Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Monday, September 27, 2021
Gold When the Tight Economic Rope Slackens / Commodities / Gold and Silver 2021
By: Gary_Tanashian
[edit] Upon completing the article I realized that no forward look at the economy and financial markets from an inflationary/deflationary point of view would be complete without consideration of the Yield Curve. Here is its status at the time of writing. It is making a steepening hint this week along with the rise in bond yields. That signaling is inflationary, at least for now. But in 2008 the curve morphed from an inflationary steepener to a deflationary one and that’s an important distinction.
You’ll notice that a blessed Goldilocks economy is mentioned below as a less favored option for 2022. She runs with a flattening curve like the one during the 2013-2019 phase. If it steepens forget about Goldilocks and prepare for either an inflationary or deflationary steepener.
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Saturday, September 25, 2021
Will Biden’s Neo-Populist Economic Doctrine Support Gold? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Biden scaled back on his infrastructure bill. However, with all the remaining cards still in play, his economic agenda should be positive for gold.Inflation, bond yields, monetary policy… that’s all interesting and crucial to understand trends in the gold markets – but, hey, what’s up in politics? A lot has happened recently on this front. In particular, last month, the world was shocked by the chaotic withdrawal of US troops from Afghanistan. The messy pullover and the quick takeover of the country by the Taliban is not only the end of Biden’s honeymoon but also America’s great failure. Some analysts even say that the fall of Kabul is another Saigon time for the US. Indeed, it goes without saying that the collapse in Afghanistan is a huge blow to America’s reputation. So, it could weaken the faith in Uncle Sam and its currency, which could be positive for gold in the long run.
However, the end of the US mission in Afghanistan doesn’t pose any direct threats to America (although terrorism could thrive under the Taliban regime) or to the greenback. So, I don’t expect any substantial, long-lasting moves in gold prices (always remember that geopolitical events cause only short-lived fluctuations, if any).
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Saturday, September 25, 2021
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? / Commodities / Crude Oil
By: Paul_Rejczak
Knock, knock? Is it already the sky, or just a ceiling? Either way, oil has risen substantially — how high can it go?
Fundamental Updates
The crude closed on highs on Thursday thanks to optimism about demand as well as the remaining tight supply. In fact, this increase is driven by a general market sentiment that is relatively favorable to the macroeconomic situation and the conviction that supply should remain tight until the end of 2021.
The WTI crude oil futures rose 1.5% - more than $1 compared to Wednesday's close. Like Wall Street, the oil market has also been sensitive to more and more reassuring tone of messages from China about the situation of real estate developer Evergrande, which is on the verge of default. In addition, the acceleration of air travel caused by Washington lifting restrictions on entry into the United States could also boost demand for kerosene. And finally, while natural gas prices are hanging from the ceiling, we could see a shift in demand from gas to oil happening, which would obviously boost the barrel rally in Q4!
Wednesday, September 22, 2021
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On / Commodities / Exchange Traded Funds
By: Paul_Rejczak
Trading energy ETFs outside of US exchanges can be tricky, as it often means lower liquidity and some latency, but is it worth trying? Definitely!
Let’s do a comparative study between the WTI Crude Oil (CL) and an Exchange-Traded Fund (ETF) tracking this energy commodity as the underlying asset.
Prelude
In the previous two-part series (see Part I & Part II), we presented different ways to trade energies such as stocks, ETFs, CFDs and futures. We saw that picking the right instrument or vehicle depended on businesses, regions, risk profiles, psychology, etc. So, today, as an example, we will compare the well-known WTI Crude Oil (CL) futures contract (quoted in US dollars) with a 2:1 (2x) leveraged ETF traded in Toronto, in Canadian dollars.
Tuesday, September 21, 2021
Silver Futures Market Speculators Crushed Again / Commodities / Gold and Silver 2021
By: MoneyMetals
The gold and silver futures markets were designed to increase volatility and discourage physical ownership of precious metals, as revealed in 1970s-era disclosures. The futures markets have also created opportunities for manipulation.
