Analysis Topic: Commodity Markets - Metals, Softs & Oils
The analysis published under this topic are as follows.
Monday, May 31, 2021
Is Gold Price Setting Up For A Rally Above $2000 Again? / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
In Part I of this research article, I tried to highlight the major market cycle phases that often drive volatility, uncertainty, and bigger trends in the US/Global markets as well as Precious Metals. Additionally, my team and I highlighted the technical confluence pattern that has setup as Gold prices have rallied above downward sloping price channels (price Flags) recently. This confluence of technical patterns, while we are transitioning into a post-COVID-19 global economy, suggests that excess credit/debt issues throughout the global financial markets are seeking safety in preparation for some type of market reversion event.
The recent move above $1900 in gold shows that precious metals are likely entering a new bullish price phase. We highlighted this in a May 3rd research article suggesting that a new advancing cycle phase may push Gold to levels above $2100. If our research is correct, Gold may continue to rally higher – reaching a peak sometime near mid-October 2021.
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Saturday, May 29, 2021
Silver SIL Global X Silver Miners ETF Fundamentals / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
The silver miners’ stocks have mostly been consolidating high since last summer. While they’ve enjoyed some sharp rallies, those have been within that sideways-grind trend. That lack of overall upside progress has left this tiny contrarian sector out of favor, with apathy reigning. But as their recently-reported Q1’21 operating and financial results revealed, silver stocks’ fundamentals and upside potential remain good.
There aren’t many major silver miners in the world, and only a handful are primary silver producers that derive over half their revenues from silver. With such a small population, there are only a few silver-stock ETFs. The leading one is still the SIL Global X Silver Miners ETF, which is also this tiny sector’s best benchmark. But nearing the end of Q1’21’s earnings season in mid-May, it only held $1.3b in net assets.
Following a mighty upleg that peaked in early August at SIL $51.53, the silver stocks have largely drifted laterally since. But their high trading range has been wide, encompassing both corrections and attempts at new uplegs. Plenty of speculators and investors are still interested in this obscure sector, as evidenced by an amazing episode in late January. That catapulted SIL a blistering 23.9% higher in just three trading days!
That was when Reddit’s famous wallstreetbets forum appeared to be starting to discuss engineering a silver short squeeze with massive retail buying. At the time I wrote a whole essay analyzing that. For our purposes today, that fascinating event proved that the right catalyst can still ignite big inflows into silver and its miners’ stocks. Unfortunately SIL resumed correcting after that, slumping on balance into late March.
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Thursday, May 27, 2021
Are Silver Prices Really Cheap; And Does It Matter? / Commodities / Gold and Silver 2021
By: Kelsey_Williams
Proponents of silver and their expectations for a much higher price have talked for years about the reasons “silver is undervalued” (their words, not mine).
Whether it is a deficit in new production of silver or the gold-to-silver ratio, there is always something to talk about; so let’s talk.
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Wednesday, May 26, 2021
Gold: The Past Years Are Often the Best Guides / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
As we know, history tends to rhyme. It’s never the same, but when you zoom out, the bigger picture often looks very similar. What does it mean for gold?
Short-term implications
With gold’s back-and-forth price action mirroring its behavior from 2012, the yellow metal is likely destined for devaluation.
Back then, gold zigzagged with anxiety before suffering a material drawdown. In fact, in early October 2012, it moved slightly above the initial highs right before sliding.
Moreover, while the yellow metal has bounced above its declining resistance line (the black line below), the price action mirrors gold’s behavior from early January. If you analyze the blue line below, you can see that investors’ optimism regarding gold’s short-term breakout quickly faded and the yellow metal sunk like a stone. In addition, with gold’s RSI (Relative Strength Index) moving slightly above 70 before the January swoon occurred, an identical development is already playing out in real time.
Sunday, May 23, 2021
Gold Approaches $1,900 amid FOMC Minutes and Crypto Sell-Off / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
The latest FOMC minutes were dovish, especially in light of the recent increase in inflation and elevated asset valuations. What does it mean for gold?Yesterday, the FOMC published minutes from its last meeting in April . They’ve shown two things doing that: first, that some of the central bankers are worried about the inflation and elevated asset valuations; and, second, that the Fed is going to remain dovish despite all these concerns .
