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After a strong jobs number on Friday, the Precious Metals Market pauses to reevaluate its next move. Very little data this week will give the Gold market a chance to act on its own.

Wall street traders are watching the currencies this week to see if the dollar will continue to strengthen putting more pressure on the metals. Most believe the metals will stay in an offer mode until more data is released. I can’t disagree.

Most say, with the job number so strong, it opens the window for a rate hike in December and gives the Fed a break from all the criticism the Wall street traders have put on them. The majority of traders believe the at the next FOMC meeting a quarter point rate is a done deal. I guess the banks would be happy if this happens and it gives a little hope for retirees with money in the bank, but will hurt the real estate folks.

Precious metals refineries report some new orders for product coming
in late Friday afternoon. A indictor that the demand for product has picked up a bit on this latest move.

Financial advisors indicate this morning they have had orders in silver from retail investors looking to take advantage of the weakness in the market. Silver is still the metal of choice on 8 out of 10 orders they report.

I believe, with the absence of any significant data on the horizon, the market will just be range bound in this area. If we maintain under $1,100 in Gold and $15 dollars in Silver, there will be retail demand for
product but not at a level most dealers would get excited about.

As I said in my comment on Friday, this looks like the train has just stopped to unload some payload and change the crew, but according to many Wall Street Traders this is not the last stop on the line.

Have a wonderful week.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

Open interest is an indicator often used by traders to confirm trends and trend reversals for both the futures and options markets. Open interest represents the total number of open contracts on a commodity, meaning one buyer and one seller. Trade volume and open interest is a powerful tool used by traders to predict market trends and it’s my favorite tool to predict future market movement.

Used in conjunction with open interest, volume represents the total number of contracts that have changed hands in a one-day trading session in the commodities or options market. The greater the amount of trading during a market session, the higher the trading volume. The greater the volume, the more we can expect the existing trend to continue rather than reverse.

So now that you have an understanding of what open interest is, I’ll start my story.

It took five weeks to build up 25,000 new longs into the December CME Gold contract, bringing the market above the $1,190 area, with hopes the bottom had been established. Everyone looked for traction to sustain the rally to and beyond the sociological $1,200 dollar level. Then in just one day, half of the new longs got out of their positions and the rally stalled. The effect of that move caused the Gold market to break down below the 200-day moving average, which was $1,174.20 at the time, and the tone had been set.

When this reversal begins, I look to trend lines for support. Trend lines are not just technical, they are also fundamental. What I mean by that is we analyze the physical demand in the marketplace by speaking to dealers, producers, refiners and government mints to determine the demand for product. Now combined with trend lines in the Gold market you can determine how weak the market can become by watching support levels.

If you have been following my previous comments, the $1,150 area and $1,130 area were both levels of support that we had to hold. And as each level was broken thru, we gained momentum to the downside. At the same time we witnessed physical demand fall off a cliff. No surprise.

Weeks ago you might remember the price of December Gold was looking very weak, trading in the $1,114 level. Then the surprise Job Numbers came out and the Gold price rallied 25 dollars in 15 minutes. This is when we started to witness the beginning of the new long taking positions, thinking the bottom had been set. This market too had started some momentum to the upside as you all witnessed to the $1,190 area. As we started to rally, we saw physical demand increase, but not at a level that would make dealers get too excited.

At the time of this report (5am Dallas time), I have to be concerned about the $1,112-$1,114 area in December Gold. We are on the doorstep of the next level of support. In my opinion this is a critical level we have to hold.
If the market fails here, I expect the momentum will gain more speed to the downside.

For those interested in the silver market, we broke thru the $15.31 level of support now and I see no level of support until we reach the magical level of $15 dollars.

On another note, Janet Yellen testifies before the House Financial Services Committee on bank regulation at 10 am Eastern today. Then in the afternoon, New York FED President William Dudley is scheduled to give a news briefing on “Looking Beyond the Macro-Economy.” And FED Vice Chair Stanley Fisher speaks at 7:30 pm on “Central Bank independence” at the National Economists Club. I don’t expect Yellen to give any clues to the direction of the FED today with her carefully prepared speech. But you never know what the Fed governors might say. I expect their comments will be more informative.

That’s it from the Lone Star State. Next comment we hope will be from The Big Apple. Have a wonderful Wednesday.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

From my hotel room in Dallas. I will be spending a good part of the week here. We begin the week with selling pressure out of the Far East.

Gold trading under $1,140 this morning with the remnants of stops being triggered at that level overnight. Continued stronger dollar helping the shorts in the Gold market gain momentum. Next level to watch is $1,131 in December, then possibly test the $1,110, according to Wall Street Gold technicians. Wall Street Gold traders out of the market at the moment waiting to see if there will be any indication from any of the FED governors about a possible rate hike in December. Until then, any news out of the FED is the only catalyst the Gold market has at this time.

Silver holding her breath above her support level of $15.31, with nothing to hold her from asking for a life preserver if we break that level, down to $15 dollars.

