Comments on oil, gold and the overall commodity complex
Sorry for the delay of today’s market wrap. Our site was temporarily down and it was our home opener for softball tonight (plus it was the nicest day in Vancouver the whole year).
Doc and I discuss the big drop in oil and the consistent sell off in commodities. All of this is playing into a bigger picture narrative that tells us the global economy is still struggling.
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AUY monthly bollinger bands are blown out still. TBH I can’t see it dropping too much further or for too much longer before making its way back to the 20 month MA or thereabouts.
Bull or bear, I don’t expect any a dramatic rise or collapse in AUY without some consolidation first on the monthly chart. The same goes for GDX too to some extent. We’ll see I guess. The issue with GDX is you have a line in the sand–the declining 50 month MA, which it is more or less riding downwards perfectly. I could definitely see GDX spend a month or two or three below the 20 month MA at $21.65, but again, the bull bear debate won’t be decided until the monthly bollingers narrow in significantly.
SLV down 15 days in a row? That’s natural market behavior if I ever saw it.
Looks like it may actually close inside the daily bollinger bands (20,2) after 8 (!!!) days in a row closing under. You will never ever see anything like that again in your life–guaranteed. But if you do, it will be silver.
But the bullion banks are now losing their game……
Open interest went UP yesterday, despite price going down. All the weak hands are now just about out out. The rest look like they are going to take delivery, (OR a bribe to not take delivery and keep their mouths shut)
On May 4th:
In silver, the total open interest ROSE BY 1,238 contracts UP to 190,478 DESPITE THE FALL IN PRICE ( 34 CENTS) SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING. NOBODY BUDGED!!. In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.952 BILLION oz TO BE EXACT.
The game is changing!!
Barring a failure to deliver, which silver bugs have been fantasizing about for 40+ years, I don’t think this is a positive. I would imagine that open interest generally shrinks if commercials are covering. Correct me if I am wrong.
We want the large spec interest to come down and commercial shorts to come down.
But this time there are not enough longs selling for commercials to cover without driving up the price.
I DO NOT KNOW exactly what will happen.
Possibility one: The commercials keep on shorting and building up their exposure, hoping that longs will sell……when the longs sell,the commercials cover their shorts. (This is what usually happens)
Possibility two: Some DEEP pocket longs, fed up with the manipulation, simply stand for delivery, regardless of price. Delivery failure, price really shoots up.
Possibility three: The COMEX rules get changed again.
I’m an honest-money bug but I don’t fantasize about anything. The Fed and the gov it owns have never failed to deliver massive money printing and deficit spending.
$gold:$xjy monthly chart. We are going to get a close below the three black candles we put in last winter. That means gold is going at least a bit lower, IMO.
Also, the monthly bollinger bands on this ratio are the tightest they have been in about 12 years. They are super tight. Can gold really turn this ratio back up? I dunno, I have my fears for sure.
Actually $gold:$xjy only has two black candles left behind from last winter, the lower one coming in at 13.43. I am 99.99999% sure we are going to close below that level on a monthly basis soon, or alternatively a hollow red candle whose lower body starts below 13.43.
Rally time for GDX or just a gap-filling bounce? I’ll guess the former…
http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=0&dy=13&id=p89951092796&a=522024384
The whole sector is due for some relief. Silver weekly candle though… It is just too much damage to not get some follow through. We’ll see.
I like that Hubbartt’s buy zones for GDX are well below my for support. He can’t be alone in keeping buyers out of the market.
http://www.321gold.com/editorials/sfs/hubbartt050517/gdx_daily.png
First line: for should be fork.
I agree and that chart from Morris that he updates regularly has been something I’ve watched closely, as well has his GDXJ charts.
THe daily chart for $gold:$xjy looks pretty ominous for gold IMO. There is a head and shoulders with an upwardly slanting neckline. The price projection takes us well, well below the 20 month MA for the ratio and would cause the monthly bollingers to widen as price shoots to the downside. Not good.
Oil is about to go up sharply after such a big crash of about 18%. Everyone got on the short side.
