Here is the note from the email to subscribers that accompanied the full report…
“I thought is was time to bulk up a bit to a 30+ page report this week. We review some of the key indicators and try to clearly define the status of US and global stocks, precious metals, commodities, currencies and even interest rates. In fact, I think US long-term interest rates are a key so many other items. The ‘Continuum’ AKA the monthly view of the 30 year yield is back front and center in the analysis, with a target of 3.6% to 3.7%. But yields are not near an indication of what the media will hype as a new bear market in Treasury bonds and an age of rising interest rates. Not saying it can’t happen, it sure can. But I am saying that it is not nearly indicated, just as it was not indicated during the last rate hysteria or the one before that or the one before that…”
Well, interest rates were just a component of this comprehensive report. But they are a key.
NFTRH 346 out now.
Morning Metals Report
METALS: August gold futures closed up $5.40 an ounce at $1,194.20 today. Prices closed nearer the session high today on short covering. The key “outside markets” were bullish for gold today as the U.S. dollar index was sharply lower and crude oil prices were higher. Gold bears still have the overall near-term technical advantage.
July silver futures closed up $0.10 at $16.78 today. Prices closed nearer the session high today on short covering. The key “outside markets” were bullish for silver today as the U.S. dollar index was sharply lower and crude oil prices were higher. Silver bears have the near-term technical advantage.
July N.Y. copper closed up 180 points at 273.80 cents today. Prices closed nearer the session high on short covering. Prices hit a five-week low Monday. The key “outside markets” were bullish for copper today as the U.S. dollar index was sharply lower and crude oil prices were higher. Copper bears have the near-term technical advantage.
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It is more important than usual to be fine tuned on exactly why the gold sector, rising as it is with the general ‘anti-USD’ trade, is different.
We go into detail with analysis that may not flow as easy as the “China love trade”, ‘Gold to 5000 due to hyperinflation’ and ‘Gold to sky rocket as institutional money panics about inflation due to strong employment’ stuff you see out there. But we are not about easy, we are about right.
Also, #343 covers all the other usual macro market aspects.
By Steve Saville
The sort of analysis that gives gold and silver bulls a bad name
A recent Mineweb article warrants a brief discussion. The article contains several illogical statements, which is not surprising considering the author. For example, this is from the second paragraph: “…the fact remains that any entity with sufficient capital behind it can usually move any market in the direction that suits it…” Large financial institutions and hedge funds undoubtedly wish that this were true, but in the real world these entities ‘come a cropper’ when they take big positions that aren’t fundamentally justified. However, I’ll ignore the other flaws and zoom in on the Ted Butler assertion that constitutes the core of the article. I’m referring to the assertion that banking behemoth JP Morgan (JPM) has managed to accumulate a 350M-oz hoard of physical silver while simultaneously causing the silver price to trend downward via the selling of futures contracts. It’s analysis like this that gives gold and silver bulls a bad name, because anyone with knowledge of how markets work will immediately see that it is complete nonsense.
Selling commodity futures and simultaneously buying the physical commodity cannot cause a downward trend in the commodity price, assuming that the amount sold via the futures market is equivalent to the amount bought in the spot market. Price-wise, the only effect would be to boost the spot price of the commodity relative to the price for delivery at some future time. Selling more via the futures market than is bought in the spot market could temporarily push the price downward, but the operative word here is “temporarily” since every short-sale must subsequently be closed out with a purchase. In any case, I get the impression from the above-linked article that JPM has supposedly managed to bring about a downward trend in the silver price while remaining net ‘flat’. This is not possible.
I don’t know how much physical silver is owned by JPM or what JPM’s net exposure to silver is*, and I couldn’t care less. I certainly see no good reason to comb through documents trying to find the answer because the answer is totally irrelevant to the investment case for silver. The investment case for silver is determined partly by silver’s market value relative to the market values of gold and the industrial metals, and partly by the same macro-economic fundamentals that are important for gold. Right now, silver has reasonable relative value and neutral fundamentals, with the fundamentals looking set to improve during the second half of this year.
I’m ‘long’ physical silver, despite, not because of, the ‘analyses’ of some of the most outspoken silver bulls.
*Neither does Ted Butler nor anyone else who isn’t a senior manager at JPM
The precious metals are wobbling at this moment. Here is the live view as of 9:00 US Eastern. Gold is making a negative move in pre-US open. The drop below April’s low must be reversed quickly or it’s the Ignominy Express once again. On the plus side, silver still thinks it can it thinks it can…
Not completely unrelated, I am leaning toward a possible economic bounce scenario as Uncle Buck settles into Support #1. ISM is coming at 10:00. Thoughts on this @ NFTRH.
