Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Thursday, June 02, 2022
Where Is Gold Price Going From Here? / Commodities / Gold and Silver 2022
By: Chris_Vermeulen
After briefly reaching highs above $2000, Gold has fallen to $1785 (-14%) following the deep selling in the US major indexes throughout most of April & May 2022.
Interpretation Of The Current Consolidation In Gold
My team and I see the recent lows in Gold as similar to the April/May 2009 consolidation after the Global Financial Crisis. Also similar to the January 2013 consolidation before an extended -34% price decline took place – ending in December 2015.
The primary difference between now and then is that the US Federal Reserve is currently initiating a new round of Quantitative Tightening (QT), raising rates, while battling Inflation. In both the previous examples, the US Federal Reserve was moving aggressively into Quantitative Easing, attempting to aid in the recovery of the US & the global economy.
It seems to me, that the underlying factors driving the price of Gold have drastically changed. All it would take for Gold to break into a new trend, up or down, would be to see some new catalyst or contagion event come to life.
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Wednesday, June 01, 2022
Gold Fakeout Instead of Breakout: Is the Gold Miners’ Crash Coming? / Commodities / Gold and Silver Stocks 2022
By: P_Radomski_CFA
Some analogies in the gold market that may be a hint for investors can be seen right now. If there's a 2008 rerun, what could that mean in the near term?
The precious metals market declined yesterday, and while the move is still small, it’s nice to see that our short positions in juniors are already profitable.
Something quite interesting happened in their price movement at the beginning of yesterday’s session, and that’s what I’d like to start with today.
Tuesday, May 31, 2022
Food, a Global Crisis – How bad is it going to get? / Commodities / Food Crisis
By: Richard_Mills
A comparison of this year’s grocery bills to last year’s yields a simple yet terrifying conclusion: food prices are rising at a rate beyond anyone’s imagination.
The Food and Agriculture Organization’s (FAO) food price index, which tracks the price movements of the most commonly traded and consumed food crops, recently reached its highest on record.
Most point to the exorbitant prices, like with many other commodities (i.e. oil), to the ongoing war in Europe, which has caused major disruptions to the global supply chain. Indeed, Russia’s invasion of Ukraine earlier this year triggered a series of events that blocked off some of the region’s supply routes, taking away a significant portion of the world’s food supply. The result? every category of food we consume — wheat, meat, dairy products, etc. — got more expensive.
FAO economists estimate that Russia and Ukraine together provided around 30% of the global wheat supply and 20% of maize exports over the past three years, representing a significant chunk of the global food supply. It’s been estimated that nearly 25 million tonnes of grain alone have been eliminated from the supply chain since Russia’s blockade of Ukrainian ports.
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Friday, May 27, 2022
Lower Copper price due to Chinese lockdowns is only Temporary / Commodities / Copper
By: Richard_Mills
Copper is one of our most important metals with more than 20 million tonnes consumed each year across a variety of industries, including building construction (wiring & piping,) power generation/ transmission, and electronic product manufacturing. The red metal is also a key component in transportation; electric vehicles use about four times as much copper as regular internal combustion engine vehicles.
A combination of supply disruptions, historically low copper stockpiles and higher energy costs, propelled copper to a new all-time high of $4.94/lb on Friday, March 4.
Since then, the base metal has lost momentum mostly because of lower demand in China, the world’s biggest consumer of copper end products.
The latest data shows China’s copper imports fell 4% in April, year on year, as the return of covid-19 forced lockdowns of several Chinese cities including Shanghai, hurting manufacturing and consumption.
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Tuesday, May 24, 2022
After Recent Highs, What’s Next for the Gold Junior Miners? / Commodities / Gold and Silver Stocks 2022
By: P_Radomski_CFA
Signs are pointing to gold’s May rally running out of steam as the USDX reaches its short-term bottom. But how much stamina is left in the yellow metal?
Another day, another higher close in the junior miners. And another day where profits on our long positions in the latter increased. There is a sign that the rally in the precious metals sector is close to being over.
That sign is the situation in the USD Index, and the shape of the gold-USD link.
Saturday, May 21, 2022
Why Is Crude Oil Ignoring US Inventories? / Commodities / Crude Oil
By: Submissions
While the current pull-back on black gold is fundamentally triggered by different forces, where is the prevailing wind coming from that is pushing prices lower?
On Wednesday, the day after the US Fed’s Chair Powell showed a more hawkish tone, crude oil prices dropped 2.5% following profit-takings on most commodity markets - new fears emerged that a world economic slowdown combined with rising interest rates could negatively impact the global demand. By the way, talking about profit-takings, our subscribers took theirs on Monday within the last phases of the strong rally in crude oil that hit our last projected targets.
