Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.Friday, March 12, 2021
Oat Prices AND the Truth Behind the "White Gold" Rush / Commodities / Agricultural Commodities
Oat futures' recent surge to 7-year highs wasn't caused by the oat milk craze; think "market psychology" instead
Generally speaking, the idea of oats is about as exciting as, well, a bowl of steel cut oatmeal.
But this chart of oat futures shows why this ordinarily ordinary grain has stolen the commodity spotlight. For starters, February 2021 saw oat prices soar to their highest level in 7 years.
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Friday, March 12, 2021
Magflation: An Unexpected Gold and Silver Driver / Commodities / Gold and Silver 2021
During the 1970's, the U.S. experienced a decade of below-trend economic growth combined with rising interest rates – and eventually – massively higher gold and silver prices.
Some sectors boomed while others lagged, and then as now, the majority of the population struggled with rising home and commodity prices, bookmarked by lofty interest rates.
This stilted and challenging environment, which came to be called stagflation, eventually drove the more perceptive people into gold and silver.
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Thursday, March 11, 2021
An Honest Look at Gold’s Chartolgy / Commodities / Gold and Silver 2021
As you well know the PM complex has been trading at a very important inflection point for the last month or so looking for the next important move either up or down. I can make a case today for either direction but the Chartology is strongly suggesting the next important move is going to be to the downside. In the very short term, days to maybe a week or so we could see some backtesting to many important necklines that have already given way.
Lets start with a few important moving averages that in the past gave us our first warning that things could start to get a little rough. These aren’t big deals in and of themselves but they do throw up a little red flag that says, pay attention.
During the bull market years I used a ribbon of 4 different moving averages that when they became all properly aligned to the upside they told us that gold was very strong. The 300 day sma was the most important moving average for the long term health of gold. Throughout the bull market that began in 2000 until the high in 2011 the only time the 300 day sma was violated was during the 2008 crash.
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Wednesday, March 10, 2021
Bond Yields Roil Markets, Gold/Silver Drop / Commodities / Gold and Silver 2021
As financial markets sold off this week, precious metals got dragged down in the selling. The culprit, once again, was rising bond yields.
On Thursday, the 10-year Treasury climbed above 1.5%. While still low on a historical range, the upside momentum has investors concerned. Over the past seven months, the 10-year yield has tripled from a low of just 52 basis points.
The 10-year note serves as a benchmark for mortgage rates as well as risk premiums in the equity markets. Elevated price-to-earnings ratios in the S&P 500 are more difficult to justify in a higher interest rate environment.
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Wednesday, March 10, 2021
Real US Interest Rates and Gold / Commodities / Gold and Silver 2021
Several factors influence gold prices (mainly the US dollar, gold ETF inflows/ outflows, inflation rate, bond yields, safe haven demand, physical gold demand, gold supply) but none is more reliable than real interest rates.
The demand for gold moves inversely to interest rates — the higher the rate of interest, the lower the demand for gold, the lower the rate of interest the higher the demand for gold.
The reason for this is simple, when real interest rates (interest rate minus inflation) are low, at, or below zero, cash and bonds fall out of favor because the real return is lower than inflation. If you are earning 1.6% on your money from a government bond, but inflation is running 2.7%, the real rate you are earning is negative 1.1% — an investor is actually losing purchasing power. Gold is the most proven investment to offer a return greater than inflation, by its rising price, or at least not a loss of purchasing power.
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Wednesday, March 10, 2021
Gold Price Momentum Selloff / Commodities / Gold and Silver 2021
Gold has suffered unrelenting selling in the last couple months, hammering it and its miners’ stocks much lower. Those outsized anomalous losses have left sentiment in tatters, with overpowering bearishness universal. Gold’s thrashing had nothing to do with fundamentals, it was driven by cascading momentum selling in gold futures and gold-ETF shares. But such dumping is finite, increasingly likely to exhaust itself.
Last summer, gold rocketed 40.0% higher out of last March’s COVID-19-lockdown-spawned stock panic. That massive upleg left this metal extraordinarily overbought, guaranteeing a correction to rebalance both sentiment and technicals. That came right on schedule, with gold dropping 13.9% over 3.8 months into the end of November. That healthy selloff was in line with this bull’s precedent, leaving gold sufficiently oversold.
Gold’s three prior corrections during this secular bull had averaged 14.3% losses over 4.1 months. And that was skewed big, with two of those earlier selloffs seriously exacerbated by unique anomalous events. So the odds swung around to favor gold’s next bull upleg getting underway. Indeed it soon started marching higher in a strong uptrend, carrying gold up 9.8% by early January. Then gold went pear-shaped!
