Analysis Topic: Commodity Markets - Metals, Softs & Oils

The analysis published under this topic are as follows.

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.

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.

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?

Sunday, July 10, 2022

Trial Begins in Gold & Silver Manipulation Case Against J.P. Morgan Official / Commodities / Gold and Silver 2022

By: MoneyMetals

Fears of further Fed tightening continue to weigh on metals markets.

On Wednesday, the Federal Reserve released the minutes from its most recent policy meeting. As CNBC reported, central bankers remain fixated on inflation.

CNBC Reporter: The minutes of the latest Fed meetings show that officials agreed that another rate hike of 50-75 basis points would likely be appropriate at its meeting later this month. Officials also acknowledge that there could be an even more restrictive stance that could be appropriate if inflation remains high. Now, the minutes show that Fed officials were worried about inflation becoming entrenched, that was debated several times in this document. Many participants viewed that as a significant risk.

Sunday, July 10, 2022

What Needs to Happen for the Gold Stocks GDXJ to Hit New Lows? / Commodities / Gold and Silver Stocks 2022

By: P_Radomski_CFA

Although the general stock market has risen, this trend may soon reverse. Since it often moves along with gold stocks, junior miners can face a fall too.

Let the S&P 500 Be a Clue

Mining stocks declined significantly this week, but they haven’t severely underperformed gold. There is a good reason for it – the general stock market moved higher recently.

What would have to happen for the mining stocks (in particular, junior mining stocks) to decline in a more profound manner and slide well below $30 (in the GDXJ)? For example, the trend in the stock market could reverse.

Guess what – that’s exactly what’s likely to happen based on what’s going on in the S&P 500 chart.

Saturday, July 09, 2022

Euphoric US Dollar Slams Gold / Commodities / Gold and Silver 2022

By: Zeal_LLC

The euphoric US dollar rocketing stratospheric to extreme multi-decade highs slammed gold this week!  That vertical surge ignited heavy gold-futures selling, hammering gold into a serious technical breakdown.  The resulting sentiment damage was severe, with traders now convinced gold is doomed to spiral much lower.  But a major reversal is imminent in the radically-overbought dollar, which will catapult gold higher.

Gold has two primary drivers, investment demand and gold-futures speculation.  Investment capital flows are much-larger and ultimately far-more-important.  But because of the extreme leverage inherent in gold futures, speculators punch way above their weights in influencing gold price action.  They totally dominate gold when investors are mostly missing-in-action.  And the US dollar’s fortunes are their main trading cue.

Each gold-futures contract controls 100 ounces of gold, worth $180,600 entering this week.  But traders are only required to maintain $7,200 cash margins in their accounts for each contract traded.  That makes for maximum leverage of 25.1x, over an order of magnitude greater than the 2x legal limit in the stock markets.  At 25x, each dollar traded in gold futures has 25x the gold-price impact of a dollar invested outright!

But that kind of leverage is exceedingly-risky, as a mere 4% gold move against speculators’ bets wipes out 100% of their capital risked.  Always facing fast total ruin, these traders’ time horizons are forced to be ultra-short-term.  They can only care what gold prices are doing in coming hours or days, even weeks are too distant.  That extreme-leverage-necessitated myopia often leaves gold inversely slaved to the US dollar.

Friday, July 08, 2022

Commodities: Bounce or Something More? / Commodities / Commodities Trading

By: Gary_Tanashian

Commodities have been corrected hard, generally to support

It is amazing how compressed the cycles are in the markets these days. But maybe it’s not so surprising when you consider the constant involvement of meddling, manipulating central banks and even governments. Add a dash of hysterical media and the human instinct for knee-jerk herding and voila, there you have it; sentiment in commodities (and the inflation trades in general) going from absolutely rock solid (over) bullish to bleak in the span of a month.

All of this in the wake of an entity that held out dovish as long as it could before being directed by the market to put on its hawk costume and go steroidal in its inflation fighting stance. Seriously, market participants are taking their cues from a monetary authority that itself is taking cues from the bond market’s signaling (tardy though they were on the uptake). The link above shows the 3 month T-bill yield’s directive that the Fed aggressively raise rates back back in February. There were other signals as well demanding the same.

Friday, July 08, 2022

Crude Oil Is Caught Between Recession Fears and Supply Cuts / Commodities / Crude Oil

By: Submissions

Oil prices fluctuated on fears of a recession and a contraction in demand. What are the main figures to observe in this critical month?

Crude oil prices hovered between red and green on Thursday after two days of steep losses this week, still plagued by fears of a global economic recession that could threaten demand but also supply cuts in a tight market.

New Lockdown and Restrictions for the Chinese Panda

On the Asian continent, several million people may again suffer from strict restrictions because of China’s “zero-Covid policy” because of this epidemic rebound, which raises fears of the return of restrictions in Shanghai a month after the lifting of a long and grueling lockdown.