Saturday, May 21, 2022
Here is Why I’m Still Bullish on Gold Mining Stocks / Commodities / Gold and Silver Stocks 2022
By: P_Radomski_CFA
The medium-term outlook for the precious metals remains bearish, but does this mean we can’t profit on shorter-term moves? Quite the opposite!
Precious metals declined yesterday, and so did the general stock market. Is the rally already over?
When I wrote about this rally on May 12, which took place at the same time when I took profits from the short positions and entered the long ones, I mentioned that I planned to hold these long positions for a week or two. Since that was exactly a week ago, the question is: is the top already in?
In short, it probably isn’t. As always, it’s useful to check what happened in the past in similar situations to verify whether what we see is normal or some kind of an outlier that cannot be explained by something that has already happened.
Let’s start with a quote from yesterday’s analysis:
Of course, there will be some back-and-forth movement on an intraday basis, but it doesn’t change anything. Junior miners are likely to rally this week nonetheless. And perhaps not longer than that, as the next triangle-vertex-based reversal is just around the corner – on Friday/Monday.
Saturday, May 14, 2022
Futures Contract – Trading Crude Oil With USO / Commodities / Crude Oil
By: Chris_Vermeulen
Crude oil, like most commodities, is not priced as a single data point like a stock. Instead, commodities, like oil, trade via futures contracts. A futures contract is an agreement to buy or sell a particular commodity or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quantity and quality specifications to facilitate trading on a futures exchange.
Unlike options, futures contracts do not have a time value component in their pricing. Each futures contract is a standalone contract with its own ending date, supply and demand, and market-determined price for the underlying product. Another key difference between options and futures is that while an option gives the holder a right to buy or sell at a specific price, exercising that right is optional. A futures contract is a legal contract for delivering an underlying physical product or, in some cases, a cash equivalent. Futures contract performance is a legally binding agreement and is not optional.
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Thursday, May 12, 2022
The War on Gold Ensures the Dollar’s Downfall / Commodities / Gold and Silver 2022
By: MoneyMetals
By Matthew Cortez, Last month was the 89th anniversary of one of America’s biggest blunders on her descent from honest, sound money into weaponized political money: Executive Order 6102.Signed on April 5, 1933, U.S. President Franklin Delano Roosevelt required all persons holding more than five ounces of gold to deliver their “gold coin, gold bullion, and gold certificates, now owned by them to a Federal Reserve Bank, branch or agency, or to any member bank of the Federal Reserve System.”
By outlawing the so-called “hoarding” of gold, Roosevelt intended to destroy gold as an everyday currency, transferring the purchasing power of gold to the U.S. government.
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Wednesday, May 11, 2022
INFLATION IS KILLING SILVER / Commodities / Gold and Silver 2022
By: Kelsey_Williams
More than just a few people are buying silver because “it protects them from inflation” – or something to that effect. Ever wonder if that argument holds up? The chart (source) below indicates otherwise…
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Tuesday, May 10, 2022
The Future of the Dollar Seems So Bright It’s Blinding Gold / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
While the USDX rushes up without looking back, gold is running... out of power. What could the next dollar highs mean for the precious metals market?
In short, practically everything that I wrote in yesterday’s analysis remains up-to-date. Based on the relative valuations and pre-market price movement, I wrote that junior miners were likely to decline below their rising support line, and I moved the exit price for the current short position in the GDXJ lower (it seems that it will gain even more shortly).
Indeed, the GDXJ fell like a stone in the water, and it pierced through the above-mentioned support line without looking back. Thanks to remaining in the short position, we were able to benefit from the breakdown below the support line.
Saturday, May 07, 2022
Gold and Silver Outperform Stocks and Bonds during Stagflation / Commodities / Gold and Silver 2022
By: MoneyMetals
As turmoil in financial markets unnerves investors, a larger economic crisis may be starting to unfold.
The Federal Reserve’s first steps toward tightening monetary policy are exposing vulnerabilities in the highly leveraged economy. The Fed spent years injecting the economy with artificial stimulus. Now it is trying to take that stimulus away without causing a crash.
On Wednesday, the Fed raised its benchmark interest rate by 50 basis points. That was the central bank’s biggest hike in 22 years.
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Monday, May 02, 2022
Gold is following a logical path in 2022 / Commodities / Gold and Silver 2022
By: Gary_Tanashian
Reference this article posted on 12.30.21: 2022: The Golden Year
Gold has done nothing unusual and in fact it has done as would normally be expected. In February it began to rally out of the base on the daily (futures) chart below. Driven by war (easy on the war, terror and pestilence bull rationales dear gold bugs) and inflation hype, kneejerkers and momos (momentum players) quickly jumped on pushing gold to an overbought high on March 8. The resulting correction is normal and it is healthy. Momos are not allowed to participate in a real gold bull (at least not until later when the bull is obviously blowing off).
