There is a change going on in the commodities

March 4, 2016

We start off chatting with Doc about his outlook for the US markets. We then quickly shift focus to the commodities including gold, silver and copper. With strong moves in the industrial commodities continuing today investors need to take a step back to understand what it all means.

Click download link to listen on this device: Download Show

    Mar 04, 2016 04:50 AM

    doc, no bulls with this spx rally, just keeps ticking higher in a slow a deliberate way. Past what I thought of the ceiling at 2000 at least for now. Best to sit tight and wait for vix to crap out some more. Gold is a big hook, this will be a repeat as before many times before. Too early for gold run, still feel not much left in price or time. Beware the ides of march.
    All those who as recently as mid February were looking at 1500 to 1750 spx low, are going to regret their call. Any spx correction after mid march should be bought into aprilmmay before serious damage.

      Mar 04, 2016 04:02 PM

      Harry, I believe you will be correct—a lot of reversals in the PM sector today. Gold is pulling back at the end of the day as I mentioned earlier today.

        Mar 04, 2016 04:07 PM

        Good thoughts Harry & Doc. As for volatility, I was using UVXY, but switched over to using TVIX on my last few trades. Harry, when you and I were discussing the markets likely making it to 2000, a few weeks back, I mentioned that TVIX has been a good buy between the mid $5’s- mid $6 range. We are getting pretty close to that today, so likely next week will be a good time to take a small volatility position.

        Here’s a chart of TVIX showing how often it spiked out of the this bottom range:

          Mar 04, 2016 04:14 PM

          Doc – in relation to the VIX this is typically in the $13-$15 zone, so we should get there next week. (TVIX) is similar to (UVXY), but with slight differences in how the futures contracts are settled, and much more than (VIXY) because TVIX is a 2x leverage to volatility.

          Good luck to everyone in their trading next week.

      Mar 04, 2016 04:22 PM

      It ain’t over until the fat lady sings.There is no indication yet that gold has reversed trend.Trend is still bearish.Obviously nothing goes straight down.Like harry said this was one of the many retracements that we have seen from 2011 highs onwards.The difference with this pullback is that they are stretching it to the limits to trap as many bulls as possible.Stock markets will be bullish in the next couple of months and gold/silver will lose there luster once again.

      Mar 04, 2016 04:45 PM

      The market is headed to around 2050 but 2100 at least before the end of the year in my opinion. I did not believe all those experts calling for a major crash and loaded up more as the market went down toward 1800. There is a ton of money on the sidelines that is starting to move back in.

    Mar 04, 2016 04:54 AM

    Big reversal candle in the HUI daily may be forming. HUI 50 day at 136.85…

    Mar 04, 2016 04:58 AM

    I am looking at EWZ, Brazil etf, a proxy for commodity sector. This week it is up almost 25%. Have we seen the bottom? Or is this the mother of all short squeeze. I believe we have to wait for next 4 weeks to be sure. If the test of January bottom holds, then yes, we have seen the bottom. But right now, I do not think so….

      Mar 04, 2016 04:13 PM

      Market leaders off the Feb lows: Commodities (oil +35%), China plays (Brazil +28), high yield Credit (+7%), Consumer (Russell consumer discretionary +17%). Prior leaders – FANG (+11%) and Biotech (+12%) – losing their luster…

      Mar 04, 2016 04:17 PM

      jay, more accurate proxy for commodity index is Canadian market. Best so far of all global markets this year, in spite of oil plunge. Doc is right, this will likely be a transition year for crb. First signs are just appearing. The real thing likely after an spx correction into the fall this year, this would of course finally include gold in my opinion.

        Mar 04, 2016 04:19 PM

        Yes, the market leadership baton usually gets passed during bear markets

        Mar 04, 2016 04:34 PM

        As Doc says, 2017 would be great for gold sector. Inflationary era, and trashing of man made paper ( and now electronic! ) currency, may be approaching.

        Mar 04, 2016 04:33 PM

        Harry what is your view on gold for the coming months?

    Mar 04, 2016 04:39 PM

    If gold volatility has seen the high, the numbers look the same as in late 2010, where you had declining volatility in gold, but higher gold prices:

      Mar 04, 2016 04:16 PM

      Wow FranSix – That is quite a chart, and very interesting observation.

      In 2010, there was a gold volatility spike to $21.78 in March, and then a surge in late April into May to a peak at $31.60. After that volatility came down but gold price continued to rise.

      Now we had fractal pattern play out in gold volatility where in Dec 2015 there was a peak to $21.56, and then another surge in gold volatility in Jan-Feb to a peak at $31.60. It would stand to reason that if gold volatility came down that the gold price still could keep rising.

      Thanks FranSix.

        Mar 04, 2016 04:18 PM

        correction: the 2010 second gold volatility peak was at $31.78 and the 2016 second volatility peak was the recent one at $31.60.

        2010 – $21.78 2015 $21.56
        2010 – $31.78 2016 $31.60


    Mar 04, 2016 04:52 PM


    Are you still seeing a a move down into April/May or is that off the table now? Thanks in advance.

      Mar 04, 2016 04:36 PM

      Ryan, not just yet. March is going to be hugely important—you have a real tug of war going on right now—sentiment is not that high yet for gold and I love the most important chart for gold as far as the MACD and that is the monthly chart. Also, we just broke higher from the continuation triangle and usually you don’t just breakout and then fall back right away. One of the big negatives for gold right now is the ongoing COT reports which have seen the commercials over the last 3-4 weeks go considerably bearish on gold. In fact today, silver on the disaggregated futures COT see silver going net long about 4000 contracts but gold again for another week going net short another 9000 contracts. Remember when the commercials a number of weeks ago were really bullish and there didn’t appear to be any hope for a big move in gold and then it took off—now you’re starting to see the opposite of that coin by the commercials.

        Mar 04, 2016 04:02 PM

        Doc what is your upside target for gdx? Imo 22 is very plausible within the next week and a half.

          Mar 04, 2016 04:21 PM

          Very possible—what I find interesting is how so many of the etfs and PM stocks are in lockstep with the gold price right now. As goes gold, so do these stocks.

    Mar 04, 2016 04:21 PM

    Don’t write off all energy stocks. e.g. DNR

    Mar 04, 2016 04:31 PM

    Oil is up 38% from the bottom. $50 should be possible by the end of the year. I think Bank of America last had a $47 forecast for June. It is looking like it is in new bull market. That is like gold going to 1450. Netflix shot up past 100 and looking good-up 3.7% today. I had been loading up on the dips.

    Mar 04, 2016 04:22 PM

    NUGT Out of control today! Scalped 10% on UWTI. Missed the power hour run.

    Mar 04, 2016 04:04 PM

    Doc, after making 20% on my PVG since Wednesday I got excited and bought NSRPF@.64 this afternoon. Do you follow NSRPF? NEM owns 23% of it.