A look at the impact of the USD breakout on gold, treasuries and other markets
Some significant moves today in the markets the day before Thanksgiving. Chris Temple joins us to discuss the continued breakout of the US Dollar. This breakout has dropped gold below $1,200 and caused treasury yields to continue the move up. While we feel that these moves are being overdone there is a notable shift in sentiment from 2 months ago.
Click download link to listen on this device: Download Show
Correction: I meant “IF my scenario plays out!”
What are the chances that Trump just shrugs his shoulders and says “Hey, I ain’t spendiing a penny on anything!”. I would have thought unlikely.
Not listened to Chris/Cory yet – need a cuppa first.
Headwinds Continue To Hurt Gold
Wednesday November 23, 2016 11:52
“The gold market may be somewhat volatile today ahead of the Thanksgiving holiday. Although the markets will reopen on Friday, participation is expected to be very thin and positioning into the weekend will likely take place today. The stronger dollar, equities and higher U.S. rates continue to nudge the longs out of the market and a likely test and possible break of the $1,200 level may be in the cards today.”
“If you are watching the words from President-Elect Donald Trump, you will see the reversals of potential promises on a daily basis. Hillary has suffered enough, so I will not look to investigate her. I am open-minded to the climate issue; it is no longer a Chinese conspiracy. Let me re-visit water boarding. A president has no conflict of interest. I can run my multi-billion dollar business and the country; I do not see a conflict. Maybe he still builds the wall; I doubt it, but let us just add that to the trillion- dollar infra-structure plan. These reversals may seem trivial, but one must question the speed. It has only been two weeks since the election and one would wonder what else may change prior to the inauguration. Remember he is not a politician. He does what he says he will do. Unless he changes his mind. He is big business and I suspect the middle-class workers will again be on the short end of the stick.”
Have a safe and happy Thanksgiving
http://www.kitco.com/commentaries/2016-11-23/Headwinds-Continue-To-Hurt-Gold.html
Head winds…..and tail winds …
Donald Trump Prepares Cold Open – SNL
Nov 20, 2016
“When faced with making good on his campaign promises, president-elect Donald Trump (Alec Baldwin) starts to panic.”
We Still Don’t Know Which Trump Will Show Up
Nov 17, 2016 – Jeff Christian CPM
The “Tru-ally” Affect – DJIA Breaks 19,000 and Gold Prices Remain Steady
Tuesday November 22, 2016
“Inasmuch as there is true uncertainty as a new US president takes office on January 20, the “Tru-ally” affect (Trump Rally) continues to add short-term optimism to US equities markets.”
“It is this short-term optimism that has partially fueled this current rally which has resulted in an all-time new record high for both the Dow Jones industrial average as well as the Standard & Poor’s 500.”
F”or the first time in history, the Dow Jones industrial average has traded above 19,000. We continue to see a favorable risk on environment in which market sentiment believes that US equities as a whole will continue to gain value. Favorable economic reports, short-term optimism, and the upcoming presidential inauguration continue to weigh favorably on US equities….”
How Trump’s presidency could affect commodities The president-elect seems serious about border control, immigration control, and infrastructure – Warren Dick, editor Mineweb.
Nastassia Arendse / 22 November 2016
American Consumers seem pretty excited about Donald Trump
Myles Udland – Yahoo Finance – November 23, 2016
Here’s an interesting editorial I read this morning, that I’ll post for conversations sake. I’m not agreeing or disagreeing with the thesis, but just putting it up for consideration:
Gold Insights: Why India Won’t Ban Gold Imports
Nov. 23, 2016
A Market Bombshell? India Faces Potential Gold Import Ban
Nov 22, 2016 – Peter Hug
Gov’t revolt in the making…..
Potential gold-import ban by India could be biggest bombshell since Nixon
Published: Nov 22, 2016
** On this link the article doesn’t appear until half way down the page as there are a bunch of screwy links at the top. Just scan down for the article:
_______________________________________________________________________
India Googles ‘Buy Bitcoin’ as Nation Explores Gold Imports Ban
After its cash curb, India could be set to put the brakes on gold imports.