Thursday, July 07, 2022

Crude Oil Collapsed Below $100PPB – Has The US FED Broken Inflation? / Commodities / Crude Oil

By: Chris_Vermeulen

On Tuesday, July 5th, Crude Oil collapsed very sharply, down over 10% near the lows, in an aggressive breakdown of the price. The $97.43 lows reached that day were more than -14% from recent highs (set on June 29, 2022) and more than -21% from highs set on June 14, 2022.

Consumer Discretionary Spending Likely To Fall Further

In a recent research article (published June 9, 2022: CRUDE OIL PRICE AND CONSUMER SPENDING – HOW THEY ARE RELATED), we shared a similar breakdown that took place in Crude Oil in 2009 and how tightening consumer spending often correlates with peaks in Crude Oil when crisis events happen.

Tuesday, July 05, 2022

Gold Price Summer Seasonal Doldrums / Commodities / Gold and Silver 2022

By: Zeal_LLC

Gold, silver, and their miners’ stocks suffer their weakest seasonals of the year in early summers.  With traders’ attention normally diverted to vacations and summer fun, interest in and demand for precious metals usually wane.  Without outsized investment demand, gold tends to drift sideways dragging silver and miners’ stocks with it.  Long feared as the summer doldrums, they’ve actually moderated in recent years.

This doldrums term is very apt for gold’s traditional summer predicament.  It describes a zone surrounding the equator in the world’s oceans.  There hot air is constantly rising, spawning long-lived low-pressure areas.  They are often calm, with little prevailing winds.  History is full of accounts of sailing ships getting trapped in this zone for days or weeks, unable to make headway.  The doldrums were murder on ships’ morale.

Crews had no idea when the winds would pick up again, while they continued burning through their limited stores of food and drink.  Without moving air, the stifling heat and humidity were suffocating on these ships long before air conditioning.  Misery and boredom were extreme, leading to fights breaking out and occasional mutinies.  Being trapped in the doldrums was viewed with dread, it was a very trying experience.

Gold investors can somewhat relate.  Like clockwork trudging through early summers, gold starts drifting listlessly sideways.  It often can’t make significant progress no matter what trends looked like heading into June, July, and August.  As the days and weeks slowly pass, sentiment deteriorates markedly.  Patience is gradually exhausted, supplanted with deep frustration.  Plenty of traders capitulate, abandoning ship.

Sunday, July 03, 2022

Stagflation With Powell Could Make Gold Price Happy / Commodities / Gold and Silver 2022

By: Arkadiusz_Sieron

The upcoming stagflation might be less severe than in the 1970s. So is the Fed’s reaction, which could mean good news for gold.

There are many terrifying statements you can hear from another person. One example is: “Honey, we need to talk!” Another is: “I’m from the government and I’m here to help.” However, the scariest English word, especially nowadays, is “stagflation.” Brrr! I’ve explained it many times, but let me remind you that stagflation is a combination of economic stagnation and high inflation. This is why it’s a nightmare for central bankers as they should ease monetary policy to stimulate the economy and simultaneously tighten it to curb inflation. Although we haven’t fallen into recession yet, the pace of GDP growth has slowed down recently. According to the World Bank’s report Global Economic Prospects from June 2022, “the global economy is in the midst of a sharp growth slowdown” and “growth over the next decade is expected to be considerably weaker than over the past two decades.” The U.S. growth is expected to slow to 2.5 percent in 2022, 1.2 percentage points lower than previously projected and 3.2 percentage points below growth in 2021.

Thursday, June 30, 2022

Central Banks Plan To Buy More Gold In 2022 / Commodities / Gold and Silver 2022

By: Travis_Bard

While gold and silver prices have fluctuated somewhat of late, both assets were performing a little more solidly throughout US trading last week.

In fact, August gold futures were up by around $6.90 at $1,828.10 by Wednesday last week, while July Complex silver futures increased by $0.054 to $20.86 per ounce during the same timeframe.

Wednesday, June 29, 2022

Rebounding Crude Oil Gets Far Away from the Bearish Side / Commodities / Crude Oil

By: Submissions

Demand for crude oil is accelerating – a bullish sign for its prices. What may the current energy market environment say about the black gold’s outlook?

A Chinese Panda’s Appetite

On the Asian continent, the lifting of health restrictions in China could signal resuming oil demand for the world’s top consumer. Given the context of tight supply, this has partially triggered a rebound in crude while driving prices higher.

Geopolitical Scene

The Libyan National Oil Company (NOC) warned that they could declare a state of "force majeure" on the facilities in the Gulf of Sirte – blocked due to the political crisis that has been hitting the country for months.

In Ecuador as well, the spectre of a halt in oil production is becoming clearer following the blockades and demonstrations initiated by a movement protesting the rise in the cost of living.

Tuesday, June 28, 2022

GOLD STOCKS ARE WORSE THAN GOLD / Commodities / Gold and Silver Stocks 2022

By: Kelsey_Williams

Gold stocks latest swoon confirms what has been stated and inferred in my previous articles about gold mining shares – namely, gold stocks are a lousy investment.

