Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Monday, April 19, 2021
Gold - You Can Win a Battle, but Still Lose the War / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Gold had a good day yesterday, but as it hits the $1,770 resistance line, it will be anything but easy for the yellow metal. The real test has begun.
And so, it happened. Gold moved right to its target level that seemed to be the max that it could reach, but that didn’t seem to be the most likely outcome. Just because it wasn’t the most likely outcome, doesn’t make it impossible. The “most likely” can happen all the time – after all its only “most likely” not “certain” or “inevitable”.
Gold declined right after its triangle-vertex-based reversal, but it appears that the market participants didn’t want to give up on the bullish tone until gold finally reached its previous lows and highs.
Just like magnets, the strong support and resistance lines draw investors and traders, and it seems that we saw this play out once again.
Monday, April 19, 2021
Will Interest Rates Rally Further Push Gold Price Down? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The recent rally in the bond yields pushed gold prices down, but this trend won’t continue forever, as the Fed will likely be forced to step in.In March, we saw a continuation of the rally in bond yields that started in February. As the chart below shows, the 10-year real interest rates have soared from -1.06 on February 10 to -0.66 percent on March 23.
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Monday, April 19, 2021
Gold Fireworks Doubt the Official Inflation Story / Commodities / Gold and Silver 2021
By: Monica_Kingsley
The S&P 500 red candle and then some – erased in a day, that‘s what you get with the Fed always having your back. The staircase climb certainly looks like continuing without any real breather. Whatever steep ascent you compare it to (Jun or early Sep 2020), this one is different in that it doesn‘t offer but token corrections. Not that it would be reasonable to expect a steep downswing given the tide of liquidity, but even sideways trading has become rarer than it used to be.
With the VIX still below 17 and the put/call ratio in the middle of its slowly but surely less complacent range, the path of least resistance is higher – the signs are still aligned behind the upswing to go on:
(…) Don‘t pin your hopes too high for a (sharp) correction though. Yes, [on Wednesday] stocks listened to the weakening corporate credit markets, and the daily retreat in long-dated Treasuries inspired some profit taking in tech. Quite some run there as yields stabilized, which has turned XLK from very stretched to the downside of its 50-day moving average, to the upside extreme. Tesla also followed suit but I doubt this is a true reversal of tech fortunes.
Just at yesterday‘s moves – technology surged higher without too much help from the behemoths, and value stocks surged. Even financials ignored the sharp retreat in yields. Yes, that‘s the result of retails sales outdoing expectations and unemployment claims dropping sharply – the economic recovery is doing fine, manufacturing expands, and inflation doesn‘t yet bite. We‘re still in the reflationary stage where economic growth is higher than the rate of inflation or its expectations.
Sunday, April 18, 2021
Central Banks May Ramp Up Gold Buying / Commodities / Gold and Silver 2021
By: MoneyMetals
Ignore what central bankers are saying; instead, watch what they are doing.
While they poo-poo gold or pretend it doesn't exist, global central banks have been quietly but aggressively accumulating gold bullion for several years now. The Central Bank of Russia, for example, has been a consistent buyer of gold.
Other major central banks have also been acquiring and holding the metal, although some scaled back last year following the pandemic and record-high prices for the metal.
Given more favorable market conditions and greater risks to holding U.S. dollar reserves, central banks may soon ramp up their gold buying again.
The Hungarian Central Bank cited “long-term national and economic policy strategy objectives” for its move.
Friday, April 16, 2021
Gold’s Singular Role / Commodities / Gold and Silver 2021
By: Kelsey_Williams
When it comes to analyzing gold and gold prices there seems to be no limit to the explanations of cause and effect. The number of things presumed to be fundamental, or which are correlated to gold, has grown exponentially as gold receives more attention in the media and from the public.
The state of confusion that exists regarding gold and gold prices is exacerbated by the contradictions and conflicting arguments of almost all concerned parties. This includes investors, traders, analysts, and brokers (make sure your broker is safe to trade).
Rather than a desire to understand gold and its singular role, most investors and others are interested in gold only when its price is going up. They buy it and then look for reasons to justify their expectations of even higher prices.
They do look for explanations as to why the price goes down, of course; especially when that happens after they have taken a position on the long side. By then, it is usually too late.