Strong selling out of China overnight in the PGM metals. The traders that were supporting Platinum at the $1,000 level have given up all hope and have turned strong sellers expecting continued pressure from China as the economy there continues to decline.

Oil under pressure also this morning. So if your favorite color is RED you’ll enjoy looking at your computer screen today.

Have a wonderful Monday.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

It’s Halloween in the Gold market. What costume will you wear? Let me give you some hints, so you will be dressed correctly for the big day.
Let’s get started. You wake up and see Gold open interest up over 20,000 contracts in the last couple of weeks, so you reach for your Bull costume.

Then later on in the day, you hear that the Fed might raise interest rates in December, so you take off your bull costume and put on the bear costume. Feeling you got the right one?

Then you pick up the newspaper and read that central banks continue to buy gold, darn it, I have to put back on my bull costume again.

Then your colleague calls you and says he spoke to this gold technician who charts the progress for gold and he says that Gold is trading under the 200-day moving average, bear costume again? Oh this is getting nuts. Can’t take it anymore? You might just skip this holiday. And to think, after the madness a couple months ago when no one had candy to sell, now it’s free for the taking and nobody wants it.

Get the point?

I want to give special thanks to the Fed for creating such a “ball of confusion.” How can anyone expect the producers and the refiners to get it right?

Today I decided just to shut off the TV and put the newspaper in the pail and just listen to soft music to clear my head.

Just to let you know, I wrote this comment on Thursday and since then everyone heard the FED bear growl loud, causing us to break out of the recent trading range. Now the new bull open interest participants have to reevaluate their positions and we now them running for the hills, looking for some safe territory to settle in.

Trick or Treat

Don t eat too much candy. By the way if anyone has extra, I love tootsie rolls. Have a wonderful weekend

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich

It’s about time for us to talk about Platinum and Palladium as investments. Are they suitable and is there any interest these days? If you talk to the average financial advisor about Platinum and Palladium as a retail investment, almost everyone claims that they have no interest. And if you’ve been long in these products for a while, it’s something you probably don’t bring up in any conversation.

Nonetheless, with gold and silver seeming as if they are going into hibernation for the winter (and to press a point if I may, I’m tired of listening to CNBC and Bloomberg network commentators talk about what they think the FED may do) it’s time to turn the page. So let’s talk a little bit about Platinum and Palladium.

Platinum:

• Is one of six metals referred to as the “Platinum Group Metals.” The other five are:
  Palladium, Rhodium, Ruthenium, Iridium and Osmium.

• The majority of Platinum comes from South Africa with notable amounts of production in Russia and Canada.
• Jewelry leads the way in Platinum applications, while a good portion goes into catalytic converters for automobiles.
• The following platinum products have been minted in the past and have had their moments in the sun, although lately these coins have been lost in the clouds.
  • American Eagle
  • Canadian Maple Leaf
  • Australian Koala
  • Australian Platypus
  • Chinese Panda
  • And the first pure Platinum coin – The Noble
    

  Palladium:

• Palladium for the most part is called an industrial metal with over 50 percent coming out of nickel mines in Russia and the next leading amount production is out of South Africa.
• Notable minted coins worth mentioning are:
  • The Canadian Maple Leaf.
  • The Russian Ballerina.
  • The Chinese Panda.
    it was a hot commodity. Today it’s rare you get an inquiry for a minted Palladium coin.
• Sales for Palladium minted coins over the years have been just a flash in the pan in my opinion. The only time I can remember Palladium coins rocketing is when Palladium was trading over $1,000 some years ago and the talk was, “it’s not stopping here,” is when it was a hot commodity. Today, it’s rare you get an inquiry for a minted Palladium coin.

I like to say all products have a time to shine. Besides, I only have one thing to say about Gold and Silver today, and take note, this is an important point: Keep an eye on the gold open interest. This combustible combination of the market stuck in a range and new longs increasing every day is like pushing down hard on a spring, eventually the force will produce a dramatic turn…but in which direction?

In the meantime, I figured I’d amuse myself in this quiet market with reading the comments of one the funniest guys that ever lived in my opinion, Yogi Berra. Here’s one of his classic comments: “I’M NOT GOING TO BUY MY KIDS AN ENCYCLOPEDIA. LET THEM WALK TO SCHOOL LIKE I DID.”

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich

The precious metal markets start off the week locked in a trading range. Gold open interest is up for the fifth week in a row, indicating new longs in place, I guess with hopes the price of Gold has bottomed out. Option traders on the street have flattened up their positions, giving up hope for a rally to $1,200 dollars going into CME option expiration tomorrow. Retail demand continues to lack any luster with most retail investors looking to equities as the fourth quarter rally continues.