Justin OConnell – 23/11/2016
https://www.cryptocoinsnews.com/india-gold-import-ban-buy-bitcoin/
Guess they never heard of BitGold…. Or the gold ETFs….. Or the gold Miners……. Or Bonds…… Or other currencies…….
It seems people in India are curious about Bitcoin instead. Very interesting indeed.
Small matter of a black market kicking in Ex!? Nothing but nothing will stop Indians getting their gold, more so during this their wedding season.
Yep, Something tells me Gold will still be a big part of Indian Wedding Season.
Wearing bitcoin print-outs for the weddings just doesn’t look as eye appealing. 🙂
Oh, I don’t know Ex, a 3-D printed wife with bitcoin jewelry sounds very avant garde to me.
Yeah, your’re right GH. Welcome to the future!
https://3dprint.com/wp-content/uploads/2014/11/cokreeate-wedding.jpg
Dollar knocks gold price below $1,200
Cecilia Jamasmie | about 5 hours ago
Potash Corp cuts production, lays off 140 from Cory mine
Cecilia Jamasmie | about 3 hours ago
http://www.mining.com/potash-corp-cuts-production-lays-off-140-from-cory-mine/
Here’s a different approach to mining…..
Canadian rare earths mine to transport ore using airships
Andrew Topf | about 17 hours ago
http://www.mining.com/canadian-rare-earths-mine-transport-ore-using-airships/
Congo gets firmer grip on Ivanhoe’s Kamoa-Kakula Copper project
Cecilia Jamasmie | a day ago
http://www.mining.com/congo-gets-firmer-grip-on-ivanhoes-kamoa-kakula-copper-project/
Jeesh, just saw copper – up 2.60%. What on earth is going on there.
I wonder if the UK Chancellor announcing a big spend on infrastructure is connected with the copper surge.
Maybe Bob, Ive read some opinions saying it was expected because of Trumps infastucture spending.
uk saying the same thing couldnt hurt.
The true benefactor of President Trump’s “America’s Infrastructure First” initiative
Palisade Research | about 7 hours ago
I posted these earlier in the week on Copper, but they may be worth revisiting:
________________________________________________________________________
Metals Rally Draws Speculators as Copper Heads for 16-Month High
November 21, 2016 – Agnieszka De Sousa and Mark Burton
COPPER TODAY – Second up leg may drive delta-hedging against options
22nd November, 2016
Hedge Funds Embrace Copper’s Wild Ride
Joe Deaux – Bloomberg
The ‘Smart Money’ Is Short Copper, But That Doesn’t Mean You Should Be
Nov. 21, 2016 – Robert Sinn
http://seekingalpha.com/article/4025098-smart-money-short-copper-mean
Thanks Excelsior.
Any idea when copper options declaration is?
Thanks Bob UK. Options aren’t my thing (I’m not smart enough to trade options), but this is the best I could dig up on Options expiry.
“Trading terminates 4 business days prior to the end of the month preceding the option contract month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day.”
Thanks Excelsior.
I don’t do options either. I assumed, as most copper is traded on the London Metal Exchange, that the options referred to in one of the articles you posted was with regard to the LME.
It may have been. I was reading them for the general trend and factors that may be moving the Copper markets. My interest is more focused on the miners and all I really care about is the supply/demand picture and the pricing trend of Copper on the charts. I do like to review info on the macro picture to see why the move up is happening, but Copper starting moving much higher before Trump was elected or his infrastructure package was parsed and debated 6 different ways from Sunday.