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Wednesday, March 10, 2021
Gold And US Treasuries – Punctures In The Everything-Bubble / Commodities / Gold and Silver 2021
Meanwhile, eyes are fixed on interest rates for US Treasury bonds. During the same six-month period (August 2020 – February 2021) during which the price of gold fell by seventeen percent, the price of the 20-year US Treasury bond fell by twenty percent. That IS a huge deal, as it corresponds to sharply higher interest rates from less than 1% last August to as high as 2.26% just the other day.
The rush to proclaim correlation between interest rates and gold has resumed. Also, warnings and predictions of much higher inflation from around the globe are increasing.
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Tuesday, March 09, 2021
3… 2… 1… Let the Gold Corrective Rally Begin / Commodities / Gold and Silver 2021
Folks, it seems that gold has formed an interim bottom, and a short-term corrective upswing is now likely, before the medium-term downtrend resumes.
Any further declines from this point are not likely to be significant for the short-term. The same applies to silver and the miners.
In yesterday’s (Mar. 4) intraday Gold & Silver Trading Alert , I described briefly why I think that the very short-term bottom is already in (or is at hand), and in today’s analysis, I’ll illustrate my points with charts. Let’s start with gold.
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Monday, March 08, 2021
Gold Predictive Modeling Suggests A New Rally Targeting $2300+, But When Will it Start? / Commodities / Gold and Silver 2021
One of our readers’ favorite tools is the Adaptive Dynamic Learning (ADL) predictive modeling system. This tool maps out technical and price patterns into an array of similar setups using historical data, then applies that data to current and future price bars. Using the ADL predictive Modeling tool, we can see into the future based on historical technical analysis that maps statistically relevant price activity and shows us the highest probability outcomes.
Monthly ADL Gold Predictions
In this research article, we’re going to focus on Gold and how current price action suggests a bottom is likely near the $1720 level. The YELLOW price channels on this Monthly Gold chart highlight exactly where we believe support is located for Gold. If this $1700 price level is breached to the downside, then the previous lows, near $1400, are the next support level for Gold.
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Monday, March 08, 2021
Gold: Crisis or Opportunity? / Commodities / Gold and Silver 2021
Peter Krauth, editor of Gold Resource Investor, delves into gold's recent price movements and discusses whether now is a good time to buy gold and gold stocks.
People…relax. It's a correction.
If you're a serious gold investor, then I sympathize.
If you're freaking out, then this is not for you. If you're anxious, then you need to check your premises.
After all, what's changed since gold reached a new all-time nominal high over $2,000 last August?
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Sunday, March 07, 2021
So, Where Is Gold's Corrective Upswing? / Commodities / Gold and Silver 2021
Can the precious metals move lower before a short-term correction, and after correcting, will they continue their medium-term downtrend?
Gold & silver reversed yesterday (Mar. 2) and the GDX rallied after bottoming right in my previous target area, but it’s still unclear if the bottom is in.
Let’s check what’s happening in the charts.
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Sunday, March 07, 2021
Gold Continues Declines on Bond Yield Jitters / Commodities / Gold and Silver 2021
The economy seems to be recovering, while bond yields are increasing again, sending gold prices down.Not good. Gold bulls can be truly upset. The yellow metal continued its bearish trend last week. As the chart below shows, the price of gold has declined from $1,807 on Monday (Feb. 22) to $1,743 on Friday (Feb. 26).
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Friday, March 05, 2021
After Gold’s Slide, What Happens to Miners? / Commodities / Gold and Silver 2021
After gold came down hard last week, it might be in a for a short pause and corrective upswing. What will the yellow metal’s next chapter bring for the miners? How high can they go if gold rallies from here?As gold recently moved very close to my approximate target of $1,700, the senior miners (GDX) ended Friday’s (Feb. 26) session $0.13 above my initial downside target of $31 . And while an eventual flush to the $23 to $24 range (or lower) remains on the table, a corrective upswing could be next in line.
To explain, if gold can bounce off of the $1,670 to $1,700 range, the GDX ETF will likely follow suit. Thus, while the miners are likely to move drastically lower over the medium-term, a decline of nearly 11% over the last two weeks has given way to short-term oversold conditions.
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Tuesday, March 02, 2021
Why now might be a good time to buy gold and gold juniors / Commodities / Gold and Silver 2021
Gold has been taking a beating in recent weeks, the sell-off prompted by rising bond yields which are taking the shine off the yellow metal. Higher interest rates diminish the argument for owning gold, which offers no yield.
On Wednesday, Feb. 24, spot gold dropped to $1,784.60 an ounce, just shy of $1,783.10 reached on Feb. 21, its lowest since July, 2020. The gold price climbed $342, or 22% last year, on pandemic fears, a low dollar and moribund bond yields, which for most of the year ran under 1%.