With virtually no Gold interest here in the States from Wall Street traders, I have to look for other things to write about hoping my readers will stay interested in this boring market. So, as some Gold traders like to tell you, the longer we stay locked in a trading range, the more severe the move in the market will be if it heats up or cools off. What they can’t tell you (and neither can I) is when that will happen. I will continue to look for indicators that might get us out of this quick sand, but for the time being, honestly, I can’t. And I don’ t expect anything from my friends at the FED when they meet later this week.

Brings to mind a song for the older folks that you might remember. Please feel free to sing along: “Mama said there’ll be days like this, there’ll be days like this, my mama said, mama said, mama said.”

Have a wonderful week.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

Oil and gold have moved in tandem in the last thirty years in a long-term link since oil prices impact inflation. In the short run, however, these two major commodities can move independently of one another. Their relationship has fluctuated and isn’t always easy to trade.

One way that investors like to track gold’s relationship with crude is through the gold-oil ratio, indicating how many barrels of oil an ounce of gold will buy. This ratio is found by dividing the price of gold by oil’s price. Historically-high ratios have occurred when gold was expensive relative to crude. Lower values were seen when gold was cheap compared with oil.

Since 1985, the gold-oil ratio has meandered between 7 and 36. In early October, it hovered around 23, versus its long-term average of slightly above 15.5. West Texas Intermediate crude prices sank to a six-and-a-half-year low of $38.22 a barrel in late August, but have risen a bit since. Gold dropped to a six-year low of $1,080 an ounce in July.

Gold and oil, of course, respond to macroeconomic factors–including the value of the dollar and other major currencies, national monetary policies and real interest rates. Gold often reacts more strongly to geo-political and financial tensions than crude, while oil is heavily influenced by its own supply-demand factors.

Economic slowdowns, particularly outside of the United States, have hurt demand for crude oil and gasoline. A growing shift toward renewable energy has made inroads too. Nonetheless, oil consumption could reach a five-year high in 2015, according to the International Energy Agency.

In retrospect, low oil prices have eventually improved as producers cut output in response to weak prices. But at times, such as 1986 to 1988, oil stayed low relative to gold for an extended period. Meanwhile, for gold to rally, the market would need to see tensions in the Middle East or another region escalate, a financial disaster develop, or a pickup in inflation.

Topic: We have reached a fork in the road.

The Gold market for the last couple of days has been trading in a tight range on both sides of the 200-day moving average.
These prices are getting old and we look for some news or event that with give us some direction. The fork in the road is the
200-day moving average and to quote the late , great Hall of Famer, Yogi Berra, “When you get to the fork in the road take it!” I’m sure you can’t argue, but I’m tired of looking at that fork in the road.

I guess one reason we might be stuck here temporarily is, a lot of folks are attending the LBMA conference and are away from the office.

Chatter out of the conference expressing the mood of the attendees is bearish. Going forward, most are looking for Gold to eventually trade between 800 and 1000 dollars. Reasons are a combination of things. First, the FED is not sure what to do about raising rates any time in the future. Second slowing Chinese growth is putting pressure on the metal.

I’m not joining the bear settlement. My take is this market will continue to trade in a tight range. I expect Gold traders
to sit on the sidelines waiting for some news that they can trade off of. I was hoping for a Gold rally to the $1,200 level to see if this market can get some traction to the upside and attract new buyers, but as the days pass with no movement my hope is just fading away.

Retail Gold investors are still out to lunch enjoying their stock purchases of late. Most financial advisors reporting some activity in the Gold ETFs, but very little interest from the individual investor for physical Gold.

Have a wonderful Wednesday

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

Markets this morning under slight pressure after gold failed to reach the $1,200 level. Wall Street traders’ wish list for the week was to test the $1,200 level to see if the market would accelerate from there. Thanks to the Far East selling overnight in precious metals, traders look for action in other markets for the time being. Everyone looking to Washington on the debt ceiling discussion for news that might bring a bid to the market again.

Retail sales sluggish as the market becomes range bound. Retail investors still investing in equities as they enjoy a three week rally in the Dow and S&P.

I expect this to be just a bump in the road as the buildup of the open interest indicated last week that there were plenty of new longs jumping in. Traders still eyeing Oct. 27th. as options expire and I expect that gold traders will try to test the 1200 level before the expiration date.

If you missed this train, it’s time its time to consider another mode of transportation

Look at what the Federal Reserve is doing with its monetary policy. We continue to be on quantitative easing, keeping these interest rates artificially low and now we hit a new debt ceiling Nov 3rd when the Federal Government runs out of money once again.

Then who can believe some of the government’s numbers, such as reporting our unemployment rate at 5.1 percent? Really, how can that be if you have a workforce participation rate at 62 percent? (And that 62 percent rate is the lowest in about 40 years.) They have to do those things to create a smoke screen that we have a functioning economy. We continue to see how strong the numbers are on Wall Street, in the beginning of the fourth quarter. But the truth is, Wall Street has become comfortable with lower rates and the indications are the FED will just drag its feet until the pressure becomes too great. Then, and only then, will the FED be forced to raise rates, a “big deal,” quarter percent. So for the time being, Wall Street traders have no trouble jumping on the train hoping it doesn’t run out of fuel at the next station, $1,200 Gold Street. Mother always told me, “Son never stand in front of a roaring freight train,” however this train hasn’t gotten up to speed yet, but it is running. I kind of wonder that $1,200 might be the last stop on this line.