We have an outside reversal (or bullish engulfing candle) in the works for the loonie…
http://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=1&mn=5&dy=0&id=p77077564084&a=521484960
GCC hit its 61.8% retrace off the 2016 low yesterday. If commodities (and the loonie) are going to bounce, it would be here. The question is, have the lows been reached? I suppose buying now with a stop at this weeks low isn’t a bad bet.
Harvey Organ snippet…
Thus the initial standings for silver for the MAY contract month: 3626(notices served so far)x 5000 oz + OI for front month of APRIL.(1038 ) -number of notices served upon today (600)x 5000 oz equals 20,320,000 oz of silver standing for the MAY contract month.
We actually gained another 244 contracts or an additional 1,220,000 oz will stand for delivery and again nobody wished to accept an EFP contract for a fiat bonus. It probably means that the entire 20.3 million oz that is standing wants only physical metal and refuses a fiat bonus. This is identical to backwardation where the investor will not accept to roll to a futures month and receive a sure fiat profit (THROUGH THE EFP) but instead that investor holds onto his physical because he is not sure in the future he would receive his metal back if he engages in that future contract. We have now had on 4 consecutive days, an increase in amount standing for silver. For the past several years, this has never happened during an active silver delivery month. Ladies and gentlemen: the silver comex is being attacked for its physical metal!!
Third time’s the charm?
http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=4&mn=2&dy=0&id=p30192708714&a=522006460
god I pray you are right. I am still all in, but to say I have doubts would be an understatement.
I’d say GDXJ nailed Attempt #1. It broke above a number of key prior peaks and Moving averages.
What level are you hoping GDXJ breaks on Attempt #3 for it to be charming?
I should have been clearer. I was referring to it staying above the 233 week MA (a Fibonacci-based “higher bar” than the widely used 200 week MA). No matter the type of resistance (or support), three tries is very often what it takes.
If it gets through on the third try and fails yet again, that would likely cause a very significant plunge.
Thanks for the clarity on the 233 weekly MA. Yes, a failed 3rd attempt would more bearish. I believe GDXJ will make it next attempt. (likely later this year).
The cyclists have been calling for a daily cycle low in gold here. They expect this daily cycle to be left translated and to top quickly and then proceed to lower lows. Gary Savage is predicting dramatically lower gold by June/July. He expects it to head to the lower trendline formed by the ’15 and Dec. 16 lows. Gary in particular did nail the recent top in gold basically to the day. So his call for another left translated daily cycle that makes a dramatically lower low is giving me some pause. Would love nothing more than him and the other gloating cyclists to be left at the station, but they have been pretty consistently correct over the last 2 years.
From what I can tell, Gary’s view is the popular one among the experts — and that’s probably a good thing. In my experience, it’s the best contrary indicator of all when the experts agree. One example that really sticks out happened in the summer of 2009. I counted about four dozen experts that were all short the stock market and very confident about their bearishness. Since that day in August of that year, the market did not give them one fleeting chance to cover at or in the money.
$usdjpy is vulnerable IMO, but it could still go higher before coming back down. The telltale black candle–a very rare occurrence for $usdjpy, and on a gap up to boot:
http://stockcharts.com/h-sc/ui?s=%24USDJPY&p=D&b=5&g=0&id=p84284844251&a=522040141&listNum=1
Gold and silver are down and the mining ETFs are up roughly 3%. That’s a nice positive divergence. Just wait until the metals are up 3%, the miners will fly.
I noticed that, very encouraging to see miners running higher with the metals down.
That’s more like it Mr. Market.
An inverse silver ETF that is at 80 on the RSI shows me it is time to sell the ETF and buy stocks.
I bought into this on the way down and think it has hit a bottom IMHO only. There is an increase in buying interest.
All GDXJ has done so far today is fill yesterday’s gap. Selling today’s strength looks like a bad idea to me.
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=7&dy=0&id=p43893273975&a=520792672
GDXJ priced in gold closed at the December low after taking it out briefly.
It Also managed to close above an important fork support.
http://stockcharts.com/h-sc/ui?s=GDXJ%3A%24GOLD&p=D&yr=1&mn=0&dy=0&id=p42957993340&a=518305274