Tag Archives: copper

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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China Gold Demand Drop? So What?

Now we will get to test the theory that little of what most people consider fundamentals for gold actually matters.  That would be things like Indian wedding season, jewelry demand, central bank buying/selling and the one hyped in the gold “community” more than any other, China gold demand.

From Hard Assets Investor:  Gold Flat Amid China Demand Drop

According to the China Gold Association, demand in the world’s largest No. 1 consumer may fall 17 percent this quarter from a year ago. An official for the trade group said the decline wasn’t unusual given the huge spike in demand last year.

“Last year was a peculiar year when we saw a big fall in prices,” Zhang Yongtao, vice chairman of the CGA, said. “People bought a lot of gold, and I think demand will start climbing again once the festive and marriage season begin later this year.”

‘But but… China gold demand is strong!!’ kept people bullish last year as gold got blown up.  Marriage season?  Please.  For me it is investment demand that matters.

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Doctor Needs a House Call, Copper Chart in Trouble

A house call from a specialist in exhaustion might be in order for Doctor Copper if the weekly copper chart is any indication.

Above the dotted neckline something else would be going on, like a meaningful commodity (inflation) rally.  Below it, and especially the solid downtrend line?  Not so much.

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Cu weekly, from NFTRH 271

So when is it going to matter that all this economic strength is not translating to anything other than the financialized aspects of the economy?  I mean yes, manufacturing is strong.  NFTRH was THE first to anticipate that (that I could see anyway, as most current bulls were thumb sucking a year ago).  But where’s the beef?  Where’s the heavy red metal?

Emerging Markets Need a House Call

Doctor Copper needs to make a house call to the emerging markets and he needs to prescribe ‘bullish’.  MSEMF (lower panel) looks like it is in some kind of a massive topping pattern (it does not look like a bullish consolidation to me) and the problem is that the good Doctor is making the same pattern.

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The potential is for a 2008 style deflationary Armageddon in commodities and emerging markets.  Now, would the US (and maybe Europe), with their respective funny munny financial chicanery get off scott free, perhaps even getting the big bid as the world rushes out of commodities and EM’s?  Well as obnoxious as it sounds, it could happen.  Though I wouldn’t bet on it.

Imagine the world rushing to T bonds, amplifying the Fed’s current operation.  Imagine US mortgage rates tanking.  Imagine the shining new era of Fortress America and its financial apparatus.  What was the last ‘new era’, the Dot.coms and the ‘new economy’?  Could we have a new one that rejects the old fashioned notion that the US stock market has a copper roof?  Sort of the modern edition of the circa 1999 rejection of a ‘brick and mortar’ business model?

Just riffing here.  I think commodities and EM’s are a bearish divergence to the US and Europe.  But unfortunately, with the Fed in the markets 24/7 now these type of questions need to at least be considered.

Doctor Copper Bounces

Look who got back up into the channel yesterday with the strong ISM.  We noted manufacturing strength back in January as a contact informed me of how robust the semiconductor fab equipment ramp up was.  The most recent input is “busy and due to get busier”.

Take if for what it is worth, but what it has been worth for all of 2013 is an economic growth spurt.  Copper has been conspicuous in its bearishness, but if growth fans out a bit – even temporarily – globally, the bearishness could be reversed.  The weekly charts will tell.

Daily copper made this move but still has a significant obstacle by bigger picture charts.  There are other signs that say inflation may gain a little notoriety in the weeks ahead.  If so, Doctor Copper and several of his positively correlated friends could participate.  Bring on ‘Jobs’ and let’s see where we are at.

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Copper

Despite the decent US economy, copper has broken down from a channel that was itself trying to prove that the positively correlated red metal was not in a big picture breakdown.  On the big picture, copper is in a topping pattern, having lost a neckline similar to when HUI lost 375.  Today copper has recovered a bit but at 3.08/lb. is still below the channel breakdown.

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The stock market seems not to need its copper roof in this cycle and that’s a good thing because the roof is cracked, leaking and about to fall apart.

 

NFTRH 248 Out Now

248 starts out talking about why this precious metals decline is different from 2008 and why I am not able to label it a ‘no brainer’ buy yet, as in Q4 ’08.  Nervous Nellie?  Yes, I guess.  Contrary indicator?  Maybe.

But discipline is my main tool and certain indicators tell me to have discipline despite a rising bullish potential on the precious metals.  It’s just the way it is.  There are a few early signals that look good, but there other negative signals that may not yet have completed their negativity.

248 also covers commodities, bonds, currencies, global markets as well as a once again negative contrary sentiment backdrop developing for the US market.  Sleep nice and comfy little bulls… there is not a worry in the world.

NFTRH 248, all 30 pages of it, out now.

nftrh248

Copper Gold Ratio

The Cu-Au ratio is actually on a breakout signal that would favor stock bulls, economy bulls and happy thinkers everywhere.

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Cu-Au ratio, click for full size view

Well, maybe that is an exaggeration because all trend lines break sooner or later.  But Cu-Au has broken the severe downtrend out of 2006.  If the green dotted line breaks down, we are going to deflationary hell.  If it holds, there may yet be an inflationary recovery play in the making.

To review, the top in 2006 came as copper blew out as one of the featured players in Alan Greenspan’s credit stoked inflationary bull market.  The top in 2011 came as Bill Gross announced that inflation was going to break out and he shorted the long bond (oops).  And now, here we are.

It’s not exactly an inspiring picture for the positive people clicking the heels of their ruby slippers, but Cu-Au did break a downtrend line, and is above an uptrend one.  It will be interesting to see if it holds the green dotted line.

Copper Prices Break the ‘Wrong’ Way for Inflation Bulls

The setup for the gold sector will be when all this other stuff tanks and when the commodity and inflation bulls are rinsed away with the broad stock market.  We are on a secular counter-cycle and that is no place for copper or the other positively correlated stuff.

Sometimes I write things like that and it sounds silly, even bringing ridicule from certain areas (and speaking of ridicule, I’ll mention Prechter until I am blue in the face if needed to make my points).

Casino patrons tend to live in the immediate here and now, always emotionally or egotistically looking for validation to their views.  The market moves at its own pace and copper (along with the rest of the industrial metals complex) shows that on the big picture things may not be so rosy.

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Cu weekly chart is violating a parameter