Craig Hemke – Commodities And Precious Metals Are Continuing To Surge Higher For A Strong Weekly Close
Craig Hemke, Founder and Editor of TF Metals Report, joins us to for a lively discussion on the big moves higher in the commodities and precious metals, and both the shorter-term and longer-term market implications that will arise from the geopolitical tensions in Ukraine and the NATO sanctions towards Russia and removing them from the SWIFT banking network. While we all hope for quick resolution of the military aspects of the war, we discuss how many factors may be changing longer term, and then review how these will continue to underpin the macroeconomic drivers of inflation, Fed policy, and the correcting general US equity markets.
We also outline that the commodities and gold and silver were already moving before the Ukraine situation intensified and that even if there is a quick resolution, not all the move is coming back out, due to the more obvious sticky inflation, muted ability of the Fed and other central banks to really do much about it, higher energy prices, slow economic growth estimates, and general environment of stagflation that is setting in. When asked about why more generalist haven’t been flocking into the PM miners lately, Craig reminds listeners that most generalist investors have not clue yet about which companies to invest in and that is why the GDX and major producers get the bid first, but eventually as metals prices run higher and more capital is allocated to resource stocks, then those money flows will eventually come down the risk profile into the smaller junior miners.
Another bullish factor for the precious metals sector is that Silver has been outperforming Gold all week, including today, and at one point got up to $25.90, and is currently around $25.77 about 8 minutes before the close. All those people that were ragging on Silver and suggesting it would plunge back down and have a date with $18-$19 will just have to keep waiting… 😉
Yep……….. looks that way……….
Craig made a really solid point in the interview above that even if the “war premium” comes back out of the PMs or commodities if there was peace tomorrow, it isn’t all going to come back out, because the move higher isn’t just Ukraine only.
Inflation is proving to be far sticker and less “transitory” than the Fed and Fed apologists were touting at this time last year, (which anyone with a clue knew it wasn’t going to be fleeting with all the record amounts of money printing and insane amounts of liquidity injected into the markets). We are seeing the continued effects of this inflation show up in prices across the board from real estate, to services and events, and yes definitely in the commodities.
Look at the huge move higher in Oil and Nat Gas spiking energy prices for citizens and businesses of the globe. Energy prices bleed into so many other areas as a cost input, which will push up the prices of so many other products or services from groceries to airfare. Speaking of groceries, most of the soft commodities have been surging for a while now (long before Ukraine heated up), and while this recent action has pushed them higher, many have been breaking out for almost 2 years now.
So the question remains – How can the Fed with their paltry 0.25% rate hikes ever normalize inflation running far north of 7% in government statistics and in double-digits in the real world?
Here’s a clue: They can’t normalize rates.
Their hope was to jawbone the markets into submission and that worked for a lot of 2021 where people bought their load of verbal horse dung, that this would all blow over and inflation would be coming back down to acceptable levels near 2% by last summer. Yeah… no.
Now even the dimmest bulbs in the main stream financial media are waking up to the fact that the rate of inflation is still ramping higher, the Fed is bringing a knife to nuke fight, and Pumpin’ Powell is a paper tiger. GDP growth estimates are 0.0% for Q1 in the US. Does that sound like a “Reopening Trade” to you?
As the general stock markets remain under pressure, like they have been since Q4 of last year, and the commodities and precious metals continue to diverge, more main stream capital will flow into the resource sector again.
I’m sure glad I was mostly fully deployed in companies over the last few months before this move to the upside happened, and I’ve trimmed back some profits over the last few weeks, including today and have my dry powder reserves up to 7%, which is the most it’s been since August of last year. If we get the selloff heading into the rate hikes over the next 2 weeks or once the rate hikes kick off that many have been calling for, then I’ve got funds to fire off, but otherwise, it has been thrilling to watch all the green on the screen in the PMs this week.
Wishing all the investors here at the KE Report good trading and prosperity!
Gold was up above $1970 in the $1971-$1972 region for the whole last 20 minutes of trading leading up to the market close, but for some reason Stock Charts shows the close at $1966.60. Sometimes the close on Stockcharts is a bit wonky though, and I noticed they’ve been off on daily closes a few times recently in a few different stocks and asset clases compared to other platforms. Maybe they have a delay or something?
Regardless. Gold had a great close for the week, and while $1971.21 at the close on other sites was better than $1966.60 on stockcharts, they both cleared the $1962-$1966 resistance on a weekly close.