I think there is much more going on globally for Copper demand than just Trump…. with old Chilean mines looking near end of life, problems in the Congo, Chinese and other Asian demand, and the battery markets. The electrification of the world is the driver, as there isn’t that much copper in bridges, roads, and walls. 🙂
The yen looks like toast. It hasn’t even hit the 100 WMA yet. No bottom for gold until the yen finds footing, which is scary. Does anyone see a rocket shot in yen in the near term? So much technical damage on the weekly chart. gold may rally, but its fate is tied to the direction of the yen, no ifs ands or buts, and at best, the yen is in for serious long term consolidation. more likely after stabilizing for a month or so, it will start trending down again, along with gold.
Again, the Fed loves this. Stocks at all time highs, $USD breaking out, commodities flat to down at best (what inflation? certainly not in the unweighted CRB) and the monetary metals hammered into oblivion. Meanwhile bonds are merely correcting to their long term MAs (yeah, bond bubble popping–don’t think so).
gold is headed to the 200 month moving average (currently at $900). No deflation necessary. All that is needed is the BoJ’s cooperation in killing the yen. That’s it.
Today is for buying, Spanky.
GDX didn’t even take out last week’s low today:
http://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=3&mn=11&dy=0&id=p06822863035&a=486737453
GDXJ has held up even better and my portfolio has now flipped into positive today:
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=0&dy=13&id=p11966073471
I’m glad you are in the green. I am down big today (I am concentrated in silver miners), which I had a feeling would be playing catch down to the gold miners. I am still holding out hope that the 100 WMA holds up, but hope is not a great investment thesis.
the $1180 area of support is a key level many investors are watching. If support holds there, and consolidates, then both Gold and Silver (and the miners) may rally for a week or two.
Impact Silver is up slightly right now and I’ve more than doubled my Americas Silver position this week.
Yeup. As it relates to the Silver miners, This week I’ve added to both Impact and Americas Silver, along with Brixton, Avino, Alexco, Nicola, and Aurcana. There are other positions I wanted to add to, or new ones I wanted to pick up as well in the Silver space, but I also want to add to a number of Gold, PGM, Base, and Uranium plays as well.
Wow, what a consolation. a rally for a week or two after a 40-50% bombing! And $1280 is going to fall precisely because so many hack technicians have identified it as key support.
The yen needs to reverse for gold to bottom, and it doesn’t look like it want to anytime soon other than for a small sucker’s rally or sideways consolidation for a week or even a day or two. End of story.
Well I trimmed back or sold many of my primary positions in July and August to lock in the profits, and swing traded some miners in Sept/Oct/Nov for a few days/weeks at a time for smaller profits or to lower my cost basis.
It did make any sense not to take some chips of the table in summer, so my position is not down 40-50%. Investors that managed their risks accordingly don’t have 40-50% losses right now on their full positions. I actually have been adding to many of my favorite companies all week for far less then what I sold them for in the Summer.
As a result, a nice relief rally for 1-2 weeks would be a a very nice consolation, and I’d trim into that strength as well, just in case we do go down and do a large double bottom.
I think the odds have increased that a major low is in the works right now. For awhile, it was looking like gold would rally before finally doing what it has done today. I’m glad the pressure stayed focused and that very thin holiday trading was needed in order to get gold down.
Yes, Spanky, I would not be surprised if 1180 briefly fails as more stops get targeted for the benefit of the big boys.
Matt, but then think about all the stops at the December lows….
This to me is starting to look more an more like one of greatest suckers rallies ever. It accomplished its goal 1000% in that all the hopeful longs were reinvigorated and sentiment went to record highs, at least as measured by COT longs.
To me, the gold bull is dead. It would take a black swan to change things now. the CBs are in total and absolute control. I am merely holding out hopes that the 100 WMA holds up. I am willing to see the $HUI down to 160, but that is my line in the sand. I am not going to sit through another 2013. The monthly chart for $gold is awful and has absolutely no modern analog to suggest it is still in a bull.
That’s a strong statement. We’ll see how it goes….
Geez Spanky, you call chartists hacks and then go on to use the charts to support your bearishness.