My story will not be complete without mentioning the United States’ favorite metal, the lovely lady named Silver. Silver can see her girlfriend Gold in the distance but needs to take off her loafers and put on some sneakers to catch up or she will miss the party. Silver’s party will be held at the top floor penthouse level at $16.315 and then move to a lower floor for some rest and relaxation.

Have a wonderful weekend.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich,

CME reports Gold open interest yesterday up 15,744 contracts, a significant increase to 451,702. December saw the largest increase up 13,444 with a total for the future month 308,396 open contracts. The exchange also reported 15,877 EFPs posted for gold.

For those who love the technical aspect of trading futures, December closed above the 200-day moving average at 1178, the first time since May 18th.
This level has perked up the interest of the average Gold trader on the street, taking on a long position hoping this market will get some traction at these levels.

Everyone now with their eyes on the $1,200 level. Talks of no interest rate increase for the foreseeable future has fueled the price of Gold.

Have a wonderful Thursday

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich,

As of Monday morning Oct. 12th, the U. S. Mint total production for 2015 Silver Eagles was 37,129,500 coins. With the end of the 2015 Silver Eagle production year upon us, I wanted to share my estimate of how many more coins will be produced before the Mint starts producing the 2016 edition. Please understand this is only my best estimate.

I expect that the U. S. Mint will average approximately 950,000 silver eagles each week until they reach 45,000,000 coins and start minting the 2016 edition. Unlike the Royal Canadian Mint that can start selling 2016 Silver Maples in 2015, the U. S. Mint can only offer 2016s after the first of the year.

So I will estimate that over the next 9 weeks (thru December 7th), the U. S. Mint will produce 8,550,000 coins, ending the year at approximately 45,679,500 total. I expect that if there is strong demand for Silver Eagles, the U. S. Mint might go with one more week of production thru Dec. 14th, increasing the year’s production to 46,629,500. Whether they stop production on December 7th or the 14th, the 2015 Silver Eagle will be the most the U. S. has ever minted, topping the 44,000,000 produced last year. Way to go Uncle Sam.

My best guess for when the 2016 Silver Eagle will be available is January 11, 2016. The reason I use this date is to give the Mint enough time to have an ample supply available to offer sufficient quantities to its AP‘s (Authorized Purchasers). To put a figure on it, whether they end on Dec. 7 or the 14th, I think 950,000 coins over 5 weeks = 4,750,000 coins on first delivery day, which should give the Mint a level of comfort that they will all be sold on day one.

I have an idea. Hey Uncle Sam, it’s your 30th Anniversary for the Silver Eagle in 2016. What do think about producing a 30th Anniversary Silver Eagle? Everyone would love it. After all, don’t you think it’s time to change your wardrobe? After all, You’ve been wearing the same clothes for over 30 years.

Have a wonderful Wednesday.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

Our day starts out with preliminary opening interest numbers up in gold, bringing new longs into the gold market. Overnight resistance levels at $1,160 broke through from Far East interest. The next level that Wall Street traders are watching will be $1,170 basis Dec. Fueling the gold price are comments from former Dallas Fed official Richard Fisher. stating that a Fed hike may be seen by year end but it’s NOT necessary .

As reported to you earlier, some traders on the street were playing the Gold/ Platinum ratio, buying Jan platinum and selling Dec. gold when the ratio got as wide as $235, this morning, they’re seeing the ratio at $170 and are very happy with the results of that trade.

Silver over $16.00 at this time looking at its next level of resistance $16.315 basis Dec.

Platinum picking up steam this morning with the $1,000 price basis January on everybody’s mind.

By Walter Pehowich,

The question arises again and again. What happens if physical gold and silver demand next year exceeds the supply and we experience the same shortages as we did this year?

I’ve been thinking about this for quite a while now and I thought I’d ask the question to a few chosen mints, refiners and producers. I asked, “Are you planning to add new machinery, hire more people and even add a shift or two to meet the expected demand next year?”

And the overall answer I received was, “How to we plan for something we don’t know will happen. You used the word “expected.” As a manufacturer, do we commit more capital for machinery or hire more people when we have no idea if the demand will be sustained. We try to juggle around some personnel and do maintenance of the machinery on weekends but there is no real answer to making a commitment to expanding capacity in this business with an unknown demand in the future.”

Some mints have laws that govern them, while other Mints have some flexibility to determine their direction. And refineries are kind of stuck in place it seems, trying to figure what road to take on investing in any capital improvements. As much heat that the mints, refineries and producers took this year, it seems in the end, for the most part, they are just fine.