Gold closed at $1974
Yes but that $1974 includes afterhour trading, which doesn’t get populated on the charts. At the normal market closing time, Gold was at $1971.21, but Stockchart shows $1966.60 instead.
Any way you slice it, a really good weekly close for Gold.
https://www.zerohedge.com/markets/buyer-finally-emerges-russian-oil-offered-record-28-discount
Somebody ..Shell …… Just bought the OIL…………. No problem Russia, will have lots of cash…..
Bingo OOTB. I’ve asked or mentioned in a half dozen interview this week that the Russian sanctions aren’t hurting them, as commodity prices are spiking, and they’ll still find buyers for their Oil, Nat Gas, Nickel, Palladium, Wheat, and whatnot…. even if they need to sell it on back channels or for Gold.
The sanctions caused a boomerang effect and only came back to hurt the West with higher prices in almost everything. What a mess…
As discussed on the other blog today, look at Palladium breaking out to a new all time high today along with Dr. Copper making a new all time high today up at $4.94. These are epic moves higher in the metals, and we saw Nickel jumping up by 5-8% many days this week, and I’d have to check but it may be near all time highs. Zinc is at $1.83 that is nearly 20 year highs.
Stuff is about to get really expensive.
Chad: Are you sure Russian oil and gas are among the sanctioned items? Anyway, oil was climbing long before they invaded Ukraine. Personally, I think it’s a world supply problem, and would be headed up even without the war. JMO
Hi Silverdollar – I guess that was directed at me since my name is Shad. Most of the reporting coming out is that with the sweeping sanctions being placed on Russia (which changes a lot and is hard to pin down) that many countries/companies will avoid buying it from Russia. There were also measures to stop the Nordstream2 pipeline from Russia to Europe. As we know, it is often the forward-looking market anticipating the market winds in advance and then taking action. Oil and Nat Gas are up substantially the last 2 weeks as a result.
I agree with the point you made that it is a world supply problem, and I had pushed back on Josef Schachter’s bearish narrative the last few times we interviewed him based on the continued problems OPEC countries were having meeting their quotas (much less exceeding them), and the environmental push to stop new projects in the US and to get banks to divest Oil/Gas assets has also hurt with new development. As you stated, I believe we’d have seen triple digit oil regardless of the war, but it simply spiked things up faster than it would have without it. Same thing in most commodities, they were going higher anyway and had been for some time, and this Ukraine war just accelerated that move.
Here’s one news release put out yesterday that addresses a number of the sanctions on Russia:
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Companies Cut Russia Operations And Trade As Sanctions Tighten
Reuters – March 3, 2022 (data from 02/28/2022)
“Companies have limited, put on hold or exited business activities in Russia following a wave of sanctions imposed after Moscow’s invasion of Ukraine.”
“Several oil majors say they will divest from Russian projects, among other curbs on exposure.”
https://www.reuters.com/business/corporate-ties-russia-uprooted-sanctions-tighten-2022-02-28/
Oil Rally To Power On As Sanctions On Russia Throttle Market
Reuters – Seher Dareen
“A rally that has driven oil prices to their highest in almost a decade shows no signs of abating, as supplies from top exporter Russia are disrupted by sanctions after its invasion of Ukraine, a Reuters poll showed on Friday.”
“The risk premium is going through the roof,” said Christian Reuter, NORD Landbk’s senior director of sector strategy, with the Organization of the Petroleum Exporting Countries and allies also unable to adequately compensate the shortfall.
“Benchmark Brent crude broke above the $100 last week for the first time since 2014 and hit $119.84 on Thursday. It was trading above $112 on Friday, propped up by sanctions on Russia, which ships more than 7 million barrels per day (bpd).”
“Although the oil and gas trade is not directly targeted, customers have hesitated to buy Russian crude to avoid becoming entangled in sanctions.”
“Prices could spike to $150 a barrel and even higher if the U.S. and allies take even more aggressive steps to reduce oil exports from Russia, as there is not sufficient spare capacity to offset a significant reduction in Russian exports,” said John Paisie, president of Stratas Advisors.
https://www.reuters.com/business/energy/oil-rally-power-sanctions-russia-throttle-market-2022-03-04/
Shad: Thank you sir for the reply. It’s a broad subject and tough to keep up with.
Absolutely SilverDollar. Every day is crazy with news overload and changing metrics, so very hard to keep up with all the moving parts. Hopefully by crowd-sourcing good ideas and all sharing ideas here together we can help each other stay more well-informed. Cheers!