First, what do the December stops have to do with anything? They’re a long ways down from today’s prices.
Second, the monthly gold chart looks better than you think and still shows higher highs and higher lows. In fact, unless it takes out the 2008 low, the secular uptrend will remain intact.
Third, gold has still not even pulled off a 61.8% Fibonacci retracement, let alone take out its December low, yet you’re already coming to some very bearish conclusions. I don’t particularly want gold to retest the December low, but if it does, and the low holds, it would be extremely bullish.
It is a good thing that all the bullishness has been wrung from the sector as it had reached record levels, as you know. Just remember that such extremes in one direction lead to similar extremes in the other direction. The energy gets stored and eventually released. 2016 was as impressive as it was to the upside because 2013 was just as impressive but to the downside.
http://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=6&mn=5&dy=22&id=p75120849987&a=452999702
I still have a 100% position from last year. But this sucks. Bad.
So do you think Yen has reached a bottom? Do you think the 2015 low in the Yen was the cyclical low?
Again, not arguing with you that Gold has out performed currencies. you acknowledged that gold was tied to the yen from a directional perspective. so does that mean you think the yen is going up from here on out. because that will dictate 100% your longer term view of gold, whether you like it or not.
The $gold chart is simply overdone here, regardless of the yen. Remember that I have maintained since last year that gold and the dollar can rise together and that its correlation to the yen will break down eventually due to Abe/Kuroda abuse.
However, I don’t think we’re there yet, and am still bearish the dollar. In other words, I think the breakout is a bull trap that was painted by big money to bring in the liquidity needed to exit large positions.
I don’t think UUP:GLD has much upside from here and I wouldn’t let this thin holiday trading psych you out.
http://stockcharts.com/h-sc/ui?s=UUP%3AGLD&p=W&yr=5&mn=3&dy=0&id=p51024879780&a=489287501
That ratio chart looks like it could form a cup and handle eventually.
Also, momentum like that is going to have major follow through also, so there is no way that chart will just flip on a dime. More likely we will need to see divergeneces as it keeps working its way higher and higher.
Blah.
We may certainly get a bounce in bonds here in the near term, but they look headed at least to the 200 dma (see the 30 year treasury chart). The miners have show zero ability to rally in the face of falling bond prices. And if the bonds have peaked, that could mean bad news for miners especially. At least PM miners.
Sounds to me like you are hoping gold and PM miners will break correlations that have existed for at least the last 20 years.
I hope you are right.
I’m glad today is for buying….. because I have been. 🙂
If $1180 support hold, then we could see a mild rally in the metals and miners next week and into early December.
The loonie just had a gap to fill:
http://stockcharts.com/h-sc/ui?s=%24CDW&p=D&b=5&g=0&id=p77004197454&a=487491837
The loonie monthly chart looks terrible. You have to pray that it can get back to the 20 month MA. Nothing on this chart is bullish, even from a contrarian perspective. The monthly stochastics never even managed to reach overbought and are rolling over now. Price is going to head toward the lower bollinger band.
Jordan’s call for a double bottom seems extremely plausible to me right now. There is literally no catalyst whatsoever for a reversal other than technical exhaustion, and we are no where near that on the monthly charts.
Spanky, you’re looking at the charts in the wrong order. The shortest term charts have to turn and improve before the monthly chart can. And there are positives about each of them right now.
Spanky – What are your thoughts on this analysis from James Flanagan at Gann Global?
Follow-up Video 3: Potential Major Bear Traps in Both Precious Metals Stocks and Gold
“We have a perfect tactical setup for a potential major corrective low being established in the precious metals which would be followed by the resumption of a bull market.”
“Important lows in the XAU gold stock index and gold have been fractionally broken. We can be assured a ton precious metals bulls have panicked out of long positions. This is what you want to see at a potential capitulation corrective low!”
Of course it could be bear trap. The commercials can do whatever they want with price at this point.