The original article linked in the preceding paragraph was published in September 2016. I just finished reading it again and find no reason to edit or modify its contents.

The price of gold peaked in the summer of 2016 – shortly before my article was written and published – at $1357 oz. (monthly average closing price). At that time the GDX (ETF index of gold mining shares) peaked at 30.60.

Both gold and gold mining shares (gold stocks) have been lower and higher since then, and the past six years have seen a fair amount of volatility. Lately, both gold and gold stocks have undergone downside corrections since their most recent highs earlier this year.

So where are we now?

Monday, June 27, 2022

Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower / Commodities / Gold and Silver Stocks 2022

By: P_Radomski_CFA

Let's not be confused by the temporary USDX weakness. Junior miners are faint and we can expect them to decline again soon.

April and May Replay?

Although history doesn’t repeat itself to the letter, it rhymes. At least that’s what tends to happen in the financial markets.

In today’s analysis, I’ll explain why I think we’re about to see another example of the above in the case of junior mining stocks. There’s a technique that suggests one thing, but there’s also another that suggests that a 1-to-1 analogy wouldn’t be as good a fit, as a slight deviation from it.

So far, the situation in the GDXJ – a proxy for junior mining stocks – has been similar to what happened in the second half of April and early May.

Saturday, June 25, 2022

Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level / Commodities / Crude Oil

By: Chris_Vermeulen

The recent downward Crude Oil trend may have caught many traders by surprise. Just before the US Fed raised interest rates on June 15, 2022, Crude oil was trading above $120ppb. Less than 5 days later, it collapsed -12% and has continued to trend lower. Currently, Crude Oil is near -17% lower than recent highs.

It appears Crude Oil has confirmed resistance near $120 and is devaluing as consumers pull away from traditional driving/spending habits while the Fed aggressively attempts to burst the inflation bubble. This type of contraction in Crude Oil is very similar to what happened in 2008-09 when the Global Financial Crisis (GFC) hit – Crude Oil collapsed more than -70% after IYC started trending lower in 2007.

Thursday, June 23, 2022

Why Are Precious Metals Considered A Good Investment? Find Out Here / Commodities / Gold and Silver 2022

By: Steve_Barker

Are you thinking about investing in precious metals? Precious metals have been considered a good investment for centuries. There are many reasons they are seen as a valuable commodity, and in this article, we will discuss some of the most important ones. From their stability to their ability to hold value over time, precious metals are an excellent choice for investors who want to protect their money. If you're considering investing in this type of asset, read on to learn why it might be a smart move.

Monday, June 20, 2022

Gold/Gold miners fundamental checkup / Commodities / Gold and Silver 2022

By: Gary_Tanashian

As they leverage the macro, what’s good for gold is even better for gold miners

After last week’s article, in which we noted a unique move on ‘CPI Friday’ as gold and the miners put in an expected test of the lows and quickly reversed upward, unique among a world full of bearish markets…

A pivotal juncture for gold and gold stocks

…let’s take a checkup on and important fundamental consideration in the wake of FOMC and the .75% rate hike that everyone knew was coming.

But first I want to remind readers that this (NFTRH & NFTRH.com) is not a place to visit if you want to get pumped on oil, copper and general (and cyclical) commodities and resources along with gold. It is the place to visit if you want discrete commodity analysis amid cyclical/inflationary conditions and/or a guide to the proper macro fundamentals that should be in place for gold and gold stocks in their rare but unique utility as a counter-cyclical market, unlike commodities and stock markets.

Wednesday, June 15, 2022

The Gold Market Is Getting Ready for Another Interest Rate Hike / Commodities / Gold and Silver 2022

By: P_Radomski_CFA

As predicted, gold stocks are gradually declining. Their situation is unlikely to improve - the Fed is already planning another interest rate hike.

After yesterday’s huge slide in the PMs (GDXJ declined by over 8%!) and a sizable increase in our short positions in junior miners, gold and silver are moving back and forth, gathering strength for the next move. Or waiting for the next trigger.

They are likely to get it tomorrow (Wednesday, June 15), as the Fed is about to make another interest rate decision. The word got out yesterday that the Fed might hike interest rates by 0.75% instead of just 0.5%, and the markets reacted accordingly. Stocks and PMs fell, while the USD Index rallied.

The best part is that you knew about the bigger rate hike before almost everyone else – I wrote about that in the extra analysis that I posted/sent out on Saturday. Quoting:

The next interest rate decision is this Wednesday, and it’s probably going to be very interesting. I wouldn’t be surprised if we saw a rate hike by more than 0.5% - for example by 0.75%. This might be enough to send a message to the market that they are serious about the inflation and have positive political implications. Whether that happens or not, the following conference will likely aim to rebuild investors’ confidence in the Fed. It might or might not work with regard to confidence, but it should be enough to trigger declines in the markets (including PMs) – after all that’s how hawkish surprises work.