Gold has been pressured by higher yields on US Treasuries, most significantly the benchmark 10-year note, which is closing in on 1.4% (currently 1.37%), an increase of 44 basis points since the start of the year. The last time the 10-year was this high, was in February 2020, just before the start of the pandemic.
Kitco reported on Wednesday that a booming US housing market, fueled by low mortgage rates, is driving bond yields higher, after the Commerce Department showed new home sales rising 4.3%. The seasonally adjusted 923,000 units sold in January trounced consensus forecasts calling for 853,000 units to sell.
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Tuesday, March 02, 2021
Silver Is Close To Something Big / Commodities / Gold and Silver 2021
There is a sense that we are close to a significant move in silver. The current season since August 2020 till now, is shaping up in a similar manner to the season of August 2019 to February/March 2020.
Silver as well as the stock market peaked in February 2020, and crashed significantly into March.
Below, is a chart of silver (top) and the Dow (bottom):
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Tuesday, March 02, 2021
Gold Stocks Spring Rally 2021 / Commodities / Gold and Silver Stocks 2021
Following a necessary correction, the gold miners’ stocks have spent much of recent months bottoming. This healthy basing process is rebalancing sentiment, preparing the way for this sector’s next bull-market upleg. That is looking to coincide with gold stocks’ spring rally, one of their strongest times of the year seasonally. That stiff tailwind blowing behind bullish technicals and fundamentals should make for big gains.
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 exhibit strong seasonality because their price action mirrors 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.
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Friday, February 26, 2021
FOMC Minutes Disappoint Gold Bulls / Commodities / Gold and Silver 2021
The recent FOMC minutes are hawkish and negative for the price of gold, but the Fed will remain generally dovish for some time.Last week, the Federal Open Market Committee (FOMC) published minutes from its last meeting in January . They reveal that Fed officials became more optimistic about the economy than they were in December. The main reasons behind the more upbeat economic projection were the progress in vaccinations, the government’s stimulus provided by the Consolidated Appropriations Act 2021, and the expectations of an additional sizable tranche of fiscal support in the pipeline:
Most participants expected that the stimulus provided by the passage of the CAA in December, the likelihood of additional fiscal support, and anticipated continued progress in vaccinations would lead to a sizable boost in economic activity.
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Friday, February 26, 2021
Kiss of Life for Gold / Commodities / Gold and Silver 2021
The narrow trading range in stocks continues, and the shallow sideways correction will eventually resolve itself with another upleg. The signs are countless, and the riskier part of the credit market spectrum agrees. As money flows from the Tresury markets, and sizable cash balances are sitting on many a balance sheet, there is plenty of fuel to power the S&P 500 advance.
With volatility in the tame low 20s and the put/call ratio again moving down, the bears‘ prospects are bleak. As I wrote last week, their time is running out, and a new stock market upleg approaches. It‘s the bond market that‘s under pressure, with both investment grade corporate bonds and long-dated Treasuries suffering in the accelerated decline.
Gold is the most affected, as the sensitivity of its reaction to the rising long-tern yields, has picked up very noticeably. How long before these draw both the Fed‘s attention and action – what will we learn from Powell‘s testimony on Tue and Wed? And when will the much awaited stimulus finally arrive, and force repricing beyond the metals markets?
Before that, gold remains on razor‘s edge, while silver leads and platinum flies for all the green hydrogen promise. The dollar has given back on Thu and Fri what it gained two days before, and remains in its bear market. Not even rising yields were able to generate much demand for the world reserve currency. Its lower prices stand to help gold thanks to the historically prevailing negative correlation, counterbalancing the Treasury yields pressure.
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Friday, February 26, 2021
The “Oil Of The Future” Is Set To Soar In 2021 / Commodities / Lithium
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Thursday, February 25, 2021
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out / Commodities / Gold and Silver 2021
Gold continues to wallow near its recent low price level, near $1765. Silver has continued to trend moderately higher – but still has not broken out to the upside. Many analysts have continued to estimate when and how metals will begin the next wave higher. My research team and I believe we’ve found some answers to these questions and want to share our research.
Silver Explodes In Late-Stage Excess Rallies
The first thing we want to highlight is that Silver tends to rally excessively in the later stages of any precious metals rally. For example, in mid-2010, Silver began an incredible upside price rally after Gold rallied from $720 (October 2008) to $1265 (June 2010). This suggests that the price relationship between Gold and Silver “dislocated” in the early stage breakdown of the financial markets near the peak of the 2008-09 Housing Crisis Peak. Then, in late 2010, Silver began to move dramatically higher while Gold continued to push an additional 80%+ higher.
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