But the most important point is that at this very moment, there is zero support for $gold on any chart from a key MA standpoint. Sure this could be some incredible shakeout, but real bull markets hold key MA levels. Buyers come in, shorts cover, etc. We have seen absolutely none of that. Gold knifed through very very important long term MAs–the 50, 200 and 100 WMAs, two of which were turned up (the 50 and 100)–like they were not even there.
James Flanagan on that video wasn’t discussing moving averages. His technical analysis showed the Oct 2015 $1192 level and the same $1180-$1200 zone of support using prior peaks & troughs. In addition he pointed out the technical levels on the XAU and HUI near reversal levels. He also used retracement levels to project support & resistance levels.
I didn’t watch the video. :]
I hope he is right, but that is literally all I can say from the TA I watch. Sure we are oversold, but we can always get even more oversold as 2013 taught us.
Ah….. I was wondering based on your response.
Well, he makes an interesting case for a reversal at present levels.
Right now the gold market is still open for 18 more minutes but it’s hovering safely above $1180 support at the $1188-$1189 level. If it closes there today then that’s good. Then we’ll have to see what happens on Friday for the weekly close, as that will be a VERY thinly traded trading day, and larger institutions may take advantage of the lack of liquidity to move the needle.
OK I watched it. I agree with his 165 stop on the $HUI. He seems very very pragmatic. I’ll give myself a little more room. I will jettison everything if we hit 160.
Yes, at that point it’s wise to get out of the way to see if the metals/miners double bottom or even head to all time lows. At this present level though, it may be a reversal that catches most traders on the wrong side of the boat. The market loves to confuse and confound both bulls and bears alike, so we’ll have to see how Friday and the weekly candle shapes up, but we are at a prime reversal spot right here, and I bought more mining shares this week for just that scenario. If I’m wrong, I averaged in at a much lower place in most than where I trimmed and I’ll exit limiting my losses if things really fall out of bed.
My only regret from last week to this week was not pulling the trigger on JDST or DUST (and I had my finger on the buy button a few times). It would have been a wise mining hedge to have had in place, but the only trading day left is Friday and it’s typically a snore. I do worry that institutions may really move some things around with the low liquidity though. It would be more bullish if it was just a boring sideways consolidation day, as then I could the beginning of next week being a bit more peppy for the miners.
He has a new video today. he is using 73.89 on the $XAU instead as a stop. I will stick with this guy’s stop.
http://www.gannglobal.com/webinar/2016/November/GGF/16-11-GGF-Video4.php
Nice. Thanks Spanky. I don’t think he has all the answers or anything (nobody does), but his thought process is pretty easy to see and his technical thesis seems very reasonable to me. He’s been fairly on target on recent calls.
The makeup inside the XAU:
Also, Jordan only called for a double-bottom in gold where it retests the Dec 2015 lows “IF” gold closes definitively below $1180. That hasn’t happened yet.
One step at a time….
$1,180 Line In The Sand For Gold
Nov. 17, 2016 – Andrew Hecht (7,870 followers – Seeking Alpha)
http://seekingalpha.com/article/4024294-1180-line-sand-gold?ifp=0
Back in February $1180 was also noted as significant, so it would still have some technical traders keying buy/sell orders off that level.
“$1180 was a significant support level that $GOLD has closed above on a weekly chart.”
https://stockcharts.com/articles/commodities/2016/02/gold–silver-continue-to-press-the-upside.html
“the prospect of Trump’s ambitious and expansionary policies driving up interest rates which had the immediate effect of driving the dollar higher, but given that sharp moves across markets since the election have been based on a combination of assumptions and wishful thinking, they could go into reverse very quickly, and with the dollar hitting a target late last week, gold has a good chance of turning up from the support in the $1180 – $1210 zone” – Clive Maund
https://www.clivemaund.com/gmu.php?art_id=68&date=2016-11-19
With some many investors watching $1180, then it wouldn’t surprise me to see the big boys trigger those sell stops there, but that would be the exhaustive event and it Gold may be just too oversold at that point in the short to mid-term.