This is bit of a panic message over on Bloomberg regarding Oil prices, but it shows where the main-stream narrative has headed in the energy space.
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Oil Could Hit $160 Per Barrel By End of Next Week, Schork Says
Bloomberg Markets and Finance – March 4, 2022
“Schork Group President Stephen Schork says oil could hit $160 a barrel if the situation in Ukraine gets any worse. He’s on Bloomberg Markets: The Close.”
Silver just secured a huge double bottom as it closed the week above two important fork resistances today…
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=7&mn=5&dy=0&id=p39968505084&a=500464214
IPT took back its 200, 300 and 500 week MAs this week and will have its own huge double bottom when it closes a week above 68 cents…
https://stockcharts.com/h-sc/ui?s=IPT.V&p=W&yr=7&mn=3&dy=0&id=p85916554936&a=1120431734
Hey Matthew: Thank’s again for the chart. IPT is my biggest holding. Hoping to see it break that double top up about $1.07 or so. Plan on reducing some at that point and hold the balance for the run-away!
Silverdollar, in my biased opinion, IPT is a great choice for a large position. I intend to hold a very large part of my position well past 1.07, probably 90%+!
https://stockcharts.com/h-sc/ui?s=IPT.V&p=W&yr=7&mn=0&dy=0&id=p27425137942&a=570417673
Thanks for this chart Matthew. It looks goof to get there.
Question… once the .68 is hit, do you see it fumbling and meandering over the coming months or do you have a feeling it’s trending further toward your target?
Thanks in advance for any insight.
Canuckski, I do not see it fumbling and meandering at all. Pullbacks will probably be in the 5 to 10 day range, 15 max, which is 3 weeks.
If it does stall for longer than I expect, it will probably happen around $1.00
https://stockcharts.com/h-sc/ui?s=IPT.V&p=D&yr=3&mn=0&dy=0&id=p17508301058&a=1001349828
On the verge of breaking out of a huge Schiff fork:
https://stockcharts.com/h-sc/ui?s=IPT.V&p=M&yr=17&mn=0&dy=0&id=p15532875851&a=568343327&r=1646602476062&cmd=print
Just took back an even bigger fork:
https://stockcharts.com/h-sc/ui?s=IPT.V&p=M&yr=20&mn=11&dy=0&id=t4928382620c&a=450738199&r=1646602709651&cmd=print
Matthew… thanks so much… simply stunning charting. You’re a pro!
You’re welcome, Canuckski. Our job now is to not get bucked off in the inevitable volatility that awaits. Just as the correction of the last year+ tried our patience, this move up will try the patience of the bears and top-callers for longer than most expect.
Impact Silver (IPT) is my biggest Silver position as well and looking forward to that move higher to test $1.07 resistance [and go beyond…]. Good charts Matthew.
Big double breakout for GDX:SPY…
https://stockcharts.com/h-sc/ui?s=GDX%3ASPY&p=D&yr=1&mn=11&dy=0&id=p44917378001&a=1120927373
Don’t be surprised if China and Russia start trading oil in non dollar but create own currency.
With all nato depending on Russia oil and gas they may have the advantage.
Biden destroyed USA energy Independence in less than year and before invasion begging opec, Russia etc to pump oil, now he going to beg Iran to start pumping ???
Wow what a difference a year makes all free world has to depend on our enemies.
Wake up people, you think all those countries are going to pump more oil and gas and it’s going to be cleaner than USA can do it, thier oil is whole lot dirtier. I’m all for cleaner energy but we just can’t do it overnight, what wrong with Biden and Germany tried it last 10 years and there puking with most nato countries.
Clean energy is a front for political corruption. Biden has sold his soul to America’s political enemies. Look how meek George W Bush has become, sitting on a fortune while he finger paints. Next is turtle Mitch McConnell & Rhinos Mitt Romney & Lindsay Graham, before we even mention Dems Xcross the isle…
Another breakout for gold:
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=0&mn=10&dy=0&id=p65704648687&a=993652669
Gold just had its best weekly close since August 2020, the month that it topped after making its all-time high.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=6&mn=6&dy=0&id=p61322981602&a=931873171
Yes, it was a spectacular weekly close indeed for the yellow metal indeed. Very encouraging.