So as a dealer in precious metals, whether a retailer or wholesaler, how does one plan for a shortage of product? It becomes a very difficult situation and it’s almost impossible to determine what products will be in demand and what inventory to carry.

As I tell my kids. “Sometimes in life there are no answers.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich,

A Love Story.

Hello it’s me, Gold! Remember, just a couple weeks ago as Silver was looking at 15 dollars and saying good bye (or good buy), while I was slipping away…possibly to $1,050. I was your go-to investment. I thought we had a good thing going…you wanted to hold me, put me in a safe place with the hopes of a future together. Meanwhile, your old “friend” the stock market was giving you a migraine and writing bad things in social media about your affair.

Then one day, someone on TV said something just happened to your old fling, Job Number. You left me short…and rallied 25 dollars in fifteen minutes. You broke up with me and went to dinner with Dividend Paying Stocks, you flirt!

And now Silver and I are just hanging together with no place to go. Locked in a trading range.

But we ain’t going down without a fight. We’ll have our day in the sun again. So I guess Silver and I will take a brief vacation together and, if something happens to you, we hope you will return with a gold ring and a silver necklace asking for forgiveness.

So I reserved a chair on the beach. I’ll be sitting there from 1130 to 1160 and Silver is hoping someone will pick her up at 15.00 again.

Have a wonderful weekend

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

By Walter Pehowich,

After talking to Wall Street traders this morning the story is the same.
To put some slang into the statement between $1,117 and $1,154 (price of Gold) “the train ain’t runnin’,the tracks are broken between these two avenues so to speak.

This morning the gold market tested the highs once again, I think it’s the 3rd time we tried to break thru $1,154 with no luck. The Market came off hard, down to $1,145. So we just sit and wait for some news that will put the train back on track.

As I indicated before, gold traders love volatility and look for momentum
in the market place before taking a position.

Coin premiums continue to come off. The reason is, all seems to be well in the equity world. The F=fourth quarter equity market comes in on solid ground, so the retail investor is looking back at dividend paying stocks to invest in.

Some Wall Street trading strategies that have been a topic this morning is the Platinum Gold ratio: buying the platinum January contract and selling the December Gold contract. The spread got as wide as 235 dollars recently and these levels are attracting some speculation in this area.

Silver moving up earlier this week almost 12 percent in three days have taken the wind out of the sails in the coin premiums. Brokerage account executives all say that the retail investor hates stock market volatility and loves Silver under 15 dollars. Those two facts put into play gets our physical market back on track.

Have a wonderful Wednesday.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

by Walter Pehowich

A good Wednesday morning to you all. CME Future prices have a story to tell in certain circumstances. Today’s topic: How the spot price can affect future prices.

Let’s examine the difference between a Contango market and a market in backwardation. First lets define the two and describe what I look for when the availability of physical metal gets tight:

• Contango market: This is a condition where the forward prices exceed the spot price creating an upward curve in pricing.
  Example: December gold $1,100, February gold $1,101, April gold $1,102, June gold $1,103.
• Backwardation market:This is the opposite condition where forward prices create a downward curve and spot prices exceed the forward prices.
  Example: December gold $1,100, February gold $1,099, April gold $1,098, June gold $1,097.

If the gold market is in a Contango, future price condition means that physical gold is attainable for the most part, and a backwardation will indicate a tightening of supply. The spot price in a backwardated market will have no limits and can trade in large differences to the future months until the metal becomes more available.

Current spot month open interest has a significant effect on the backwardation of the spot price as the days dwindle down to the end of the month, resulting in delivery issues on the exchange.
The old Wall Street guru always says: “There are four things to remember when you begin your career on Wall Street. When entertaining a client, never talk about food, politics or religion and most important, never go into a delivery month with a short position unless you have the metal to deliver.”

We will be watching these levels in the future and report to you any interesting scenarios.

Have a wonderful day.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

by Walter Pehowich

Today I would like to share with you the other side of the Precious Metals market: the CME Future’s market and the Wall Street Gold Trader. On Friday we talked about who the retail investor is and their role in the marketplace. Now I will explain why you see a total disconnect from the price of gold and silver to the physical demand for metal.

Who is the Wall Street Gold Trader? A person who works for a bank, brokerage house, or hedge fund and most likely trades a proprietary book for his or her firm. They use technical levels, like 200- or 50-day moving average trading levels for gold and silver and have the latest electronic trading platform with the fastest news services available. He/she trades CME futures or options and also has a program that runs an algorithm book to complement their other tools and looks for momentum in the market and their trading activity creates volatility and increased open interest in the futures contracts.