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Wednesday, April 14, 2021
The Current Cannabis Sector Rally Is Pointing To Another Breakout / Commodities / Cannabis
By: Chris_Vermeulen
My research team and I continue to believe the Cannabis/Alternative sector is poised for a big trend in 2021 and 2022. Over the past few years, this sector has continued to trend lower after the hype of 2016~2018 – back when everyone was getting into the Cannabis industry as multiple US states authorized recreational and medical use. After the 2018 peak, followed by the early 2019 moderate price recovery, this entire industry sector fell out of favor with investors for almost 2 full years.
MJ Pennant Setup Almost Complete
The peak in the MJ, Alternative Harvest ETF, in September 2018 was $45.40. The lowest price since that peak was in March 2020 at $8.81 – that’s an 80% decline in price. Currently, MJ is trading near $22.31 and we’ve seen a tremendous recovery after the 2020 US elections. These elections resulted in a wave of enthusiasm for Cannabis and Alternative supply companies as it was widely expected the Democrats would move quickly to legalize Cannabis and other illegal drugs after their win.
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Monday, April 12, 2021
Another Gold Stocks Upleg / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
The gold miners’ stocks suffered a rocky start to 2021, rolling over into an extended correction after a young upleg prematurely failed. The resulting deeper lows left sentiment overwhelmingly bearish, with this contrarian sector deeply out of favor. But over the last five weeks or so, gold stocks have powered higher again in another young upleg. This one has a far-stronger foundation given the underlying gold setup.
The leading and dominant gold-stock benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. It held $14.2b in net assets in the middle of this week, a massive 30.6x bigger than the next-largest 1x-long major-gold-miners-ETF competitor! Several weeks ago I analyzed the top 25 GDX gold miners’ latest quarterly results, which revealed this sector now enjoys incredibly-strong fundamentals.
While gold averaged $1,876 per ounce in the recently-reported Q4’20, the big GDX gold miners reported average all-in sustaining costs of $1,038 per ounce. That implied stellar $838-per-ounce profit margins! That fantastic profitability fueled record revenues, adjusted earnings, operating cash flows, and treasuries at the GDX-top-25 gold miners. That was their sixth quarter in a row of soaring mid-double-digit earnings growth!
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Friday, April 09, 2021
Gold Mining Stocks: A House Built on Shaky Ground / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
It’s tempting to say that miners are showing strength compared to gold based on the GDX’s performance, but other mining proxies say otherwise.
Just because a house is standing doesn't mean its foundations are solid, and that's exactly the case with the miners.
There’s one extra thing that I would like to point out about mining stocks’ technical picture today (Apr. 8), and that’s their performance relative to gold.
Thursday, April 08, 2021
Gold and Latin: Twin Pillars of Western Rejuvenation / Commodities / Gold and Silver 2021
By: Antonius_Aquinas
After Brexit, there has been a growing number of voices within the European Union and among various nationalistic groups arguing that English should be replaced as the official language since now only Ireland and Malta retain English.
The loudest quarter calling for a change has come from the French who, not surprisingly, want their own tongue to become the lingua franca of the EU. Eric Zemmour, a French conservative commentator, asserts, “I think this is the time to launch a counter-offensive in favour of French, to recall that French was the original language of EU institutions.”*
A return to French, however, has its difficulties with other nationalist groups particularly those from the EU’s dominant economic power, Germany.
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Thursday, April 08, 2021
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs / Commodities / Crude Oil
By: EWI
Dear reader,
Almost exactly a year ago, oil prices went negative $40.
Today, with crude trading at $60, you're hearing lots of opinions as to what's next.
"Electric car revolution" ... "reopening economy" ... "end of commute" ... "start of travel season"
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Wednesday, April 07, 2021
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies / Commodities / Metals & Mining
By: Richard_Mills
Years of neglecting its critical metal supplies is catching up with the United States, as demand for the raw materials needed to build a new green economy that rejects fossil fuels gears up.
US President Joe Biden just announced a $2.3 trillion infrastructure spending package aimed partially at shifting the US transportation system from gas and diesel-based to battery-powered, and more support for renewable energies such as wind and solar over carbon-based sources like natural gas.
