Precious Metals Locked in Trading Range

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.

American Eagle Sales as of 10/22/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 22nd and the amount of change since our last report on October 16, 2015

Gold
Coin Sales in oz. /#coins + from 10/15/15
One oz.
542,500
542,500
2,500
2,500
Half oz.
33,000
66,000
500
1,000
Quarter oz.
36,500
146,000
000
000
Tenth oz.
87,500
875,000
1,500
15,000
Total
699,500
1,629,500
12,000
35,500
Silver
Coin Sales in oz. /#coins + from 10/15/15
One oz.
38,986,000
38,986,000
969,500
969,500

Curious Relationship of Gold and Oil Prices

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.

Investors Eyeing Gold Fork in the Road

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.

Precious Metals Under Slight Pressure

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.

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.

Fed Policy And Our Economic Drive

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.

American Eagle Sales as of 10/15/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 15th and the amount of change since our last report on October 9, 2015

Gold
Coin Sales in oz. /#coins + from 10/8/15
One oz.
540,000
540,000
6,500
6,500
Half oz.
32,500
65,000
000
000
Quarter oz.
36,500
146,000
000
000
Tenth oz.
86,000
860,000
1,000
10,000
Total
687,500
1,594,500
7,500
16,500
Silver
Coin Sales in oz. /#coins + from 10/8/15
One oz.
38,016,500
38,016,500
887,000
887,000

CME Contracts Up Significantly

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.

2015 Silver Eagle Production Estimates

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.

New Longs in the Gold Market

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.

Supply and Demand of Precious Metals – Overview

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.

The Romance of Precious Metals

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.

American Eagles Sales as of 10/8/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 8th and the amount of change since our last report on October 2, 2015

Gold
Coin Sales in oz. /#coins + from 10/1/15
One oz.
533,500
533,500
13,500
13,500
Half oz.
32,500
65,000
1,000
2,000
Quarter oz.
36,500
146,000
1,000
4,000
Tenth oz.
85,000
850,000
2,000
20,000
Total
687,500
1,594,500
17,500
39,500
Silver
Coin Sales in oz. /#coins + from 9/16/15
One oz.
37,129,500
37,129,500
1,075,000
1,075,000

Gold Tests the Highs This AM

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.

Contango Versus Backwardation

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.

How CME Futures Impact Precious Metals

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.

American Eagles Sales as of 10/1/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 1st and the amount of change since our last report on September 24, 2015

Gold
Coin Sales in oz. /#coins + from 9/24/15
One oz.
520,000
520,000
10,000
10,000
Half oz.
31,500
63,000
1,000
2,000
Quarter oz.
35,500
142,000
1,000
4,000
Tenth oz.
83,000
830,000
3,500
35,000
Total
670,000
1,555,000
15,500
51,000
Silver
Coin Sales in oz. /#coins + from 9/16/15
One oz.
36,054,500
36,054,500
1,000,000
1,000,000

Metals Generally Lower This Morning

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.

This Morning Sees Precious Metals Slide

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.

American Eagles Sales as of 9/24/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on September 24 and the amount of change since our last report on September 17, 2015

Gold
Coin Sales in oz. /#coins + from 9/16/15
One oz.
510,000
510,000
47,500
47,500
Half oz.
30,500
61,000
500
1,000
Quarter oz.
34,500
138,000
1,000
4,000
Tenth oz.
79,500
795,000
3,000
30,000
Total
654,500
1,504,000
63,500
47,000
Silver
Coin Sales in oz. /#coins + from 9/16/15
One oz.
35,054,500
35,054,500
750,000
750,000

VW Headlines Possibly Boosts Palladium

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.

Palladium Is Today’s Star Performer

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.

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Allows Retail Coin Dealers to Offer Interactive Customer Experience

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Silver Only Metal to Hold This Morning – Thus Far

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.

Reaction to Fed Biggest Driver

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.

Gold Showing Strenghth

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.

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Precious Metals Moderately Low

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:

Gold
Gold fell sharply Wednesday, breaking through the 1108.50 (December contract) that I discussed. Since then it has been catching its breath, with lower volatility. Today’s action so far is on the downside, and seems likely to take out Wednesday’s low of 1100.1. If we reach the sub-1100.00 level, especially on a closing basis, the road will be paved for a trip down to the July-August lows at the 1073.70 to 1079.20 area. Lower prices expected.

Silver
For the last 7 days or so, Silver has been about as trendless as a market can get. We are now in the lower part of that trading range. If it wants to go lower, a close below 14.425 to 14.440 (December) will be our first clue. Such a breakdown would clear the way for movement towards the August low of 13.950. The thing about a trendless market is that it doesn’t take much new buying or selling pressure to move it up or down.