Today, the corruption is on full display for anyone who cares to look at the Wiki-Leaks documents, criminal prosecutions, and the other piles of evidence detailing foul play.
Yet the global price for precious metals is still set by these futures markets. And the trading volume has even grown, even as prices appear increasingly unhinged from fundamental drivers impacting supply and demand for the underlying metals.
Monday, September 20, 2021
Two Huge, Overlooked Drains on Global Silver Supplies / Commodities / Gold and Silver 2021
By: MoneyMetals
Precious metals markets got dealt a technical blow after gold and silver sold off on Thursday. Stronger-than-expected economic reports boosted the U.S. Dollar Index, which in turn gave futures traders all the rationale they needed to pound longs with sell orders.
Silver traded down to a slight new 2021 low. Unless prices recover quickly here and carve out a double bottom, stop-loss selling could send spot silver toward lower-range support levels from last year.
Meanwhile, gold is faring relatively better with prices still holding well within this year’s trading range. The gold to silver ratio has risen from a low of just under 64:1 in February to 77:1 as of Thursday’s close. Put another way, silver is now very cheap versus gold.
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Monday, September 20, 2021
Gold gets hammered but Copper fails to seize the moment / Commodities / Gold and Silver 2021
By: Gary_Tanashian
The Copper/Gold ratio remains at a key decision point
Gold has been clobbered lately but a key metallic macro indicator remains in a long-term congestion zone. If it’s going to be cyclical ‘inflation ON’ we’d expect Cu/Au to break through and do what it has not done since a major inflation trade blew out in 2006-2008, and for the 30yr Treasury yield to eventually catch on and rise at least to the EMA 100 (blue line).
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Saturday, September 18, 2021
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
August marked the 50th anniversary of Nixon’s abandonment of the gold standard. It caused so many problems for the economy…and gold didn’t take over?Last month marked the 50th anniversary of President Nixon’s suspension of the convertibility of US dollars into gold. This move broke the last, thin link between world currencies and the yellow metal, effectively ending the ersatz of the gold standard that we still had back then (the official end came in March 1973, marking the start of an era of freely-floating fiat currencies).
I wrote about the collapse of the Bretton Woods in the last edition of the Gold Market Overview, but as it was a truly revolutionary event that paved the way for today’s monetary conditions, it’s worth mentioning the topic again.
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Wednesday, September 15, 2021
Eurozone Impact on Gold: The ECB and the Phantom Taper / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The ECB tapered its asset purchases. Only that it didn’t taper at all. Are you confused? Gold isn’t – it simply doesn’t care.Tapering has begun. For now, in the Eurozone. This is at least what headlines suggest, as last week, the Governing Council of the European Central Bank held its monetary policy meeting. The European central bankers decided to slow down the pace of their asset purchases:
Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters.
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Wednesday, September 15, 2021
Gold Miners: Last of the Summer Wine / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Autumn is just around the corner, and while the precious metals tasted some success most recently, the medium-term is still set for a downtrend.
With Fed Chairman Jerome Powell sticking to his dovish guns and U.S. nonfarm payrolls elongating the central bank’s perceived taper timeline, gold, silver, and mining stocks were extremely happy campers. However, with event-driven rallies much more semblance than substance, I warned on Sep. 7 that the rollercoaster of emotions would likely end in tears.
I wrote:
With the 2013 analogue leading the gold miners down an ominous path, the HUI Index and the GDX ETF have rallied by roughly 8% off their recent lows. However, identical developments occurred in 2013, and neither bout of optimism invalided their bearish medium-term outlooks.
And after the GDX ETF and the GDXJ ETF (our profitable short position) plunged by 5.35% and 6.98% respectively last week, summertime sadness confronted the precious metals. Likewise, with more melancholy moves likely to materialize over the medium term, gold, silver, and mining stocks should hit lower lows during the autumn months.