The plan is big on promises and appears to benefit many sectors, but details are scant on how the country will source the metals needed for repairing and replacing traditional “blacktop” infrastructure, and minerals that will feed a brand new “mine to battery” supply chain.
This article takes a deep dive into the US metals problem and how it might work with its northern neighbor to address it.
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Monday, April 05, 2021
Why the Financial Gurus Are WRONG About Gold / Commodities / Gold and Silver 2021
By: MoneyMetals
Longtime gold bashers are gloating over the precious metal’s recent price slump. Gold prices have declined more than 10% in the first quarter of 2021.
But the perma-bears shouldn’t feel vindicated. After all, anyone who heeded their advice missed out on gold’s record run in 2020 – and on many years of outperformance since 2001.
While gold bugs are often accused of having an unhealthy obsession with the metal, the “anti-gold” bugs reveal a deep-seated bias that can only be explained as irrational or dishonest.
Monday, April 05, 2021
Will Biden’s Infrastructure Plan Rebuild Gold? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Biden just announced an ambitious and expensive infrastructure plan. Will it rebuild gold?Yesterday (Mar. 31), President Joe Biden announced the big infrastructure plan , the second major legislative initiative after the $1.9 trillion coronavirus relief plan passed in early March. The proposal includes about $2.2 trillion in new spending over eight years, boosting government expenditures even further .
Despite the name, the plan assumes that only a part would be spent on infrastructure. To be more specific, Biden wants to spend $600 billion on transportation infrastructure (such as bridges, roads, airports, etc.), and more than $300 billion on improving utilities infrastructure (drinking-water pipes, electric grids, broadband). He also proposes to put more than $300 billion into building and upgrading housing and schools, $400 billion to care for elderly and disabled Americans, and almost $600 billion in research and development infrastructure, manufacturing, and job training.
That doesn’t sound bad at all (after all, infrastructure is critical), but there is a catch. The plan assumes that all the spending will be financed by tax hikes. Biden proposes to raise the U.S. corporate tax rate from the 21 percent set by Trump to 28 percent, as well as to eliminate all fossil fuel industry subsidies and loopholes. So, according to the proposal, the tax reforms will add about 0.5 percent of GDP in fiscal revenues, which are believed to fully pay for investments within the next 15 years.
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Sunday, April 04, 2021
Silver $100 Price Ahead / Commodities / Gold and Silver 2021
By: The_Gold_Report
Peter Krauth, editor of Silver Stock Investor, discusses the macroeconomic environment for silver and why he is embracing the metal's volatility. Being a silver investor over the last few weeks has become more psychologically challenging.
That's true even for us die-hard silver enthusiasts.
After all silver had a standout 2020, having gained about 47% in its best year since 2010. That easily outpaced gold's own impressive 25% return.
But the reality is that so far in 2021, silver is down 9%. And meanwhile, nearly all the fundamental market drivers have remained intact. It seems the pressures on silver prices are likely from two angles. The first is after such an impressive 2020, it was due to correct. That's what bull markets do.
The second pressure point is a rising U.S. dollar index, likely thanks to rising long-term bond yields. However, it's important to consider that this trend will also run its course and exhaust itself. That could happen naturally, or the Fed could intervene by imposing Yield Curve Control.
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Saturday, April 03, 2021
Gold Price Just Can’t Seem to Breakout / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Confirmed, unconfirmed, verified, and invalidated: breakouts and breakdowns are now ubiquitous. And the implications are bearish for gold.
Let’s start today’s analysis with a discussion of the key market that everyone is interested in – gold.
Gold’s Failed Breakout – A Sell Sign
In short, gold just invalidated its small breakout above the declining blue resistance line. The previous breakout was small and thus it required a confirmation. It never got one, and instead gold plunged, invalidating the move. This is yet another sell sign that we saw.
Friday, April 02, 2021
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks / Commodities / Gold and Silver Stocks 2021
By: Gary_Tanashian
The Gold Miner correction was well earned, but it was not a bubble
Even today there is some pablum out there talking about how if inflation is good for gold it is especially good for gold miners. I will simply repeat once again that if gold usually does not benefit fundamentally by cyclical inflation (i.e. inflation promoted for and currently working toward economic goals) the gold miners never do, unless they rise against their preferred fundamentals as they did during two separate phases in the last bull market, which were justly resolved with crashes.