Platinum
We took out the 980.10 level that I discussed on Wednesday, and this morning we have taken out the 970.30 support level, also discussed. If we close below that level we could see movement down to the July-August double bottom formed around 945.40.

Palladium
Palladium remains trendless, and has continued to avoid a close below 569.00 (December). If we get that penetration, we are set up to test the August low of 519.20.

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.

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Precious Metals Head Lower

By Peter Aan.

All four metals are lower this morning, but Gold is the only one that seems to have a sense of direction. Here’s what I see now:

Gold
Gold has worked lower, as expected, since my last commentary and has taken out the 1116.90 level I mentioned on an intraday basis. There is another minor support level at 1108.50 (December contract) that could come into play, but the bigger support is much lower, at the July-August lows at 1073.70 to 1079.20 area. Lower prices expected.

Silver
Silver gave us a close (barely) above the 14.745 level I discussed previously, but seems reluctant to follow through. This paves the way for higher prices, but a close below Tuesday’s low of 14.400 would signal yet another change of trend. Right now, it’s having trouble gathering momentum in either direction.

Platinum
Friday’s close was below the 995.60 area (October), signaling a change in trend. We then went lower, leading to a rally that seems to be failing this morning. We seem to be headed for a test and penetration of yesterday’s low of 980.10, which would lead to a test of the 970.30 low made in late August. However, step back from the chart a bit and you still see a range-bound market.

Palladium
Palladium has been in a tighter range than the other metals, trendless enough to avoid a close below the 569.00 (December) level I discussed last week. The weakness this morning hints that it may want to make another try at a breakout to the downside.

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.

Jobs Report Briefly Boosts Precious Metals

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. The metals were buoyed for only a few minutes—initial reactions to reports are often short lived–but then they started to slip. Here’s what I see this morning:

Gold
Gold has worked lower since my last commentary, and has done a fair job of testing the recent low of 1116.90 (December contract). I continue to look for lower prices and a probable penetration of that 1116.90 support level.

Silver
Silver has worked reluctantly higher since Wednesday, but we have not yet had a close above the 14.745 level (December). Such a close would signal a move to the upside. Otherwise, I see this current bounce fading.

Platinum
Platinum has been range-bound, but the weakness this morning post-report puts it near the 995.60 (October) level I wrote about on Wednesday. If today’s close is below 995.60, I look for movement towards the late-August low of 970.30.

Palladium
Palladium has been non-committal since Wednesday, but is showing some weakness this morning. Once again, we need to avoid a close below 569.00 (December) to keep the bears away. Such a close should send us back down towards the recent low of 519.20. If we can continue to resist such a close, then we could see movement towards the resistance levels at 605.00-625.80.

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.

American Eagles Sales as of 9/3/15

The following chart includes the year to date totals from the U.S. Mint as of 5pm on September 3 and the amount of change since our last report on August 28, 2015

Gold
Coin Sales in oz. /#coins + from 8/27/15
One oz.
433,500
433,500
29,000
29,000
Half oz.
27,500
55,000
1,500
3,000
Quarter oz.
30,500
122,000
2,000
8,000
Tenth oz.
69,500
695,000
11,500
115,000
Total
561,000
1,305,500
40,500
120,000
Silver
Coin Sales in oz. /#coins + from 8/27/15
One oz.
32,495,000
32,495,000
1,000,000
1,000.000

Fireworks Possible This Friday

By Peter Aan.

Action is subdued this morning, but we should see the brief, monthly fireworks Friday morning (7:30 CST) as the employment numbers are released. Here’s what I see now:

Gold
Gold has rallied reluctantly since Monday, but is a little lower this morning. I still favor lower prices, with the caveat that a close above 1146.00 (December contract) will signal a move towards the recent high of 1169.80.

Silver
We have had relatively subdued action in Silver since my Monday commentary, and it is a little lower this morning. I still look for lower prices, but if it closes above Thursday’s high of 14.745 (December), a trend change to the upside is signaled.

Platinum
Monday morning’s selloff in Platinum didn’t have legs, and the market recovered somewhat. I still favor higher prices here, but a close below Monday’s low of 995.60 (October) will signal a change another change in trend, and movement towards the late-August low of 970.30.

Palladium
Palladium extended its run to the upside on Monday, but has pulled back. To keep this rally alive, we need to avoid a close below 569.0 (December), which is not far below where we are as I write this. Such a close should send us back down towards the recent low of 519.20. If we can resist such a close, then we should see movement towards the resistance levels at 605.00-625.80.

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.

Platinum Dips This Morning

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 →

Extreme Volatility This Morning In Precious Metals

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 →