What’s next for GDX? It looks very strong but is short term/daily chart overbought and at resistance.
https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=11&dy=0&id=p13414934182
Gold Breakout: Breakaway Gaps Confirmed
Jordan Roy-Byrne – The Daily Gold – March 4, 2022
“Gold, Silver, and gold stocks formed breakaway gaps on Tuesday. With the strong close today, it is highly likely breakaway gaps have been confirmed.”
Gold Price Setting Itself Up for a Big Run, $3,000 in the Cards
Stansberry Research – March 4, 2022
“Monetary policy going forward will dictate what the gold price does,” says Rudi Fronk, founder and chairman of Seabridge Gold. “We think [the Fed] will err on the side of keeping rates low,” he says to our Daniela Cambone at the 2022 GSA Investor Day Conference, and mining stocks need to earn their reputation back by not lagging behind the gold market as they have over the last thirty years.
“I am a gold bull now because of what’s going on in the global financial system,” he says, “and I think it’s setting itself up for a big run.” Fronk concludes that mining operations are vital to green energy initiatives moving forward, and, “as mines get shut down, it’s going to put a lot of pressure on the market.”
Palladium Price Explodes; Gold Rallies as LBMA Eyes Russian Refineries
Stansberry Research – Mar 4, 2022
Palladium and platinum are spiking to all-time highs, where one of the main contributors of this is the Russian airspace blockade, says Will Rhind, founder & CEO of GraniteShares. “We’ve never canceled a G7 country in the way that Russia is being canceled right now,” he tells our Daniela Cambone, “we don’t know the lasting impacts of this new reality.”
“The volatility we had in the beginning of the year was on the heels of upcoming monetary policy,” he says. “Gold responds best when there is a fear factor in markets,” which is what’s happening in Ukraine, Rhind observes. Gold has room to go significantly higher than where it is at today, “this is just the beginning,” he concludes.
Gold, silver and GDX, the three least risky parts of the sector, finished the week above their weekly Bollinger bands.
GDX
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=3&mn=6&dy=0&id=p05910611088&a=1121059647
It really was a solid weekly close in the PMs, and nice follow through after the good monthly close in February.
It is encouraging to see solid levels painted on the weekly charts for Gold, Silver, and GDX. I do get nervous when a month starts off with a big bang, that it will give up some of those gains as the month progresses, but it would be really nice to hang onto levels around here for the monthly/quarterly close, as that would really cement the technical setup even further. A lot can happen in 3 weeks, so we’ll see how it goes, but it’s just nice to see some excitement in the PM sector again.
Pullbacks will happen, obviously, but my concern level about whether or not this is the real deal is as close to zero as it can get. The whole picture is bullish beyond belief and gold’s bullish leading action is now confirmed in multiple ways.
This market has done the exact opposite of what the bears expected for the last year and now many are either trapped in short positions or in cash.
GLD perfectly backed up its price action this week with huge volume not seen since August 2020.
https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=3&mn=6&dy=0&id=p88614202725
Yeah, I agree that the PMs have been demonstrating for a while the right kind of action and blowing through trendlines, moving averages, and other key resistance levels, and we already had a great monthly close for February, a really epic weekly close this week, and for confirmation to a larger audience, it would be great to put in another solid monthly close and quarterly close in March. That would likely pull in more nervous nellies off the sidelines.
Priced in dollars, GDX broke out with its Feb 18 weekly close but priced in real money, it is just now cementing its low. This is a big deal.
Compare:
GDX
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=3&mn=7&dy=0&id=p98240485679&a=988301549
GDX vs GLD (today will be the first weekly close above the high weekly close of mid November):
https://stockcharts.com/h-sc/ui?s=GDX%3AGLD&p=W&yr=3&mn=11&dy=0&id=p92072154179&a=1120993808
The CRB appears to be in a blow-off and has closed the last 11 weeks higher. When it ends, it will send more money into the gold space.
https://stockcharts.com/h-sc/ui?s=%24CRB&p=W&yr=5&mn=0&dy=0&id=p00408102877&a=1109894614
PUTIN IS CACA TRUMP LOVES PUTIN
Well, I believe this strong weekly close in the precious metals, accompanied by a rip roaring move higher in the commodities answers the question around whether the strong February monthly close over $1900 would see any follow through. 🙂
We are still about 15 mins from the close but Gold is up substantially this week, currently over $1970, which is a solid close above both the $1920-$1921 resistance, as well as the $1962-$1966 resistance and congestion zone. That’s a pretty darn good weekly close to kick off March, and very solid follow through the prior monthly close.
https://www.investing.com/commodities/gold