We noted in an NFTRH update on Monday that this week was full of data and combined with FOMC, was likely to be very volatile. Check.
Let’s see how the dust has settled at 4:01 US Eastern.
 ISM just out with a flat 51.5%, but a notable bump in exports (ref. USD correction)
I have not even read the interview before starting this post. By the end of the post I will have read it and I assume, taken issue with at least some of it.
The very term “Resource Sector” is something that bothered me going back to the ‘inflation bull’ market of 2003-2008. Back then I used to grouse about the gold is silver is copper is tin is oil is hogs crowd always lumping ‘resources’ together as if they are anywhere near the same thing. They are not; they are vastly different, with most ‘resources’ being economically cyclical while gold is counter cyclical.
Sure, sometimes when the inflation tout is going good it all goes up. But there is no resources sector as a discrete and unified asset class. So my conclusion was that anyone pitching “the metals” as many used to often do (gold and industrial metals all in the same analysis) is either just lazy or a ‘resource sector’ pitch man or woman. There were tons of ’em in 2003-2008.
Anyway, on to Casey here…
L: Well, Doug, we’ve seen another quarter of high volatility and significant world events. What strikes you as most important at present?
Doug: Everything is still held together with chewing gum and baling wire, for which I’m grateful, considering what’s coming. It’s very clear to me that the global economy is in very much the same space as it was in 2007—in other words, on the edge of a precipice.
So buy resources! Wasn’t that a solution from many corners of the fear trade into the 2008 top when resources of all kinds eventually crashed as bad or worse than the stock market?
Continue reading Signs of a Resource Sector Bottom? Really?
Well, I just wrote 42 pages. I’m spent, so no big promo. I am personally enjoying the market for what it gives and having a good year so far. In that existing trends have not changed yet, the real fun however, begins at some future point.
April gold was lower overnight as it extends the decline off January’s high. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If April extends the aforementioned decline, the 62% retracement level of the November-January-rally crossing at 1199.50 is the next downside target. Closes above the 20-day moving average crossing at 1257.00 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 1231.80. Second resistance is the 20-day moving average crossing at 1257.00. First support is the 62% retracement level of the November-January-rally crossing at 1199.50. Second support is the 75% retracement level of the November-January-rally crossing at 1176.10.
March silver was slightly higher overnight as it consolidates some of Tuesday’s decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near-term. If March extends the decline off January’s high, the reaction low crossing at 16.210 is the next downside target. Closes above the 20-day moving average crossing at 17.323 are needed to confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 17.323. Second resistance is January’s high crossing at 18.505. First support is the reaction low crossing at 16.210. Second support is the reaction low crossing at 15.510.
March copper was mostly steady in quiet trading overnight. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 255.05 would temper the near-term friendly outlook. If March extends the rally off January’s low, the reaction high crossing at 279.40 is the next upside target. First resistance is the reaction high crossing at 264.20. Second resistance is the reaction high crossing at 279.40. First support is the 20-day moving average crossing at 255.05. Second support is January’s low crossing at 241.90.
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Guest Post by Adrian Ash
SILVER INVESTING sentiment amongst private individuals in the West fell near record lows at New Year 2015 as the metal’s strong price rally invited existing owners to sell, writes Adrian Ash at BullionVault.
That’s the conclusion of our new Silver Investor Index, launched today.
The metal’s 10% rise during January saw more private investors sell silver using BullionVault than any month since summer 2011, very nearly equaling the number who chose to buy silver VAT-free at live spot prices on the world-leading precious metals exchange online.
That put BullionVault’s new Silver Investor Index – a companion to our widely-cited Gold Investor Index launched in 2012 – near the series low hit when silver sellers outnumbered buyers in June 2014.
Five years since BullionVault first made silver trading and storage available online, it has become a leading provider of silver bullion to private investors online, now caring for 502 tonnes on their behalf – all securely vaulted in the user’s choice of London, Singapore, Toronto and Zurich.
Continue reading Silver Investing Grows, But Sellers Jump 83%
How to promo… how to promo? NFTRH 329 took a hard look at the realities of what happened last week and despite an end of week reversal (below SPX key resistance of 2165) it found that at week’s end the bulls and the risk ‘ON’ contingent regained their footing.
Going the other way, the rise in short-term yields vs. long-term yields was gold bearish and not friendly to Team Risk ‘OFF’.
A really good market report doing the work it has to do every step of the way. Of course we are in the volatile ‘swing baby, swing’ market so we’ll be ready to adjust as always over the coming week. The key is to be in proper position for when the ‘swing’ phase consolidation ends.