Friday, September 10, 2021
Gold Price Back Below $1,800! / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Gold Price Back Below $1,800!
Easy come, easy go. The yellow metal rallied on Friday just to plunge on Tuesday. What’s your next move, Mr. Gold?
Ugh, the recent rally in gold prices was really short-lived. As the chart below shows, the price of gold increased after the publication of disappointing nonfarm payrolls on Friday. However, it declined as soon as on Tuesday, and on Wednesday it slid below $1,800.
Friday, September 10, 2021
Silver Price seen tracking Copper prices higher / Commodities / Gold and Silver 2021
By: Richard_Mills
As a keen observer of the silver market, something recently caught my eye concerning the relationship between silver and gold (well-recognized) and silver and copper (less so).
Traditionally, silver prices have tracked gold prices fairly closely, which makes sense given that both function as monetary metals, and they often occur together in mineral deposits. The correlation between gold and silver since 1975 has been 0.8876. The 10-year correlation coefficient is 0.7511. However this year, the correlation has dropped significantly to 0.1959.
I suggest the reason is the fact that both copper and silver are being increasingly demanded in green energy applications. The closer correlation is seen below in the similar-shaped line graphs of 6-month spot silver and copper.
This is something we at AOTH will definitely be watching.
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Monday, September 06, 2021
Energy Metals Build Momentum; Silver & Platinum May Follow / Commodities / Metals & Mining
By: MoneyMetals
Will this September be one to remember in the markets? It is often characterized by rising volatility heading into the fall. September also often ushers in a period of seasonal strength for precious metals markets.
U.S. stocks opened the month heading back up to record levels. Meanwhile, gold and silver traded with little fanfare. Prices bounced around quietly ahead of Friday’s big jobs report.
Despite lackluster performance in the precious metals sector of late, some other metals are taking off. Energy metals in particular are a hot commodity right now. Uranium – the fuel for nuclear reactors – has suddenly gained strength on supply concerns. And metals used in electric vehicles, including lithium and rare earth elements, are surging along with demand for electric vehicles.
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Monday, September 06, 2021
Surging US Home Prices and Gold – What’s the Link? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
US home prices are surging, increasingly raising worries about inflation. Could gold follow houses? If so, why?Home price growth in the US has accelerated even further, reaching a new record. The S&P/Case-Shiller U.S. National Home Price Index rose from 255.3 in May to 260.9 in June, boosting the annual percentage gain from 16.8% to 18.1%, as the chart below shows. That’s the largest jump since 1988 when the series began.
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Sunday, September 05, 2021
Bond Conundrum - Boom or Bust for Gold? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Inflation has risen, but bond yields have declined. Such a divergence is strange — beware gold bulls!Would you like to see something mysterious? If yes, please look at the chart below. It shows the yields on 10-year US Treasuries (red line) and CPI annual inflation rates (blue line) in recent years. As you can see, a huge divergence emerged this year: while inflation surged above 5%, nominal bond yields declined from 1.6% to 1.3%.
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Friday, September 03, 2021
Will Crude Oil Prices Skyrocket in the Aftermath of Hurricane Ida? / Commodities / Crude Oil
By: EWI
"Supply and demand" does not always determine the price trend of crude oil
As you probably know, Hurricane Ida hit Louisiana on August 29, the exact date that Hurricane Katrina made a Louisiana landfall sixteen years earlier.
On August 30, the Wall Street Journal said:
Oil Industry Surveys Damage After Hurricane Ida Slams Louisiana
The storm disrupted fuel supplies, and the speed of the recovery will depend on how long it takes for refineries to come online amid flooding and power outages
Did oil prices skyrocket due to the disruption in oil production? Well, Bloomberg reported (August 30) that prices initially fell 1.6% [as Ida made landfall] before they "edged" higher.