Indeed, some FOMC participants noted that the demand for labor had started to put some upward pressure on wages. Moreover, a number of them pointed out the protracted supply disruptions and the insufficient pre-emptive hawkish reaction from the Fed as potentially inflationary factors:
A number of participants remarked that supply chain bottlenecks and input shortages may not be resolved quickly and, if so, these factors could put upward pressure on prices beyond this year. They noted that in some industries, supply chain disruptions appeared to be more persistent than originally anticipated and reportedly had led to higher input costs. (…)
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Saturday, May 22, 2021
Cryptocurrency Crash Benefits Gold / Commodities / Gold and Silver 2021
By: MoneyMetals
This week has been truly brutal for the entire cryptocurrency sector, with the prices of major currencies like Bitcoin and Ethereum crashing at least 30%. The overall sector has shed trillions of dollars in value.
The recent carnage for holders of digital currencies could be due to a variety of factors including profit taking spurred by Elon Musk, an easing of inflation worries, or concerns about new regulations coming down the pike.
Whatever the case may be, some of the capital that recently left the crypto space has found its way into the gold and silver markets. This trend could continue as well, with precious metals gathering strength and with Bitcoin still having plenty of room to fall further.
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Saturday, May 22, 2021
Gold historically follows Inflation higher. Will it do so Again? / Commodities / Gold and Silver 2021
By: Richard_Mills
Precious metals are among the best places to park your money in times of economic or political distress.
Gold and silver offer stability during a period of extreme stock market volatility and low bond yields, and while they do not pay interest or dividends, they are not subject to inflation like paper currencies.
It is also, in my opinion, a smart strategy to allocate a portion of gold and silver to your investment portfolio, knowing that precious metals can be used as a “fail-safe” currency in the event of a total financial collapse.
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Friday, May 21, 2021
Gold Price Reversal Is the Name of the Game / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
When the USDX declines, the PMs usually celebrate and rise as a result. However, this was not the case yesterday – and we can’t ignore it.
“Reversal” is the name of the game, at least when it comes to the precious metals market.
The USD Index declined profoundly once again yesterday (May 18), and gold, silver, and mining stocks ignored this move. They didn’t want to follow in its footsteps anymore.
Thursday, May 20, 2021
Gold Rebounds After Fainting Due to Inflation Spike / Commodities / Gold and Silver 2021
By: Arkadiusz_Sieron
Gold recovered after a downward response to the surge in inflation. What’s next for the yellow metal?Gold rebounded after an initially bearish reaction to the BLS report showing that inflation soared 4.2% in April year-to-year. This means we have an inflation annual rate doubling the Fed’s target and the highest since the Great Recession as the chart below shows.
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Thursday, May 20, 2021
Will Precious Metals Investors Get the Last Laugh? / Commodities / Gold and Silver 2021
By: MoneyMetals
Financial markets have become a complete joke. From GameStop to Dogecoin to non-fungible tokens (NFTs), a plethora of assets have been pushed to laughable heights with the help of the Federal Reserve’s funny money.
Just about everyone, except for stone-faced Fed officials, seems to be in on the joke.
Dogecoin promoter and billionaire Tesla founder Elon Musk poked fun at cryptocurrencies and the U.S. dollar itself during his hosting duties last weekend on Saturday Night Live.
During the “Weekend Update” segment, Musk appeared in character as a cryptocurrency guru. He admitted Dogecoin began as a joke.
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Wednesday, May 19, 2021
Being a Gold Bull Is Now Far Too Easy - Don’t Be Deceived / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Easy choices lead to a hard life (or at least losses), and because gold’s downside move is delayed, it’s extremely easy to be bullish on gold right now.
It’s easy to get carried away by the day-to-day price action, and it’s even easier to feel the emotions that other market participants are feeling while looking at the same short-term price action. Right now, it’s tempting to be bullish on gold. It’s “easy” to be bullish on gold while looking at what happened in the last 1.5 months. But what’s easy is rarely profitable in the long run.
