Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
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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Wednesday, March 31, 2021
Why It‘s Reasonable to Be Bullish Stocks and Gold / Commodities / Gold and Silver 2021
By: Monica_Kingsley
Another day, another reversal – and a positive one for stocks. Universal sectoral weakness gave way to a unison rebound amid constructive outside markets. After weeks of on and off fits over rising Treasury yields, S&P 500 ran into headwinds on their retreat, and recaptured its luster yesterday as long-dated Treasuries (TLT ETF) rolled over to the downside. I guess nothing boosts confidence as much a troubled 7-year Treasury auction.
While it‘s far from full steam ahead, it‘s a welcome sight that the reflation trade dynamic has returned, and that technology isn‘t standing in the way. I think we‘re on the doorstep of another upswing establishing itself, which would be apparent latest Monday. Credit markets support such a conclusion, and so does the premarket turn higher in commodities – yes, I am referring also to yesterday‘s renewed uptick in inflation expectation.
Tuesday, March 30, 2021
Is Silver the New Gold? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Many analysts expect silver to outperform gold this year. It’s possible, but investors shouldn’t count on improving economic conditions and industrial demand.Silver has recently become a hot investment theme. For months, if not years, some analysts claimed that silver is undervalued relative to gold. Then, at the beginning of 2021, Reddit revolutionaries tried to trigger a short squeeze in silver. Although that attempt failed, silver has, so far, clearly been outperforming gold this year , as the chart below shows. So, is silver now a better investment than gold?
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Tuesday, March 30, 2021
Have Commodities Peaked? We Doubt It / Commodities / Commodities Trading
By: Chris_Vermeulen
While everyone was paying attention to the FOMC, Gold & Silver, and the Treasury Yields, it appears the recent commodity rally trend took a big hit on Thursday, March 18, 2021. Our guess is that the FOMC statement did nothing to support the continued commodity price rally as the US Fed continued with near-zero interest rates and economic support through 2023. The rally in commodities was likely based on expectations of a much stronger economic recovery as the COVID vaccines take the pressure off economic shutdowns and further restrictive economic conditions, but that may not be the case.
Commodities Rollover May Be Misleading Traders
The rollover in commodities suggests the markets are reacting to renewed expectations, post-FOMC. They may continue to consolidate near support (near $16.30) before attempting to move higher as traders digest the Fed comments and fall back into economic recovery expectations. Any move below $16.00 as seen on the chart below may likely prompt a consolidation phase within historical support channels (see the Weekly DBC chart below).
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Monday, March 29, 2021
Helicopter Money Vs. Gold / Commodities / Gold and Silver 2021
By: The_Gold_Report
Peter Krauth, editor of Gold Resource Investor, looks at the Fed's actions and what they augur for gold. This week Fed Reserve Chair Jerome Powell spoke at the "Innovation Summit" hosted by the Bank for International Settlements.
During his talk, he dissed Bitcoin and cryptocurrencies saying they were "…highly volatile and therefore not really useful stores of value, and they're not backed by anything."
OK, let me get this straight.
At its latest FOMC meeting the Fed promised near-zero interest with no rate hikes until 2023, and its $120 billion monthly asset purchases see no sign of abating.
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Monday, March 29, 2021
Powell and Yellen Sound Upbeat. Don’t They Like Gold? / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Both Powell and Yellen testified before Congress. They sounded upbeat on the U.S. economy, but gold’s reaction was weak.What a combo! Both Fed Chair Jerome Powell and the U.S. Treasury Secretary Janet Yellen testified before Congress this week. They spoke about the economic response to the economic crisis caused by the Covid-19 pandemic and the Great Lockdown .
In his prepared remarks , Powell sounded rather hawkish , as he noted that “the recovery has progressed more quickly than generally expected and looks to be strengthening.” As well, during the Q&A session, the Fed Chair seemed to be very confident about the economy and the central bank’s monetary policy . In particular, Powell told senators that 2021 was “going to be a very, very strong year in the most likely case.”
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Sunday, March 28, 2021
Gold Mining ETFs: Headed for Their Next Slide? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The mining ETFs (the GDX and GDXJ) have hit resistance and look tired. After their corrective rally, a slide looks promising.
The miners are done correcting and if they were at a water amusement park, would they head for the lazy river? How about the wave pool? Nah… they’d be headed straight for the slides.
If you’ve been waiting for a high-quality sign that the next big move in the precious metals sector is underway – you just got it.
There are days on the markets when nothing happens, there are days when what happens is visible only to some ( like Monday’s session ), and there are days when the market’s signals are crystal-clear – as if the charts were practically screaming at the person examining them. Yesterday, was one of the latter kind of days.
