Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Monday, September 19, 2022
Gold Bleeding, Seasonal Pattern / Commodities / Gold and Silver 2022
By: Zeal_LLC
Gold has sure been a four-letter word lately, suffering one of its worst bull summers. The primary culprit was heavy gold-futures selling on a parabolic US-dollar surge fueled by extreme Fed hawkishness. But the resulting gold technical damage really disheartened investors, spawning additional relentless selling from them. This investment bleeding has certainly exacerbated gold’s downside, but its days are numbered.
With inflation raging in its biggest super-spike since the 1970s, gold should be soaring today. Instead it has been bludgeoned 14.3% lower between mid-April to late July, defying long precedent. And at the mid-week data cutoff for this essay, gold had again been pummeled right back to those deep summer lows. Technically gold looks pretty broken, which has whipped up bearish sentiment to suffocating extremes.
Gold was trading near $1,977 in mid-April just before the US Dollar Index started rocketing vertically. In the past five months starting then, US headline CPI inflation has run red-hot blasting up 8.3%, 8.6%, 9.1%, 8.5%, and 8.3% year-over-year! That high-water June print was the worst witnessed since way back in November 1981, a 40.6-year high! It’s hard to imagine a more-irrational backdrop for a major gold selloff.
Gold skyrocketed during the last similar inflation super-spikes in the 1970s. In the first the CPI blasted from +2.7% YoY to +12.3% over 30 months into December 1974. Gold’s monthly-average prices from trough to peak CPI months launched 196.6% higher! During the second the CPI exploded from +4.9% YoY to +14.8% in 40 months climaxing in March 1980. Gold’s monthly-average prices were a moonshot, up 322.4%!
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Friday, September 16, 2022
Inflation Is Hotter Than Expected, Gold Price Colder Than Hoped / Commodities / Gold and Silver 2022
By: Arkadiusz_Sieron
The annual CPI decelerated in August but came in higher than expected. Bets on a more hawkish Fed increased, while in the case of gold, they decreased.Inflation stayed hot in August. Unbelievable! At least for the majority of pundits who expected softer inflation. However, I’m not surprised, as I’ve repeated many times that “inflation is likely to stay elevated for some time.” But let’s stop bragging – and start digging into the recent CPI report.
The CPI increased 0.1% in August after being flat in July, according to the Bureau of Labor Statistics. It doesn’t seem to be a huge increase, but let’s note that it occurred despite a 10.6-percent decline in the gasoline index. Without plunging gas prices, inflation would be much higher because of the broad-based monthly item increase.
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Thursday, September 15, 2022
Bearish Signals Remain for Brent and WTI Crude Oil Price / Commodities / Crude Oil
By: Submissions
After the bearish progress, oil prices slipped slightly as worries about the global growth outlook overtook fears about the supply shortage.
Macroeconomics
On the macroeconomic view, the greenback found support on its 50-Day Moving Average (DMA) at the beginning of the week before resuming its rally upward and approaching its monthly highs of $110-110.50. Will the quarterly R3 pivot ($115) be reached anytime soon, or will the $110.50 level be left as its two-decade high?
Friday, September 09, 2022
Futures Still Dogging Gold Price / Commodities / Gold and Silver 2022
By: Zeal_LLC
Gold continues to languish near major lows after a rough summer, deeply out of favor with traders. Oddly this leading alternative investment seems oblivious to the first inflation super-spike since the 1970s. That should be driving big gold demand, fueling a major upleg. But that classic inflationary response has been temporarily delayed by heavy-to-extreme gold-futures selling. When that reverses to buying, gold will soar.
As everyone running a household or business knows, inflation is raging out of control. Not even lowballed government statistics can hide it. The monthly US Consumer Price Index has averaged blistering 8.3% year-over-year gains so far in 2022! That’s 4.6x 2019’s +1.8%-YoY monthly average, the last normal year before the pandemic-lockdown stock panic and its extensive aftermath. This June, the CPI soared 9.1% YoY.
That proved its hottest print since way back in November 1981, a staggering 40.6-year high! That’s despite today’s CPI being way watered-down compared to the 1970s one, extensively understating real inflation. Americans sure wish prices were only climbing 9%ish annually, but the grim reality out there is at least double to triple that. With such extreme inflation, gold should be soaring on huge investment demand.
