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Data and comments on Gold vs Fed rates, Insider Selling and Copper

Cory
March 9, 2017
Comments (8)

Below I outline some interesting economic data and news that caught my eye. I am always interested in what all of you think so please feel free to share your thoughts on the charts and data below…

First up we have something that seems contradictory to what most investors are taught but has been the trend for gold when compared to the Fed’s key interest rate in 2004 and currently which started in December of 2015.

As rate increase gold should be dropping because of the argument that gold does not pay a dividend. This chart is a great example of the importance of looking past one metric. The Fed is behind the curve and even though it is raising rates gold is rising just as it did in 2004. A great example of history echoing itself.

Next up is some data on the US equity markets from TrimTabs. In February as the markets put in new all time highs we saw a drastic shift in what insiders are doing with their money. Here’s the quote from TrimTabs…

Insider Selling  explodes to six-year high in February.

Whenever insiders are selling this should make investors take note. In no way does this signify a major drop in the markets but it is a cause for concern.

 

The final note comes from a technical analysts and is focused on the copper chart. I said late last year that the run up in copper would slow and we would see a sideways consolidation of price. Too much of the move was predicated on Trump’s infrastructure spending which is taking much longer than those drinking the kool aid thought.

Chris Kimble points out that if cooper breaks point 2 (below) we could see some more selling. I think this is very possible but would only last thought the summer at the longest. The downside would be down to $2.45, if that breaks down to $2.31. It should not drop lower than that.

I guess we will see. What do all of you think about the future for copper? Here is the tweet from Chris Kimble.

 

 

 

Discussion
8 Comments
    CFS
    Mar 09, 2017 09:07 PM

    Wikileaks calls for Geneva convention for Cyberspace:
    https://www.youtube.com/watch?v=W8FkAm-1E1w

    CFS
    Mar 09, 2017 09:59 PM

    Off Topic:
    http://www.cnn.com/2016/07/18/world/germany-train-stabbing/index.html

    It’s the religion.
    Come on Bob, do your mea culpe and blame the US.

    CFS
    Mar 09, 2017 09:13 PM

    Meanwhile……down the rabbit hole:

    http://www.bbc.com/news/uk-england-39193347

    Paul W
    Mar 09, 2017 09:29 PM

    >>>>As rate increase gold should be dropping because of the argument that gold does not pay a dividend.

    Nobody has ever bought gold for a dividend. A .25% rise in rates means diddly squat to a long term gold investor. The two most important things to look at is real interest rates and confidence. The last two times there were rate increases, gold knee jerked down for a short term before rallying strongly on inflation concerns. I think if the fed raises rates, you will see the usual computer traded volatility as they trade the sound bites and then gold will rally after the USD finishes it’s jerk higher and the stock market falls.

    Paul W
    Mar 09, 2017 09:37 PM

    Inflation has now tripled from last July, going from 0.8% to 2.5%. How does this compare to a possible rate increase of a fraction of one percent? Inflation and real interest rates are going to swamp out the moves of the fed. Anyone who thinks they are in control is living in fantasy land.

    http://www.tradingeconomics.com/united-states/inflation-cpi

    Paul W
    Mar 09, 2017 09:42 PM

    Dr Copper is being moved by external factors with politics in Indonesia and Philippines and their moves against miners lately. Until this settles, I don’t think copper will be a good barometer of global growth.

      Excelsior
      Mar 09, 2017 09:38 PM

      Paul W – That’s a good point about Dr Copper being a mixed back of macro growth drivers and fundamental mining madness in certain jurisdictions like Indonesia and the Phillippines. Same for Nickel and Zinc as the mine closures is fueling changes in supply and smelter demand.