Without further ado, let’s take a look at the key development that we just saw in the precious metals’ world – the big decline in the GDX ETF – proxy for mining stocks.
Sunday, March 28, 2021
Fed’s Crypto Plans May Turn Bitcoin Bulls into Gold Bugs / Commodities / Gold and Silver 2021
By: MoneyMetals
The globalist push for central bank digital currency is ramping up.
On Monday, Federal Reserve Chairman Jerome Powell spoke at a virtual "Innovation Summit" hosted by the Bank for International Settlements, the central bank for central banks around the world.
Powell aimed his remarks specifically at digital currencies. And he made it clear that Bitcoin and other privately circulating crypto coins should not be allowed to supplant government-controlled fiat notes.
Clearly, Bitcoin’s recent surge to a market capitalization of $1 trillion set off alarms within the global central banking cabal. The prospect of cryptocurrencies becoming widely used in commerce and trade poses an existential threat to the world monetary order.
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Friday, March 26, 2021
Gold Miners: Why Apparent Strength is Just a Facade / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Despite everyone saying the bottom is in, and that gold and miners are set for takeoff, the signs still point south. The real question: how low can they go?
Let’s take a look at some price targets for where the GDX and GDXJ mining ETFs might land up.
With the miners attempting to reclaim Pride Rock, it won’t be long until the GDX ETF is singing Hakuna Matata.
Rising U.S. Treasury yields? No problem.
A reinvigorated USD Index? Who cares.
But while strength is often viewed through the eyes of the beholder, the GDX ETF is far from being The Lion King. Sure, its bravery in the face of familiar foes is reason for optimism. However, we’ve seen this movie before. While the recent rally may resemble Mufasa, beneath the surface, the GDX ETF’s tepid price action looks a lot like Simba.
Wednesday, March 24, 2021
Commodities Comeback / Commodities / Commodities Trading
By: The_Gold_Report
Peter Krauth, editor of Gold Resource Investor, examines the commodity supercycle and the role recency bias plays in investment decisions. Recency bias is a funny thing. It's human nature to expect the near future to look like the recent past.
But we all know that's not how things always play out.
And that can be costly, even dangerous, for investors.
Take long term bonds, for example. Ten-year Treasury yields have more than tripled, from 0.54% to 1.66% since last July. Does that mean the 40-year bond bull market is dead?
Tough to say, or course. We'll only know that for sure with hindsight. You know… recency bias.
If nothing else, the bond market is telling us price inflation is becoming a thing again, notwithstanding what the Fed might be telegraphing.
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Tuesday, March 23, 2021
Nervous Fed to Give Precious Metals Markets a Boost / Commodities / Gold and Silver 2021
By: MoneyMetals
The Fed’s Open Markets Committee met last week and left policy unchanged – at least for the moment.
No one expected central banking officials to make rate adjustments last week with equity prices rubbing up against all-time highs and the economic recovery narrative still dominant.
Central bankers are likely getting nervous, however. Treasury yields are surging, and it is only a matter of time before stimulus addicted markets throw another tantrum.
In fact, the S&P 500 index fell after Wednesday’s announcement and each of the following two days.
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Friday, March 19, 2021
Have the Ides of March Come for Silver? / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Gold’s volatile little brother had an interesting run thus far, with internet forums buoying its price. But will fundamentals prevail? Where is silver headed?
“The Ides of March are come,” said Caesar. “Aye Caesar; but not gone,” replied the soothsayer. The Ides of March quotation is often bandied about in financial articles midway through the month. Caesar was assassinated on March 15 th in 44BC (or BCE), at a meeting of the Roman Senate. Written about by Plutarch and further popularized by Shakespeare (who dramatized the event), the day has been used as a harbinger of ill fortune. So, if we’re to look at silver, should we be concerned about anything at this time?
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Friday, March 19, 2021
Gold Prices Then March 2020 and Now March 2021 / Commodities / Gold and Silver 2021
By: Kelsey_Williams
A year ago this past week marked the onset of the Covid-19 Pandemic. It also was the last full week of trading in the financial markets preceding crashes in all markets and a near-complete, albeit temporary, shutdown of economic activity.
Subsequent rebounds in stocks, bonds and real estate took valuations to levels as high or higher (much higher for stocks and gold) than before the turbulence took hold. Some might refer to those valuations as nose-bleed levels, although the summit for peak ascension is always moving when the effects of inflation are factored in.
Gold had its day in the sun, too. After falling sympathetically with other markets, gold’s price began an aggressive climb of more than 40% in just four months time.
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