Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold and Currency War Chaos

Commodities / Gold and Silver 2015 Mar 13, 2015 - 06:20 PM GMT

By: Alasdair_Macleod

Commodities

This week has been all about currencies, with a weak euro grabbing the headlines. At one point yesterday morning, the euro was 3% down from last Friday's close, hitting a 12-year low against the US dollar. The yen was also weak, challenging its multi-year low point established last December. However, there are signs that gold and silver are being accumulated in the futures markets, and at GoldMoney we have seen a pick-up in demand for physical gold this week.


Gold fell heavily last Friday by over $35 after overnight prices failed to hold, reflecting a developing bout of dollar strength. Since then gold has drifted sideways to slightly lower by the close last night, a pattern followed by silver. This month, so far, gold is down 4.5% and silver 6.2%.

Gold and Silver chart

Since silver tends to move twice as much as gold up or down, this represents a good relative performance for the former.

Given the drubbing precious metals have received recently it is a surprise that Open Interest on Comex for both metals is increasing. The next chart is for gold, where this can be clearly seen.

Gold Chart

The only Comex category which appears to be adding to its longs is "Other Reportables", which includes dealers that don't fit into the other defined categories. Otherwise, Money Managers are adding to their shorts and Producers and Merchants are reducing theirs, which is normal for gold in falling markets.

The rise in Open Interest in silver has been more dramatic, which is shown in our next chart.

Silver chart

Open Interest is heading back to new highs. Here again, it is the "Other Reported" category that is going long, together with the "Non-reported" category. It looks like undefinable parties are accumulating long positions.

So what is going on?

When Open Interest accompanies a rising price, it indicates healthy buying is present. Conversely, a falling price, which most of the time is through lack of bids, is usually accompanied by falling Open Interest. The relationship between Open Interest and the price is different at turning points, and it looks like that is what's happening.

Rising Open Interest on a falling price, which is the condition we have here, indicates increased buying support on falling prices, telling us that the price trend is likely to be on the turn. The bullish implication of this new demand is confirmed by silver showing resistance to further price falls relative to gold: silver should have fallen by about 9%.

In other news this morning, deliveries from the Shanghai Gold Exchange rose to 44.52 tonnes for the week ending 6th March. This is more than for the comparable week following New Year in 2014.

Next week

Monday. UK: Rightmove House Price Index. US: Empire State Survey, Capacity Utilisation, Industrial Production, NAHB House-builders Survey, Net Long-Term TICS Flows.
Tuesday. Japan: Leading Indicator, Customs Cleared Trade. Eurozone: HICP, ZEW (Economic Sentiment). US: Building Permits, Housing Starts.
Wednesday. Japan: BoJ MPC Overnight Rate. UK: Average Earnings, Claimant Count Change, Claimant Count Rate, ILO Unemployment Rate, Budget Day. Eurozone: Trade Balance. US: FOMC Fed Funds Rate.
Thursday. Japan: All Industry Activity Index. Eurozone: Labour Cost Index. UK: CBI Industrial Trends. US: Leading Indicator, Philadelphia Fed Survey.
Friday. Eurozone: Current Account.

Alasdair Macleod

Head of research, GoldMoney

Alasdair.Macleod@GoldMoney.com

Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online.

© 2015 Copyright Alasdair Macleod - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Alasdair Macleod Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules