Category Archives: Precious Metals

Yield Spreads; Gold Bugs Avert Eyes…

Better yet, look square at it because this is the market, not ideology, making the rules.  I don’t want to pile on (ref: Tom McClellan’s guest post) but this is extremely gold unfavorable with yields up and short term yields up way more.  Insert here the boiler plate about not taking any one day’s reading in a vacuum… but then consider the spreads have been degrading nearly every day for a week now.

10.2.yields

10 & 2 year yields, from Bloomberg

Gold will get where it is going one day, but not until fundamentals come back in line.

Big Pictures: Stocks, Gold and the Miners

Ukraine war hype, China demand drop, GOFO mysteries… these are the short term noise inputs on the gold sector.

US Treasury bond yield spreads, gold vs. commodities (i.e. the ‘real’ price of gold), gold vs. the stock market… these are some of the fundamental considerations that actually matter and they have taken a hit since January.

It is easy to say ‘I am bullish in the big picture’ (measured in years) but it is not so easy to actively manage in the smaller pictures (measured in days, weeks and months) with all of the above noise inputs and more bombarding the poor individual player.

We use shorter term charts to manage the shorter time frames.  Daily charts have most recently indicated a bearish set up as bear flags formed across the precious metals complex (with the exception of silver, which never got going to begin with) last week.  Weekly charts continue to indicate that an extended and oh so grinding bottom may be forming, but that includes the potential for ups and downs, also known as volatility.

There is also a lot of noise lately in the stock market.  The US stock bull celebrated its 5th birthday last month.  The last 2 cycles (the manic phase of the secular bull ended 2000 and the cyclical bull ended 2007) were each approximately 5 years long.  Today let’s retreat to the calm of the long term monthly charts and get a snapshot of the big picture.

The S&P 500 has a measured target of around 2190 that we have had open as a possibility since the big breakout occurred in early 2013.  A measured target is just that, a measurement; simple math.  It is not a directive and therefore 2190 is not hype, it is just a possibility.

spx

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NFTRH 286 Excerpt; Gold Stocks Technical Bottom Line (4.13.14)

Big picture (2014) I remain bullish for a coming turn.  But technicals and fundamentals must be aligned.  All we can do is continue the journey without imposing our will on events.  They’ll play out as they will and we need to adapt to that, not the other way around.

Gold Stocks Technical Bottom Line

  • I am so bullish I can taste it, but the time may not yet be right.  The big market pivot will take its time unfolding.  This corrective leg, which had looked so normal as a post-Ukraine reaction, is taking on short-term technical problems.
  • I am going to tell you what I see every step of the way and trust you not to over react and simply stay within your discipline.
  • A bear flag breakdown on HUI, if it happens, would project to around 211 in my opinion.
  • Unfortunately, it would also open the possibility of a bottom re-test below 200.
  • We are not going to sponsor this sector or wear it like a badge.  We are going to capitalize upon it whether that is on Monday or some later date.
  • The fundamentals, which must go along with the technicals, must come in line to complete a bullish view.  They were savaged after January.
  • In my opinion, the sector also has the ability to rip higher out of nowhere in anticipation of fundamental improvement, technicals be damned.  So be forewarned on that.  But NFTRH is in large part, a technical service.

You can review NFTRH here.

Central Fund of Canada NAV -6.4%

CEF’s net asset value does not imply that the bugz are over bullish.  Quite the contrary.  It is selling at a decent discount to net assets and could be viewed as a long term value for those who don’t think that precious metals have gone the way of the Dodo Bird.

So as lame as the precious metals (esp. silver) have been acting, this is one for the bulls because it sure is not concerning that gold bugs are not putting their money where their convictions are.

cef.nav

HUI Gold Bugs Index Symmetry, Updated

On Monday the chart below was included in a post called HUI Gold Bugs Index Symmetry, before it had a chance to start making this week’s candle.  Excerpted from the post:

“There can be a final drop this week but ultimately (going strictly by technicals, the fundamentals are another matter to be managed along side) if symmetry holds it would be a positive week for the miners.”

hui

Well, I am not going to pretend I had a good week.  It was an aggravating week at best.  But at least Huey hung on and did indeed have a (barely) positive week after dropping early in the week (right off the bat on Monday, as it turned out) as speculated upon.

If symmetry holds, a new up leg would generate off of this right side shoulder.  But even if that happens, according to a more detailed game plan in NFTRH, gold stocks would not necessarily be out of the woods just yet.  So if we are lucky enough to go bullish, do me a favor, eh?  Keep your balance and don’t listen to the cheer leading that will be sure to crop up.

Have a good weekend.

Morning Report – Precious Metals

Guest Post by Ino.com

Market Summary
The Dow Future is higher 19 points to 16506. The US Dollar Index moved higher by 0.069 points to 80.288. Gold has slipped 5.57 dollars to 1286.80. Silver is trending lower 0.0990 dollars to 19.8575. The Dow Industrials rose 40.39 points, at 16573.00, while the S&P 500 trended higher 5.38 points, last seen at 1890.90. The Nasdaq Composite moved up 8.60 points to 4276.64. 

Metals Snapshot
Symbol Last Change %
GOLD Jun 2014 1284.3 -6.5 -0.50%
SPDR GOLD SHARES 124.31 +0.92 +0.74%
SILVER May 2014 19.840 -0.210 -1.05%
PALLADIUM Jun 2014 784.65 -3.15 -0.40%
DIREXION DAILY GOLD MINERS BEA 23.86 -1.82 -7.65%
POWERSHARES DB PRECIOUS METALS 41.6500 +0.3400 +0.82%

PRECIOUS METALS

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Silver vs Gold

Well, let’s just say that the baby trend continues in silver vs gold…

sgr

If silver takes leadership in the precious metals well, you know how that goes.  I have bought, held and added to a silver bullion fund over the last few weeks and it has not been fun.  But I did not think of selling it because silver has not broken critical support and the ratio above appears to be holding support as well.