Gold skyrocketed during the last similar inflation super-spikes in the 1970s. In the first the CPI blasted from +2.7% YoY to +12.3% over 30 months into December 1974. Gold’s monthly-average prices from trough to peak CPI months launched 196.6% higher! During the second the CPI exploded from +4.9% YoY to +14.8% in 40 months climaxing in March 1980. Gold’s monthly-average prices were a moonshot, up 322.4%!
If today’s CPI still used its far-more-honest 1970s methodology, headline inflation would be about double reported levels. Gold’s stunning disconnect from today’s raging inflation is troubling, leaving the great majority of traders forgetting about that 1970s precedent. After suffering one of its worst summers in modern bull-market years, gold has largely been left-for-dead. Instead of flocking back, investors are fleeing.
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Friday, September 02, 2022
Gold Falls as Powell Appears Hawkish in Jackson Hole / Commodities / Gold and Silver 2022
By: Arkadiusz_Sieron
Powell’s speech at the Jackson Hole symposium confirmed his hawkish stance, sending gold prices towards $1,700.Markets Were Quick to React to Powell’s Speech
Jackson Hole is behind us! What have we learned from Powell’s remarks at this year’s symposium? Well, the Fed Chair delivered a decisive and firm speech that reinforced the Fed’s hawkish stance and put to rest beliefs about a quick dovish pivot:
Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.
Although Powell didn’t specify how large the next interest rate hike will be, he said that “another unusually large increase could be appropriate at our next meeting”. Importantly, Powell downplayed July’s deceleration in inflation, saying that “a single month's improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down”.
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Thursday, September 01, 2022
Nothing Is Stopping the Gold GDXJ From Reaching 2020 Lows / Commodities / Gold and Silver Stocks 2022
By: P_Radomski_CFA
Both gold and silver’s results sagged, but gold stocks are the worst performers so far. What is this decline leading to?
Gold moved visibly lower yesterday, silver closed at the second-lowest level in over 2 years, and miners (both GDX and GDXJ) formed their lowest daily close in over 2 years! If someone has chosen to take short positions, profits have increased.
Saturday, August 20, 2022
Gold 2022 Doesn’t Have to Be Like 1980 / Commodities / Gold and Silver 2022
By: Arkadiusz_Sieron
A recession is coming – but will it really be positive for gold? After all, the yellow metal plunged in 1980, despite an economic downturn.Recession and Stagflation
Everyone says that the upcoming recession and stagflation will be good for gold. However, will they really? Some doubts also arose in my mind, so let’s investigate them. I, of course, don’t dispute that gold soared in the 1970s. This is a fact which is illustrated nicely by the chart below.
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Thursday, August 11, 2022
Silver Coin Premiums – Another Collapse? / Commodities / Gold and Silver 2022
By: Kelsey_Williams
SILVER COIN PREMIUMS
In 1972, a bag ($1000 face value) of “junk” US silver coins sold for approximately $1300-1350. The average closing price of silver that year was $1.68 oz; hence, the silver content (715 ounces) value was $1200 per bag. The remaining difference was a premium of about ten percent.
A lower silver price would generally result in higher percentage premiums because the face value of $1000 represented a ‘floor’ which limited the risk of holding the coins. In other words, the real investment risk was limited to the amount you paid over the $1000 face value.
For example, if the price of silver were to fall to $1.00 oz., the silver content value of the bag would be $715 ($1.00 oz. x 715 ounces) Since the coins were legal tender and still accepted at their face value, though, the full bag of coins retained its face value of $1000.
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Thursday, August 11, 2022
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 / Commodities / Gold and Silver 2022
By: Chris_Vermeulen
Fear is starting to become an issue. Traders are starting to realize inflation, CPI, PPI, and global currencies are reacting to the sudden policy shift by the US Fed and global central banks. This fear is showing up in the Gold-to-Silver ratio as well.
My research suggests the closest comparison to the current Gold/Silver setup may be found by looking at the early 2000~2003 US markets. Let’s investigate this setup a bit further.
