Cyclical Commodities Continue To Weaken

Crude Oil and Industrial Metals continue downward. This is significant per this NFTRH monthly chart showing these items and the broad CRB itself having hit trend lines from the 2008 highs. These pullbacks from long-term trend lines are notable and qualify cyclical commodities as risk indicators for the cyclical macro.

industrial metals

Here is oil’s weekly view. Key support was lost last week as noted in this article: Positive Implications for Gold Miners if Crude Oil Breaks Down. I expect currently oversold WTI to rally from the noted support area, but remain ‘not bullish’ on this cyclical commodity (and remain in scouting mode for the upcoming gold miner buying opportunity). Continue reading "Cyclical Commodities Continue To Weaken"

Gold Stocks Will Benefit From Cyclical Change

As we have noted over the many years of the gold sector’s bear market, the gold miners will not rally for real until the real sector and macro fundamentals come into place. Those fundamentals do not include commonly promoted inflation, China/India “love” trades, a US dollar collapse or especially, war, pestilence or any other human misery than economic. The more astute gold bugs do not fall for that.

The gold miners are counter-cyclical as they leverage gold’s performance (whether positive or negative) relative to cyclical assets and markets. Hence the handy picture showing the key fundamental items with the 4 largest planets orbiting the golden sun being the most important.

macro fundamentals

So the 3 Amigos (of the macro) were saddled up last year in order to guide us to the point of macro change. Linked here is the most recent update from October 19. In this post let’s look at just one macro fundamental indicator among several important macro and sector fundamentals; the ratio of gold to developed stock markets.

As a side note, the macro fundamentals indicate whether the larger economic cycle and investor sentiment backdrops are right for the gold sector and the sector fundamentals that we track indicate whether gold mining companies are likely to improve, operationally. The gold stock sector is a real value now, assuming the turns in stock markets are for real, unlike the February spike down. Continue reading "Gold Stocks Will Benefit From Cyclical Change"

NFTRH 518 Excerpt: Precious Metals

In honor of the men staring at silver’s daily chart, let’s highlight NFTRH 518’s Precious Metals segment this morning. We have 60% of the new trading week in the books and not much has changed for the PMs since this was written. You’ll notice that this man who stares at charts gets a little wordy at the end. There is much context that would-be gold bugs need to have in hand.

Precious Metals

Last week:

Here is how I see the precious metals situation. It’s one or the other of…

  1. US dollar declines short-term and the precious metals bounce with the rest of the anti-USD trade, or…
  2. US dollar rises (likely along with the Gold/Silver ratio) and the precious metals decline again into a real buying opportunity.

Thing 1 carried the day (week). I don’t care (well, actually I do but work with me here…) how many gold bugs leave the subscriber base while I am not able to give a long-term green light, but we are going to track the proper fundamentals, not the imaginary ones. And this bounce along with China, copper, global stocks, US stocks and everything else in the cyclical world is not proper. Not until all that crap tops out.

It. Is. A. Bounce… until it proves otherwise by seeing gold rise against CRB, SPX, ACWX and while we’re at it, global currencies.

So for now it’s just a bounce, and the [daily] Silver/Gold ratio did make a positive hint of Friday. Continue reading "NFTRH 518 Excerpt: Precious Metals"

Platinum Could Restore Its Supremacy Soon

Aibek Burabayev - INO.com Contributor - Metals - Platinum


Last October I focused on the rare case when the price of palladium, for the first time in many years, could surpass the usually dominant platinum price. Both, common sense and chart analysis of the palladium price suggested that the triumph of this metal could be temporary. In the charts below, we can see if this conclusion turned out to be right.

Chart 1. Platinum/Palladium Ratio Monthly: Half-Half

Platinum
Chart courtesy of tradingview.com

This time I would like to start with the chart of the relative strength of the two metals which is clearly traceable through the platinum/palladium ratio. This ratio is falling sharply from the 2009 high at the 6.09 oz showing the dramatic weakness of platinum compared to palladium. In the chart above, I only show you the period when the drop started to decelerate, and the trend turned flat. Continue reading "Platinum Could Restore Its Supremacy Soon"

HUI Is Testing Support, XAU Is Yet To Try

Aibek Burabayev - INO.com Contributor - Metals


Much to my dismay, I’ve never covered these hot indices in my posts. I detected some interesting chart patterns as well as significant price actions and thought if it might be interesting to cover and discuss.

These indices have a long trading history as well as great companies that are tracked by each index. The NYSE Arca Gold BUGS Index (HUI) and Philadelphia Gold and Silver Index (XAU) are the two most watched gold indices on the market. The main difference between them is that the HUI Index’s components are only gold producers (17 companies) whereas the XAU Index includes both gold and silver miners (30 names). Below is the table of listings for comparison.

Table 1. Current Composition of Indices

XAU and HUI Index Listings

I highlighted the matching companies in green so you can easily see the difference between the indices. It is evident that the HUI index almost entirely sits in the XAU index (15 out of 17 names are in), the latter in its turn covers broader the precious metals market. Let us see in the charts below their dynamics and possible price action. Continue reading "HUI Is Testing Support, XAU Is Yet To Try"