Friday when the job number report came out we witnessed exactly what programming trading can do to the price of gold and silver. Let me explain. At 8:30, when the number was released, gold immediately took a bid and started to rally. The price of gold jumped 25 dollars in 15 minutes. The speed of this quick rally to the upside was initiated by some key news items. Algorithm applications look for specific wording that hits the tape and immediately executes a buy or sell order electronically. In the old days on the Comex floor, there was an open outcry pit. Brokers trading for themselves and for clients (i.e., banks, brokerage houses and hedge funds) quoted market prices back to the proprietary desks for orders to be executed. Market movement took time to react to the news. Today it’s a completely new ballgame. It is my opinion, it would be very difficult to move the price of gold that fast with open outcry. Well it’s different times now. With the speed of the electronic platforms, much larger orders can be executed with ease, where open outcry would take a lot longer.

So while trading futures or spot with an electronic platform you might feel that you have been reading the paper or getting a cup of coffee waiting for the train to arrive and next thing you know it’s at the next station up the line. And your response is how did I miss that?

This is why today there is a total disconnect between the price of gold and silver and the crazy interest in the physical market. The Wall Street trader is not too interested in the physical side of the market. He or she just wants to take advantage of news that could create instant market movement with hopes he or she can beat everyone to the punch. And the Wall Street trader will once again hope for the next opportunity to come by looking to gain an edge in the market place and taking a proprietary risk to generate quick profits in an instant with the electronic platforms and algorithms to help him along.

While the retail investor looking at stock market volatility, currency devaluations, government debt, congress out to lunch, causing them to reposition part of their portfolio is into hard assets like precious metals.

In the end, we still see long delays for delivery for all types of physical metal, but everyone is starting to catch up, and we all wait for the next bit of news that will generate interest in the precious metal markets again.

Have a wonderful Monday.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

My mother always told me that first impressions are everlasting so before I wrote this comment I put on my best suit and splashed on expensive cologne and got started. Continue reading →

By Peter Aan.

Metals are generally lower this morning, with Gold leading the way south, while Palladium tries to hang tough near yesterday’s close. Here’s what I see now:

Gold
Gold has penetrated that 1120.50 support level (December contract) that I discussed Wednesday. Now we are primed to move towards the more important level at the September low of 1097.70. If that level does not hold, we could see movement towards the critical low from August at 1073.70. That is the lowest gold price since early 2010. The big picture on Gold shows that we have been ratcheting down over recent years, with spurts of falling prices followed by rally attempts that fail to last more than 2-4 months. I continue to look for lower prices.

Silver
Silver seems to be taking a breath after the steep fall on Wednesday. I continue to look for movement towards the September low of 14.240 (December). After that we have the more important low made in late August at 13.950. You have to go back to 2009 to find prices lower than that.

Platinum
Platinum fell further yesterday, then rallied into last night’s session, but that rally could not be sustained. It seems likely that we will see new lows in this market, probably before the week is out.

Palladium
Palladium started a selloff on Wednesday, but buying pressure came in yesterday, lifting the market fairly close to recent highs. We are in the lower part of today’s range as I write this, so we could be making another attempt at lower prices. The first hint of a top formation would be a close below 651.00 (December), and a close below 644.00 would be a more significant signal. As I said on Wednesday, though, any pullback in a market this strong should be considered suspect.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

Sunday night’s openings in the metals were all close to Friday’s close, but none were able to build from there and all have slid to substantial losses. Here’s what I see now:

Gold
This morning we have seen Gold take out Thursday’s low. As I said on Friday, this is an important short-term level. Now that this has been penetrated (and a close below this level would be a stronger indication), we must now expect a test of another short-term support at 1120.50 (December contract). We are close to that level already, but a more important support level is at the September low of 1097.70.

Silver
Silver is weaker than Gold this morning, crashing through the recent low. Now we turn our attention to the September low of 14.240 (December). After that we have the more important low made in late August at 13.950. You have to go back to 2009 to find prices lower than that.

Platinum
Platinum remains the weakest of these four, and has plunged into new lows this morning, reaching the lowest level since January 2009. As I’ve written before, the mega-low in Platinum is the 761.80 from 2008. That was the culmination of a plunge from the lofty height of 2308.80 reached earlier that year. You have to go all the way back to 2004 to find a lower Platinum price. We are far above 761.80 now, but there’s no reason to expect anything but lower prices for now.

Palladium
Palladium, our strongest market of late, is also pulling back this morning. We have traded below Friday’s low, and a close below that level would certainly indicate the start of a correction. With the recent strength of this market, I would not be quick to call an end to this bull market.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

Markets are interconnected in many ways that are not always immediately obvious. The accusations by the EPA that VW may have rigged the software on some diesel models is thought to benefit gasoline cars. These cars tend to use Palladium in their catalytic converters more than Platinum, leading to some dramatic moves this week. Here’s what I see this morning:

Gold
The 1120.50 level (December contract) was able to hold on Wednesday, and we saw very strong buying yesterday. There’s no follow through today, however, and we are starting the morning moderately lower. The key for today and Monday is for Thursday’s low of 1129.50 to hold. If it does, we could see the bulls regroup and rally towards the August high of 1169.80.

