Precious Metals Were Ripe For A Pullback

If you hear one peep out of the gold community about a precious metals “takedown”“attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

 

Instead, everybody, it seems knew about the high-risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “takedown”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high-risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest head-fake rise in the gold price. Continue reading "Precious Metals Were Ripe For A Pullback"

Weekly Futures Recap With Mike Seery

Gold Futures

Gold futures in the December contract is currently trading at 1,523 an ounce after settling last Friday in New York at 1,529 down slightly for the trading week experiencing high volatility as I am currently not involved, but I do have a bullish silver position which has been mirroring gold to the upside.

If you are long a futures contract, I would place the stop loss under the 2 week low standing at 1,503, however for the bullish momentum to continue prices have to break the September 4th high of 1,566 in my opinion.

Trade talks between the United States and China will begin once again in October as that put pressure on gold prices in yesterday's trade also sending the stock market sharply higher as money flows entered equities and out of the precious metals which have been used as a flight to safety.

In my opinion, I still believe gold and silver will continue their bullish trends as negative interest rates around the world will continue to support the precious metals sector as interest rates are going to remain extremely low for a long time as I see no reason to be short gold.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Continue reading "Weekly Futures Recap With Mike Seery"

Is Bitcoin The Place To Be In A Volatile Market

Many investors have called Bitcoin the digital version of gold. Obviously, we know it is in a lot of ways the digital version of cash, but the comparison to gold would potentially mean that if the stock market continues to be volatile or potentially crash, then Bitcoin would be an excellent place to be invested.

However, while someday Bitcoin may genuinely be the digital version of gold, it is not yet trading as such, I’ll explain in a moment, and therefore is not likely the best place to be parking your cash while the stock markets decide which direction it wants to go.

A simple chart of with the price of Gold and the price of Bitcoin overlaid on top of each other, clearly shows the two investments have not moved side-by-side over the past year, let alone the past month when the stock has been flipping from trading lower by 1% to trading higher by the same amount every few days. Since August 8th, 2018 Bitcoin and Gold have moved in the same direction at the same time just 51% of the time. Not really movements or assets that I would call correlated. Although, since May 8th, 2019, around the time we started seeing an uptick in volatility in the stock market, the two assets have been moving in sync 58%. Still not a sign of strong correlation, but better than before and a sign that someday, Bitcoin and Gold may move much closer together.

At this time, though there are just too many unknowns with the future of Bitcoin from both a legal standpoint and an adoption standpoint for it to trade hand-in-hand with Gold.

First and foremost, Bitcoin is illegal in a handful of countries around the world. China is the largest anti-crypto country, but the list also includes Algeria, Egypt, Morocco, Bolivia, Colombia, Ecuador, Saudi Arabia, Iran, Bangladesh, Nepal, Pakistan, Cambodia, and Indonesia. Continue reading "Is Bitcoin The Place To Be In A Volatile Market"

Market Breaks Out Of Trading Range

Hello traders everywhere. In Wednesday's video, I discussed how the market had been stuck in a trading range for the last month and that we needed to see a move above the 50-day MA to potentially see a move higher. Well, we got that move on Thursday when the news of an agreement between China and the U.S. to set a meeting for trade talks hit the wire resulting in a big move higher which resulted in three new green weekly Trade Triangles being issued for the S&P 500, NASDAQ and DOW.

The market is ending the week relatively quiet as the U.S. economy added 130,000 jobs in August, the Labor Department said. Economists polled by Dow Jones expected jobs to grow by 150,000 last month. Unemployment remained steady at a rate of 3.7% while wages rose more than expected. Wages expanded by 0.4% on a month-over-month basis and by 3.2% year over year. August marked the third straight month that job creation in the U.S. slowed. In June, 178,000 jobs were added while 159,000 were created in July.

After four straight weeks, of declines, the major indexes are looking to post consecutive weeks of gains with the S&P 500 gaining +1.8%, the DOW +1.5%, and the NASDAQ will post a weekly increase of +2%. Will we continue to move higher from here or is just a short-term bump?

Key Levels To Watch Next Week:

Continue reading "Market Breaks Out Of Trading Range"

U.S. Crude Production Growth Paused In 1H19

The Energy Information Administration reported that June crude oil production averaged 12.082 million barrels per day (mmbd), down 33,000 b/d from May. The drop resulted from a drop of 58,000 b/d in Oklahoma. Production gained the most in North Dakota (58,000) and Colorado (19,000) while production in Texas was only up 13,000 b/d.

Crude Production

A pause in the growth rate in Texas had been expected due to pipeline constraints, which are expected to be alleviated in the second half of 2019 and first half of 2020. Nevertheless, Texas production reached a new all-time high of 4.982 mmbd.

US Crude Production

The year-over-year gains have been especially impressive with the June figure being 1.410 mmbd. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For June, that additional gain is about 540,000 b/d. Continue reading "U.S. Crude Production Growth Paused In 1H19"