bullard said that the recent FOMC shift towards a faster tightening of monetary policy was a natural response to faster economic growth and higher inflation than anticipated:
We were expecting a good year, a good reopening, but this is a bigger year than we were expecting, more inflation than we were expecting, and I think it's natural that we've tilted a little bit more hawkish here to contain inflationary pressures.
Bullard also noted that “Powell officially opened the taper discussion this week”. Indeed, in my Friday edition of the Fundamental Gold Report , I focused on the changed dot-plot , which suggested that FOMC members were ready to hike interest rates twice in 2023. However, the second major shift in the stance of the US central bank was that the Fed officials started to “talk about talking about” tapering.
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Wednesday, June 23, 2021
Unlocking The Next Stage Of The Hydrogen Boom / Commodities / Energy Resources
By: Submissions
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