Silver
Silver also managed to rally yesterday, but with only a fraction of the strength we saw in Gold. We are a little lower as I write this. If we can manage a thrust through Thursday’s high of 15.180 (December) especially on a closing basis, we could see a test and penetration of the 9-18 high of 15.435.

Platinum
Palladium followed through solidly to the upside yesterday and this morning, and remains the strongest metal of this group by a good margin. I would consider any pullback here to be a correction in a bull market for the time being.

Palladium
Palladium followed through solidly to the upside yesterday and this morning, and remains the strongest metal of this group by a good margin. I would consider any pullback here to be a correction in a bull market for the time being.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

We’re seeing moderate strength in Gold and Silver this morning, despite some bearish signs earlier this week. Palladium is the star performer today, busting through recent highs. Here’s what I see now:

Gold
Tuesday’s weak close was a bearish sign, but buying has lifted prices moderately this morning. The action so far today is inside of yesterday’s range, and that low of 1120.50 (December) is important to hold. If it is breached, it could mean a slide down to the September low of 1097.70.

Silver
We got a bearish close in Silver also on Tuesday, but it’s hanging tough this morning. Another selloff from this area could trigger a trip down to the September low of 14.240 (December).

Platinum
Platinum was the weakest market on Tuesday, collapsing through the lows from early August. This sends us back to the monthly charts, where we see that the next major support level in this market is the 2008 low of 761.80. This is not to say that it will reach that level, but to say that there is no support level on the charts above 761.80.

Palladium
Palladium is on fire this morning, taking us to the highest level since mid-July. This brings it to an overbought situation, but the truth is that overbought markets sometimes just get more overbought, especially when they have good momentum. Stepping back from the chart to look at the bigger picture, there is not significant resistance until you get to much higher levels such as the 803.00 high from May. It’s been a long slide for Palladium since then, and we seem determined to begin climbing back up that ladder.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

All metals but Silver are moderately lower this morning. Here’s what I see now:

Gold
Gold has pulled back this morning, but all of the action since last night is within Friday’s range. The bulls would not like to see a close below Friday’s low of 1126.9 (December contract). Despite the rise last week, we are still not significantly overbought. I continue to see movement towards 1147.30.

Silver
Silver is hovering around Friday’s close as I write this, and we have an inside day so far. I continue to favor movement towards 15.770 (December).

Platinum
Platinum is moderately weak this morning, after a bullishly confirming close on Friday. I continue to look for more strength in this market. A close today under 972.60 would be a black cloud on the bulls’ horizon, however.

Palladium
The range of Friday and today (so far) have been within Thursday’s range. A breakout of Thursday’s high (618.30 basis December) and low (594.40) will clue us in to further movement. I still favor higher prices and a test of 625.80.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

Over the last four decades of watching the markets, I have noticed how often the initial reaction to a news event or report is wrong, or at least overdone. Such it was with the Fed announcement yesterday, where the initial reaction in many markets was short lived, and the markets either turned south or moderated their initial gains. The equity markets are overrun with bears this morning, while the precious metals markets have seen the bulls return. Here’s what I see now:

Gold
The strength we saw on Wednesday morning, after having second thoughts yesterday, has followed through nicely this morning, and we are approaching the resistance at 1147.30 (December contract) that I wrote about. If we can penetrate that level, the next resistance is a more important one at 1169.80, the August high. We have plenty of momentum now to the upside, and the market is not overbought, so the easiest path is to head higher.

Silver
Silver easily took out the short-term resistance levels I wrote about previously. It is overbought, but the trend is undeniable. We now have the August high of 15.770 (December) in our sights.

Platinum
Platinum has only a fraction of the strength we are seeing in Gold and Silver, but still seems to by trying to put in a triple bottom as discussed on Wednesday. A further confirmation of this would be a close above Wednesday’s high of 976.7 (October). If the bulls are successful, watch for a test of the resistance levels in the 1024.00 to 1038.50 area.

Palladium
We got a strong close on Wednesday above the 605.00 level I discussed. Today’s strength may put the market back on track to work towards a test of the 625.80 (December) high from August.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

Markets of all stripes are as nervous as a cat in a room full of rocking chairs as the Fed meets this week to ponder interest rates. The fireworks are expected to start Thursday at about 1:00 CST. Here’s what I see now:

Gold
Gold is showing substantial strength this morning, after failing to close below 1100.00 (December contract). If this strength does not dissipate during the trading day, we could see a close above Monday’s high of 1111.90, an early sign that the recent slump in prices has run its course. If we do start a new leg to the upside, the first resistance level that we will encounter is the 1147.30 level reached on September 1.

Silver
Silver is also strong, after a low volatility day yesterday. There is formidable resistance not far above us at the early-September highs in the 14.930 to 14.950 area. Beyond that—and the psychological 15.000 level–we have resistance at the August high of 15.770.

Platinum
Platinum is higher this morning, but with less enthusiasm that Gold and Silver. It’s possible that it may be trying to form a triple bottom with the July and August lows. On the other hand, we often see a market approach an obvious support or resistance, back away, and then turn right around and plow right through it. At any rate, a close above Tuesday’s high of 963.90 will be our first sign that a bottom may be forming.