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Thursday, September 02, 2021
When Will It Be Time to Sell Precious Metals? / Commodities / Gold and Silver 2021
By: MoneyMetals
Clients often ask when they should sell precious metals. We usually suggest one basic rule around the timing. After that, the decision to sell will depend upon whether your reasons for holding gold and silver have changed.
The basic rule is to avoid selling based on impulse. Humans are emotional creatures and studies show most of us make poor choices when it comes to timing. If you are making a snap decision to sell (or buy) based upon a surge of either fear or greed, odds are you will regret it.
The trick to avoiding an emotional decision about when to sell is to understand why you bought precious metals in the first place and stick to your guns.
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Thursday, September 02, 2021
Bittersweet Truth for Gold Stocks: What You Need to Know / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
When the Fed entices grown up kids with sweet words, they hit the candy store and stock up on gold, silver, and stocks. A sugar hangover follows.
Beware of the candyman!
With Fed Chairman Jerome Powell performing his usual dovish dance on Aug. 27, gold, silver, and mining stocks were like kids in a candy store. However, with the short-term sugar highs often leaving investors with nasty stomach aches, the sweet-and-sour nature of the precious metals’ performances may lead to pre-Halloween hangovers.
HUI Index: Harbinger of Things to Come
To explain, while the HUI Index invalidated the breakdown below its previous lows, the bullish reversal may seem quite sanguine. However, an identical development occurred in 2013 right before the index continued its sharp decline. Moreover, I warned previously that the HUI Index could record a corrective upswing of 4% to 8% (that’s what happened after the breakdown in 2013) and that it would not change the medium-term implications. And after the index rallied by more than 6% last week, the bounce is nothing to write home about.
Thursday, September 02, 2021
Facing down our investment fears, Courage comes from a strategy you can genuinely believe in / Commodities / Gold and Silver 2021
By: Michael_J_Kosares
“Gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.” – Matthew Hart, Vanity Fair magazine
Facing down our investment fears
Courage comes from a strategy you can genuinely believe in
“As markets shake off their summer slumbers,” writes London-based analyst Bill Blain, “what should we be worrying about? Lots..! From real vs transitory inflation arguments, the long-term economic consequences of Covid, the future for Central Banking unable to unravel its Gordian knot of monetary experimentation, and the prospects for rising political instability in the US and Europe.”
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Tuesday, August 31, 2021
Gold GDX Stocks, A Proxy for the Precious Metals Complex / Commodities / Gold and Silver Stocks 2021
By: Rambus_Chartology
I’ve been suggesting for some time now that the PM complex is trading at a critical inflection point where they can have a big move in either direction. It may sound like a copout but that is what an inflection point is. Many times at a critical inflection point, in the case of the PM stock indexes, support can hold beautifully or there can be a false breakout of the the S&R line which can be called a bear trap if the price action trades back above that important trendline.
Tonight I’m going to use the GDX as a proxy for the rest of the PM stock indexes which is showing us a great example of the current critical inflection point. The most basic concept in Chartology is how an important trendline can reverse its role to what had been resistance to support once broken to the upside and vise versa. The psychology behind an important trendline, using the top rail of the 2016 flat top expanding triangle on this weekly chart for the GDX below, is that when the top rail of the flat top expanding triangle was broken to the upside everyone that bought below the top rail is above water. As long as there isn’t a big breach of the top rail most will feel comfortable and not sell.
Every trendline you put on a chart is a support and resistance line, above is bullish and below is bearish. This is why we are always looking for a backtest when we see a breakout of a chart pattern. It doesn’t happen all the time but it does happen enough to always be on guard.
Lets focus on the top rail of the 2016 flat top expanding triangle that starts at the 2016 high and runs horizontally to the right side of the chart. Not many caught the double top that formed just below the 2016 trendline which led to the March 2020 crash low. As you can see there were 3 important touches from below. After the 2020 crash low was put in you can see the vertical rally that ensued but this time the top rail gave way. After several more weeks of moving higher the GDX completed its first backtest which could have been the backtest which would lead to the next important move higher but that wasn’t the case.
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