Here are a couple charts we used in NFTRH 648 in a segment written to set the record straight. We have also used these charts – especially the first one – since the caution flags went up last summer, visually by the first chart and anecdotally by the usual suspects aggressively pumping the unwitting masses. Buffett buys a gold stock!… okay, well so much for that. Sentiment became off the charts over-bullish and now, as we prepare for the final act of the correction, it’s the opposite. That’s perfect.
HUI had far exceeded the Gold/SPX ratio and so it was very vulnerable from a macro fundamental perspective. Why on earth would players want to focus on miners digging a rock out of the ground that was starting to fail in a price ratio to the stock market? They wouldn’t, and since last summer they didn’t.
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Friday, April 02, 2021
Gold And US Dollar Hegemony / Commodities / Gold and Silver 2021
By: Kelsey_Williams
The US dollar is the world’s reserve currency. That isn’t likely to change anytime soon.
All currencies are substitutes for real money, i.e. gold. And because all governments inflate and destroy their own currencies, any potential alternatives to the US dollar are as bad or worse.
That doesn’t stop the dollar bashing, of course. In a general long-term sense, the condemnation is well-deserved. After all, the US dollar, under the care and watch keeping of the Federal Reserve Bank of the United States, has lost more than ninety-eight percent of its purchasing power.
The possibility of gold reasserting itself as the international medium of exchange continues to increase; but, a lot more bad stuff has to happen before we get to that point. Also, governments around the world have too much at stake to capitulate when it comes to ceasing to issue ‘funny money’.
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Friday, April 02, 2021
What Biden’s Big Infrastructure Push Means for Silver Price / Commodities / Gold and Silver 2021
By: MoneyMetals
The federal government is spending and redistributing newly created cash so rapidly, it’s becoming difficult to keep track of which trillions are going where.
This week, President Joe Biden will pitch a $3 trillion “green” infrastructure package. That’s on top of the $1.9 trillion economic “relief” bill he recently signed into law.
Next month, Biden is expected to roll out plans for additional trillions to be spent on healthcare, education, housing, and more.
Republicans in Congress may object to some of the proposed spending. But they have a lousy track record – even during times when they were the majority – when it comes to actually reining in federal outlays.
Thursday, April 01, 2021
A Climbing USDX Means Gold Investors Should Care / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Positions in the USDX are shifting from shorts to longs, so gold investors should look closely. Why? Because it’s an inverse relationship.
We’ve discussed the negative correlation between the dollar and the precious metals many times before, but it can never be discussed enough, particularly as the situation develops and the outlook for the USD Index becomes more positive.
Once the USD Index lands some knockout punches, the precious metals will be hurting, as they tend to do when the dollar rises. Gold, silver and the miners will eventually rise, but for the medium-term, they are still in bearish territory.
Counted out, counted down and rarely counted on, investors threw in the USD Index’s towel long before the fight even began. However, after shaking the cobwebs and landing a few haymakers, the greenback’s Rocky-like comeback is proof that ‘it ain’t over till it’s over.’
Let’s look at the factors influencing rise of the USD Index as well as some of the historical patterns:
Thursday, April 01, 2021
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation / Commodities / Gold and Silver Stocks 2021
By: Chris_Vermeulen
Precious Metals have continued to slide sideways as the US stock markets have rallied into the FOMC meeting last week. Not by coincidence, metals have continued to base/bottom near recent lows as concerns about the global debt/credit markets, central banks, and precious metal supplies continue to linger. The US Fed indicated it will do whatever is necessary to support the recovering economy. The question my research team asks in relation to the basis for a move in metals/miners is “do the global markets believe the global central banks still have control of the underlying global banking/credit markets well enough to prevent another massive rally in metals?”.
This question should be first and foremost for metals precious metals enthusiasts. Recently, there has been quite a bit of concern related to a Silver Squeeze and COMEX deliveries. Currently, there is some speculation that the Perth Mint has a very limited supply of physical metals on hand and nearly 60x that amount on their balance sheets (Source: https://www.reddit.com/r/Wallstreetsilver/comments/mc18no/perth_mint_unallocated_silver_is_not_backed_by/). We’re no expert related to this lack of physical inventory, but if it is true, then a breakout rally in metals (a true metals SQUEEZE) could be just days or weeks away.
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