Palladium
Tuesday saw Palladium flirting with a penetration of the August high of 605.00, but we are seeing some reluctance this morning. A close above 605.00 would be a strong signal in this market, which remains primarily a congested, sideways market.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.

By Peter Aan.

Gold is hanging tough this morning, near Friday’s close, while the other metals are succumbing to selling pressure. Here’s what I see now: Continue reading →

By Peter Aan.

All four markets are moderately lower this morning and succumbing to selling pressure as this commentary was being written. Here’s what I see: Continue reading →

By Peter Aan.

The employment numbers that were released at 7:30 CST this morning showed fewer jobs added than expected, but other aspects of the report were more encouraging. Continue reading →

By Peter Aan.

The action Sunday night and early Monday shows little of the volatility that we’ve seen in recent weeks, except for Platinum, which is sharply lower this morning. Here’s my take as we begin the week. Continue reading →

By Peter Aan.

Here’s my take on the metals as we begin to close out a very interesting week in the financial markets. Continue reading →

By Peter Aan.

As equities seem stuck in a fall/soar/repeat cycle, the consensus in precious metals is consistent: lower prices. Continue reading →

By Peter Aan.

Nothing is constant except change. As I was writing commentary on these four markets this morning, by the time I got to the fourth one, the markets had rallied to the point where I had to return to the top to rewrite! Here’s what I see…for the moment, anyway. Continue reading →

By Peter Aan

Metals opened Sunday night close to unchanged from Friday afternoon levels, but found some buyers as we worked into Monday morning, although Platinum and Palladium began to slump. Continue reading →

By Peter Aan

One thing I look for on a bar chart when a bottom appears to be forming is a close above the high of the low bar. Continue reading →

By Peter Aan.

As the equities markets fall victim to the China Syndrome, the precious metals markets continue to follow through to the upside. Continue reading →

By Peter Aan.

As I write this late Monday morning, the metals have made a dramatic move to the upside. Let’s look at the current technical picture. Continue reading →

The employment report released this morning was close to estimates, and the initial response by the precious metals markets was bearish. Continue reading →

It’s probable that markets of all stripes will have an eye on the employment data being released Friday morning at 7:30 CST. Reaction to the report is often volatile, but sometimes the market quickly cools down. Continue reading →

By Peter Aan

Signs of the Times: Goldcorp, a major North American gold producer, cut its dividend due to weak gold prices, and stated that it would consider reconfiguring or partially closing mines if gold should linger below $1,000 for an extended period. Continue reading →

Two headlines caught my eye this week: “Prepare for gold prices to plunge…as low as $350” and “Forget about whether $100 silver is possible—how about $1,000”. Continue reading →

by Peter Aan

Gold
On Friday, Gold penetrated the July 20 low, but buyers lifted the market off of its low, and that buying pressure spilled over into today’s session, but then selling returned. Continue reading →

Gold

Gold crashed through the recent 1080.0 low, as discussed earlier this week. Like Sunday night’s selling spree, the market quickly found some buyers, Continue reading →

From Peter Aan, Senior Dillon Gage Trader

Gold

Gold is weak today, being drawn towards the panic low of 1080.0 from Sunday night’s opening. Continue reading →

Gold

Gold was hit with panic selling during the opening minutes Sunday evening, taking the August futures quickly down to a breath-taking 1080.0. Continue reading →

Industry Veteran Will Oversee Precious Metals Investment Services

ADDISON, TX (July 21, 2015) – Dillon Gage Metals, an international precious metals wholesaler, has announced that Walter Pehowich has joined the executive team. Pehowich will serve as the executive vice president of precious metals investment services and will work from the company’s New York City trading office.
Continue reading →

Precious metals continue to feel the weight of a rising USD as gold and company have moved lower throughout the week. With news on Greece and Iran behind us, the market has focused on Chair Yellen’s testimony before Congress which was quite upbeat and leaves no doubt that the FOMC intends to raise rates this year with many “experts” now calling for a quarter point hike in September and again in December.

The headline story for our market today is the Chinese Central Bank releasing their official gold reserves for the first time in 6 years. In 2009, China claimed to have reserves of 1,054 tonnes and today that figure is 1,658 tonnes. If this figure is correct, and there is already chatter that it is not accurate, it falls far short of market expectations. This figure puts Chinese reserves in fifth place behind the U.S., Germany, Italy and France. If this figure is accurate, it may signal that the Chinese Central Bank may be a buyer of gold in the short term as it prepares for a meeting with the IMF in the fall where it wants the IMF to include the Yuan as an approved global reserve currency. In the short term our corner of the market benefits from excellent physical demand as investors of all sizes are attracted by the lower price points.

My next commentary will be on July 27. Have a good weekend and upcoming trading week.

Roy

Roy