Knife Fight !
“Pirates Of The Caribbean 2-Isla Cruces Fight Scene”
Copper up over 3%. I think someone is taking advantage of Thanksgiving to manipulate the price to whatever end.
Just a couple thoughts today
1. Canadian markets are not closed on Thursday, to the best of my knowledge. It might be an interesting day – and Friday, too.
2. The 165 HUI is the best line-in-the sand; also $16 for silver (guidance for selling silver stocks)
3. For $Gold, we are back to to the $1180-1200 knife fight – we have been here SO MANY times before.
Personally, I sold enough shares in Sep/Oct to get all my initial investment back. I only own free shares now – 90% silver companies. But I can sell all and never look back, to be honest.
Assuming $16 silver holds, it is ONLY silver companies for me, going forward. It is my opinion the Silver/Gold ratio may begin a slow rise at this point. I am with Avi on silver – if $16 holds we could see $35 in 18 months
I have a few small gold junior positions to close out over the next few days. It is only physical gold ownership that interests me, now.
I definitely agree that silver will far outperform gold but when it comes to the miners, remember that leverage to the metal comes from a number of potential factors. As a result, a lot of gold miners will beat a lot of silver miners, and vice versa.
We want silver to outperform gold particularly on days like today, and it did.
http://stockcharts.com/h-sc/ui?s=%24SILVER%3A%24GOLD&p=D&yr=1&mn=1&dy=0&id=p88180156110&a=488129528
Lots to think about, Matthew. Thanks,
Agreed Matthew. There are more variable to the miners than the underlying metal or mineral. There are their percentage increases or decreases in margins, how they calculate AISC, exploration upside, ability to replace mine life, one-trick pony/versus multiple projects/versus too many projects, other commodity credits or penalties they may receive at the smelter, currency exchange rates for the country they operate in, other revenue streams like Royalties/tolling agreements/environmental consulting/side projects, the equity share ownership that some companies hold in other companies, JV projects, environmental/social concerns or breakthroughs, permitting hurtles/achievements, power needs & pricing, water needs and pricing, changes to mining processes, open pit versus underground, seasonality of work that can be done, etc… etc… etc….
Yes Canadian markets open tomorrow and Friday…..so the pot stocks will continue their roller coaster ride….copper is definitely going nuts but I will point out zinc too….also Ex take note of how rzz did on a day gold went down like it did
I’m glad to see the disconnect going on between RZZ and GZZ showing again how undervalued GZZ (who is the parent company that owns half of RZZ and many other projects) was down today while RZZ was up. So strange….
Anyway, yes it was encouraging to see RZZ up today.
Golden Valley Mines Ltd. (GZZ.V)
$0.32 down -$0.01 (-1.52% loss)
Abitibi Royalties Inc. (RZZ.V)
$8.54 up +$0.44 (+5.43% gain)
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The one I’m kicking myself over though is Marlin Gold. I have position, but was going to add to it this morning and opted for a few Silver & Gold companies instead. A few went up on the day from where I purchased them, but not like Marlin. Damn, I knew it was about to take off and I went back and forth a few times debating on what to do. Quite the move today.
Marlin Gold Mining Ltd. (MLN.V)
$0.56 up +$0.09 (+19.15% gain)
Marlin Gold Mining Ltd. (MLNGF)
$0.42 up +$0.07 (+19.77% gain)
Marlin Gold Mining – Corporate Presentation:
http://www.marlingold.com/MLN%20Corporate%20Presentation_Web.pdf
Good interview Chris/Cory! t looks to me that not only have markets prematurely priced in multiple rate hike(s), it has mistakenly miss priced a big infrastructure spending plan. The markets are vulnerable now and will get hammered if Trump doesn’t deliver on either of these items. This will be known as the great “Trump-Pump&Dump.” The bet the next 3 months will be a very rough ride for investors.