“Easy choices – hard life. Hard choices – easy life” – Jerzy Gregorek
Let’s get beyond the day-to-day price swings. The Fed has been keeping the interest rates at ultra-low levels for many months, and it has just pledged to keep them low for a long time. The world is enduring the pandemic, and the amount of money that entered the system is truly astonishing. The savings available to investors skyrocketed. The USD Index has been beaten down from over 100 to about 90. And yet, gold is not at new highs. In fact, despite the 2020 attempt to rally above its 2011 high, gold’s price collapsed, and it invalidated the breakout above these all-important highs. It’s now trading just a few tens of dollars higher than it had been trading in 2013, right before the biggest slide of the recent years.
Wednesday, May 19, 2021
Gold Staging New Momentum Base In Preparation For A Big Upside Move / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
In the first portion of this research article, I highlighted the correlation between Gold and the US Dollar as well as the correlation between the US Dollar and the EURUSD and JPYUSD. The purpose of this example was to highlight the different phases of US Dollar appreciation vs depreciation compared to the EURUSD/JPYUSD. The EURUSD and JPYUSD are often compared to the US Dollar as major global currencies. Therefore, when the US Dollar moves into a depreciation phase, we expect to see the EURUSD and JPYUSD move into an appreciation phase.
How this correlated to the price of Gold and the phases of advancing vs declining precious metals is simple to understand. Gold will stall, or more broadly downward, while the US Dollar is within an advancing/appreciation phase. Gold will move higher or begin an upward trend bias when the US Dollar begins to generally weaken or moves into a declining/depreciation phase.
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Tuesday, May 18, 2021
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards / Commodities / Gold and Silver 2021
By: Chris_Vermeulen
Although Gold has continued to drift downward after reaching a peak near $2089.20 in early August 2020, our Custom Gold Inverse Trending Index suggests this weakness has actually built a very strong momentum base – preparing for a big move higher.
The relationship of Gold to the US Dollar is a fairly widely known correlation. When the US Dollar is weaker, Gold tends to rally. When the US Dollar is stronger, Gold tends to be weaker. Yet the combination of EURUSD and JPYUSD (plotted in INVERSE) in combination to the trend of the US Dollar related to Gold is difficult to ignore. Let’s explore this unique correlation a bit deeper.
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Monday, May 17, 2021
Gold Mining Stocks Fundamentals / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
The gold miners’ stocks have powered higher in recent months, solidifying a strong young upleg. But the extended-correction low leading into this latest rally has left sector psychology fairly bearish. Traders are skeptical about gold stocks’ upside potential, wary of another serious selloff. The gold miners’ just-reported Q1’21 operating and financial results reveal whether their fundamentals support further big gains.
The first quarter of 2021 was rough for the gold stocks. Their leading and dominant benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. Its $15.3b in net assets in the middle of this week ran 31x bigger than its next-largest 1x-long major-gold-miners-ETF competitor. During Q1, GDX dropped a sizable 9.8%. The gold stocks were increasingly out of favor as gold itself also lost 10.0%.
The gold miners actually proved quite resilient last quarter, as the majors in GDX generally amplify gold’s material moves by 2x to 3x. Still you couldn’t give away gold stocks in early March as their last extended correction finally bottomed at GDX $30.90. As these miners’ earnings leverage gold price trends, their stocks got sucked into gold’s vexing momentum selloff. But as that passed, the gold miners caught a bid.
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Monday, May 17, 2021
Junior Gold Miners Should be Rallying – What’s Holding Them Back? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Junior miners may soon suffer a breakdown of the short-term support line. So, what’s responsible for their underperformance of gold and stocks?
Today’s technical part of the analysis is going to be brief, as I have discussed multiple things this week and my comments remain up-to-date. There’s not much to add today, and we’ll go over only one technical chart – the one where we have trading positions – the GDXJ ETF chart. Unlike in the previous days, today I’m going to look at it from the more short-term point of view – through the 4-hour chart.
Before looking at it, please note that yesterday’s (May 13) session was relatively boring in the case of gold futures (they ended the day $1.20 higher), and quite positive for the GLD ETF, at least at first sight, as it closed $0.70 higher. The seemingly odd discrepancy between the two is just a result of different times that are taken into account for calculating both markets’ performance. All in all, yesterday’s session was positive for gold.