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Monday, August 08, 2022
The End Game for Silver Shenanigans... / Commodities / Gold and Silver 2022
By: MoneyMetals
The federal criminal trial of JP Morgan executives Michael Nowak, Gregg Smith, and Jeffrey Ruffo began on July 8th. These senior bankers are accused of running a years-long scheme to manipulate precious metals prices through what is known as “spoofing.”
Perhaps the three will be found guilty, but it isn’t likely to have much impact on trading in the paper silver markets. If there is solution to artificially rigged prices, it will come from somewhere else.
It isn’t that regulators don’t have a lot to go on. Investigators had the goods when prosecutors got Deutsche Bank to plead guilty and cooperate.
Friday, August 05, 2022
Recession Is Good for Gold, but a Crisis Would Be Even Better / Commodities / Gold and Silver 2022
By: Arkadiusz_Sieron
The US economy fell into a technical recession. As a safe-haven asset, will gold soar now?What Is Recession, Anyway?
Ladies and gentlemen, please welcome the technical recession! According to the initial measure of the Bureau of Economic Analysis, real GDP dropped 0.9% in the second quarter, following a 1.6% decline in the first quarter (annualized quarterly rates). As the chart below shows, on a quarter-on-quarter basis, real GDP decreased by 0.4 and 0.2 percent, respectively. Thus, the US economy recorded two quarters of negative growth, which implies a technical recession.
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Friday, August 05, 2022
SILVER’S BAD BREAK / Commodities / Gold and Silver 2022
By: Kelsey_Williams
Bad breaks can be tough to recover from. The process can be arduous and can take a long time. Sometimes a full recovery remains elusive and distant.
Silver has a history of bad breaks over the past half-century. Below is a series of charts that tell the story…
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Wednesday, August 03, 2022
Don’t Be Misled by Gold’s Recent Upswing / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
Despite gold’s latest move higher, its outlook remains bearish. If its 2012-2013 pattern is to repeat, it means gold is now preparing for a big fall.
Patience Advised
Gold moved higher on Friday, so you might be wondering if this changed anything regarding the outlook. In short, it didn’t.
Let’s take a closer look at what happened.
Sunday, July 31, 2022
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" / Commodities / Metals & Mining
By: EWI
This suggests "a burgeoning slowdown in economic activity"
It may seem strange to bring up deflation when surveys show that inflation is the public's number one worry.
But who would have thought that inflation would become a big issue, say, just two years ago?
Right -- a relatively small percentage of people. The point is: Things can unexpectedly change -- fast.
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Sunday, July 31, 2022
Gold Stocks’ Rally Autumn 2022 / Commodities / Gold and Silver Stocks 2022
By: Zeal_LLC
The gold miners’ stocks have been thrashed in recent months, crushed as heavy futures selling slammed gold. That obliterated any residual sector bullishness, leaving gold stocks wildly-oversold and deeply-out-of-favor. But having weathered a rough early summer, the battered miners and their metal are trudging back into their traditional strong season. That begins with robust autumn rallies really accelerating in August.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks display strong seasonality because their price action amplifies that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities see, as its mined supply remains relatively-steady year-round. Instead gold’s major seasonality is demand-driven, with global investment demand varying considerably depending on the time in the calendar year.
This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. Starting in late summers, Asian farmers begin to reap their harvests. As they figure out how much surplus income was generated from all their hard work during the growing season, they wisely plow some of their savings into gold. Asian harvest is followed by India’s famous wedding season.
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Friday, July 22, 2022
Gold Will Come Out Stronger from the Economic Hurricane / Commodities / Gold and Silver 2022
By: Arkadiusz_Sieron
Recession calls are getting louder. If history is any guide, the bust is coming. Good news for gold!
An economic hurricane is coming. Brace yourselves! This is at least what Jamie Dimon suggested last month. To be precise, he said: “Right now, it's kind of sunny. Things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road, coming our way. We just don’t know if it's a minor one or Superstorm Sandy.” When JP Morgan Chase’s CEO is painting such a gloomy picture, you know that something serious is going to happen!
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Friday, July 22, 2022
Do Fed Rate Decisions Affect The Price Patterns For Gold? / Commodities / Gold and Silver 2022
By: Chris_Vermeulen
Many traders are focused on Gold as price has contracted over the past 5+ weeks, and the $1700 level is being retested. This prompted my team and I to do some research related to the US Federal Reserve’s recent rate increases and how Gold has previously reacted to rising and falling interest rates.
Exploring Price Patterns Between Gold and Fed Rate Decisions
I knew from the 2008-09 Global Financial Crisis and the 2020 COVID-19 event that Gold initially moves downward as extreme selling pressures drive almost all assets lower. Yet, in both cases, Gold quickly rebounded and began to move higher within 5+ weeks after setting up a bottom.
I started my research by outlining “Normal Fed Activity” and “Extended QE Fed Activity” to see if I could identify any difference in how Gold reacted to fear and uncertainty in these phases. My thinking was that Gold would react more muted in a price range in Normal Fed Activity phases because crisis events and economic uncertainty are more muted overall. When the Fed enters an expansive QE phase, this activity is associated with a US/Global economy that requires extraordinary measures to prompt expected normal capital functions.
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Wednesday, July 20, 2022
Gold Is Getting Ready to Follow in Junior Miners’ Footsteps / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
As junior miners continue to rise and the USD keeps falling, it seems like a matter of a short time before gold soars. It only needs a proper trigger.
Gold is doing pretty much nothing these days, but junior miners tell us what gold’s going to do next. It’s most likely to rally in the short term.
Why? Because the mining stocks tend to lead gold higher and lower, and looking at the relative performance of both parts of the precious metals sector, we see that this time, miners are already moving higher, while gold is getting ready to follow in miners’ footsteps. Let’s take a closer look at what junior miners (the GDXJ) did recently.
Friday, July 15, 2022
Gold Inflation Disconnect / Commodities / Gold and Silver 2022
By: Zeal_LLC
Gold should be soaring with red-hot inflation raging, but instead it is breaking down. This history-defying disconnect has devastated sentiment, leaving this leading traditional inflation hedge despised. Traders need to realize gold’s bizarre decoupling from all precedent is an extreme anomaly that will prove short-lived. It has been driven by a parabolic US-dollar surge fueling unsustainable heavy gold-futures selling.
As a professional speculator and financial-newsletter writer for the past 23 years, I’m deeply immersed in the markets. I eat, breathe, and sleep trading, watching and analyzing market action all day every day. In such a long span of time, I’ve seen plenty of irrational episodes where prices temporarily disconnect from reality. But recent months’ serious gold weakness may take the cake as the most absurd I’ve witnessed!
For millennia, gold has proven the greatest investment in inflationary times of monetary debasement. Its supply growth from mining is very-slow, constrained naturally by the rarity of economic gold deposits and the decade-plus timelines necessary to bring them to production. So when governments irresponsibly expand their money supplies at excessive rates, gold prices surge to reflect those depreciating currencies.
Relatively-way-more money is suddenly available to compete for relatively-much-less gold, bidding up its price levels. And the higher gold powers, the more investors want to chase it accelerating its upside. This logical gold-inflation dynamic has fueled legendary gains during past inflation super-spikes. The previous couple before today’s monster hit in the 1970s, and gold’s performances reflected how it should react.
From June 1972 to December 1974, headline year-over-year US Consumer Price Index inflation soared from 2.7% to 12.3%. During that 30-month span, conservative monthly-average gold prices blasted up an amazing 196.6%! After that serious inflation wave passed, another one soon followed. From November 1976 to March 1980, the YoY CPI prints skyrocketed from 4.9% to 14.8%. Gold was a moonshot in that span.
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Wednesday, July 13, 2022
How Has Russia’s Ukraine Invasion Impacted the Commodity Markets? / Commodities / Agricultural Commodities
By: Travis_Bard
Russia’s ongoing invasion of Ukraine continues to take an incredible human toll, with the very latest updates from the Office of the United Nations revealing that some 4,509 civilians had been killed in the conflict to date.
However, this geopolitical conflict has also caused significant financial and market disruption, from compounding the rise in global energy prices to significantly disturbing the world’s agricultural space.
But how exactly has this industry been impacted to date, and what does the conflict mean for the global commodity markets as a whole?
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