As you can see on the chart, gold found support at the first projected level (this chart was used in an NFTRH update on Wednesday) to possibly contain the downside. However, as also noted in the update, better support is below at and around 1834 and the 200 day moving average. Still below short-term resistance, that lower support is still well in play at this time.
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Wednesday, April 27, 2022
Following Twitter, Elon Musk May Next Want to Acquire Silver / Commodities / Gold and Silver 2022
By: MoneyMetals
Elon Musk’s $44 billion purchase of Twitter is being hailed as a victory for free speech. Musk vows to make changes to the social media platform that will make it a true “digital town square” where people are free to speak their minds, even if others take offense.
Of course, not everyone is excited about the prospect.
“Biden officials worry Musk will allow Trump to return to Twitter,” CNBC informs us.
Musk, meanwhile, is worried that the Biden administration may launch retaliatory attacks by securities regulators. He is also concerned by government policies that are stoking inflation.
Wednesday, April 27, 2022
Crude Oil Is Holding Its Breath As China Fears COVID Again / Commodities / Crude Oil
By: Submissions
While China plans to implement lockdowns for fear of an epidemic, concerns about the coronavirus are taking a toll on the oil market. Will it escalate?
Crude oil prices remained lower on Tuesday, after significant losses suffered the day before. They are still weighed down by fears of a general lockdown in Beijing, the capital of China, as well as in Shanghai, thus risking a demand reduction for black gold.
The concern also affects industrial metals, of which China is a major consumer. They recorded substantial price drops on the London Metal Exchange (LME) on Monday. As per the below chart, the LMEX, an index that incorporates the prices of aluminium, copper, lead, nickel, tin, and zinc traded on the LME, posted 4,864.9 points on Monday, erasing all its gains from March and April:
Wednesday, April 20, 2022
If Gold Read the Tea Leaves, It Would See the Shape of a Bear / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
Despite increased war tensions, gold failed to break above $2,000. What’s worse, rising USDX and interest rates are already lurking on the horizon.
The precious metals just performed exactly as they were likely to. Despite the increase in war tensions, PMs and miners reversed instead of rallying, which indicated that the rally has probably run its course. Since the tensions can now (most likely) either decline or stabilize, gold and silver prices will presumably fall right away, or after a while, as the market starts paying attention to gold’s two key fundamental drivers:
- the USD Index
- the real interest rates.
Both are inversely correlated with the price of gold, and both are on the rise. It’s therefore most likely only a matter of time before gold declines, and the same goes for silver and mining stocks. In fact, silver and mining stocks are likely to fall harder than gold, as they’ve been very weak in recent years anyway. Let’s not forget that while gold moved above its 2011 highs, silver and miners are well below the 50% retracement from their respective 2011 highs.
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Monday, April 18, 2022
Gold Gains In Price Only – Not In Value / Commodities / Gold and Silver 2022
By: Kelsey_Williams
GOLD GAINS IN PRICE ONLY
It has been said that the more things change, the more they remain the same. That is certainly true of gold prices.
Let’s look at the following three charts in succession. Then we’ll talk about them…
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Saturday, April 16, 2022
Beating Inflation: Are The Fed’s Dreams Gold’s Worst Nightmare? / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
While investors remain happy-go-lucky, fundamental data for gold and silver is now worse than in 2021. Is this the last chance to come back to earth?
As another week comes to a close, the winds of change are blowing across the financial markets. However, while many investors and analysts can see only sunny days ahead, fundamental storm clouds should rain on their parade over the medium term, and it’s quite possible that it’s going to happen shortly.
To explain, this week culminated with the USD Index soaring above 100, the U.S. 10-Year real yield hitting a new 2022 high, and Goldman Sachs’ Financial Conditions Index (FCI) hitting its highest level since the global financial crisis (GFC). However, the PMs paid no mind yet. In fact, investors across many asset classes continue to ignore the implications of these developments. So far.
Sunday, April 10, 2022
6 Things You Need To Know Before Investing In Gold / Commodities / Gold and Silver 2022
By: Steve_Barker
Investing in gold is a smart investment. But why? Gold has been valued for centuries and for good reason! It's rare, durable, and can be used to make jewelry or electronics. Plus, it's not affected by inflation so no matter what happens with the economy it'll always have some value. But before you invest in gold there are a few things you need to know - what type of gold should you buy? How do you store your gold? What if the economy takes another downturn? Learn more here!
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Wednesday, April 06, 2022
Gold Begins to Wobble. Is It a Sign of a Greater Fall? / Commodities / Gold and Silver 2022
By: P_Radomski_CFA
Gold is still running on the war-fumes, but its last moves bring to mind only bearish associations. Worse yet, a rising dollar appeared on the horizon.
On the technical front, we saw that the junior mining stocks moved higher in the first part of the session, but then declined and ended the day practically unchanged.