Friday, May 14, 2021
Gold: Lose a Battle to Win the War / Commodities / Gold and Silver 2021
By: P_Radomski_CFA
Gold scored some victories over the past days, but it’s playing a risky game. One misstep and the yellow metal might lose the war.
Sometimes, a good strategist needs to give up a few battles to eventually win the war. Or, at least, convince their enemy that they’re defeated while preparing a counterattack. Just the same, a chess player may need to sacrifice a piece in order to checkmate a king. Sun Tzu has spoken, and the Art of War translates well here.
In the world of trading, the same rules often apply. A good investor needs to give up a few unfavorable days to eventually score a final victory. Again, controlling one’s emotions and adhering to patience are key. These principles are important when waiting out gold’s temporary upswings in a medium-term downswing, and also when waiting for gold’s eventual ascent. Don’t let short-term intraday moves cloud your vision.
Yesterday (May 11), I wrote that the rally in gold and stocks might have just burnt itself out, and the markets didn’t wait long to agree with me.
Is it 100% certain that the top is in? Absolutely not, as there are no certainties in any market, and sound position management should be utilized at all times. But based on what happened yesterday, and what we saw in today’s pre-market trading, the odds that the corrective top is already in have greatly increased.
Friday, May 14, 2021
Gold to Benefit from Mounting US Debt Pile / Commodities / Gold and Silver 2021
By: Richard_Mills
Gold bugs are closely watching what happens with Treasuries. Last year, the gold price hit a record high of $2,034/oz, largely due to the fact that investors were piling into bonds as a safe haven against pandemic-related uncertainty. A descending US dollar and negative real rates (when bond yields minus the inflation rate fall below 0%) were also important antecedents.
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Thursday, May 13, 2021
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic / Commodities / Commodities Trading
By: Chris_Vermeulen
We recently completed some interesting research related to one of our newest Custom Indexes – the Commodities to Smart Cash Index (C2SC Heat Index) – weighted by the US Dollar and VIX. We’ve been reviewing this new index for months watching it to see how it reacts to various trends in Lumber, Gold, Treasury Yields, the Smart Cash Index, and other weighted values. Recently, we added the Fed Funds Rate to this chart and suddenly things took on a different perspective.
We had drawn horizontal lines on the Commodities to Smart Cash index highlighting historical high, low, and confluence price levels. Historically, when we see a chart that channels in a sideways range, one can often identify high and low price thresholds while also trying to find a confluence level (where a continued rise or decline in price is likely to continue). We can see how the US Fed reacted to rising inflationary concerns almost immediately as the C2SC Index rose near or above 6.5 (the RED Confluence level) throughout the past 25 years. Each time, in 1994, 1999, and 2005, when a period of increasing inflationary trends, the Fed was quick to act to contain inflation. The only time the Fed acted differently was in 2013~2015 and in 2020~now.
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Wednesday, May 12, 2021
Gold Price During Hyperinflation / Commodities / Gold and Silver 2021
By: Kelsey_Williams
Let’s start by defining hyperinflation…
“Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.” (source)
In addition, hyperinflation is described as “an extreme case of monetary devaluation that is so rapid and out of control that the normal concepts of value and prices are meaningless.”
The latter description is much more characteristic of the potential threat that most people envision when they invoke the term hyperinflation.
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Tuesday, May 11, 2021
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The GDX and HUI Index are enjoying a blissful moment. With HUI behaving civilly, will the GDX cling to the unrealistic and try to leap to cloud “ten”?
With the GDX ETF punching a hole through its glass ceiling, the senior miners are now witnessing an environment that’s beyond their wildest dreams: sunshine, clear skies and a utopia that’s eluded them since the beginning of the New Year. However, while leaving paradise is often more difficult than arriving, the GDX ETF’s recent vacation is likely coming to an end. And with the senior miners about to resume the daily grind of real life, their optimism will likely fade with the tropical sun.
To explain, while the GDX ETF remains on cloud nine, the HUI Index (a proxy for gold mining stocks ) has already left the resort. With the latter’s long-term outlook still intact and its broad head & shoulders pattern remaining on schedule, I wrote previously that the right shoulder would likely form after the HUI Index reaches 300. And after closing at 301.72 on May 7, the BUGS (after all, HUI is called the Gold Bugs Index) are currently living up to expectations.
Please see below: