Walter Pehowich is on vacation today and Monday. Today’s commentary comes from Stephen W. Miller, CEO of Dillon Gage Companies.
What markets do day to day is interesting to watch. But, if you talk to the trade room at Dillon Gage, looking for them to tell you what will happen tomorrow, they just won’t. Continue reading →
For the first time in three weeks we’ve witnessed gold redemptions in the ETF shares. Continue reading →
My technician friends “AKA the gold chart traders” have been knocking at my door this morning bringing to my attention that the Gold Relative Strength Index now stands at 80.4 percent, Continue reading →
What’s happening to our gold market this morning? The dollar index is seen in positive territory and gold is up big. Economics 101 says that’s not supposed to happen. There must be some powerful forces effecting the gold price. Continue reading →
For over two weeks now Gold ETF holdings have increased in a big way, helping gold keep its bid posture. The question now remains, with the dollar steadying, will the retail investor continue to support the gold price by buying more shares? Continue reading →
One man’s opinion:
Something has to be done at the Fed. On Tuesday, Kansas City President Ester George said, “There has been NO substantial shift in the outlook that would justify pausing further gradual rate hikes.” Continue reading →
The tightening of financial conditions that have taken place since the FED began raising short–term interest rates in mid-December is a matter of considerable concern to the FED, Continue reading →
Longs still in control of the gold market as we continue to witness inflows into the gold ETF’s. Gold overnight broke thru the 200-day moving average at $1,132.00, but failed to gain momentum above as selling from the Middle
East put a damper on the rally.
Kansas City FED President Esther George said yesterday, “There has been no substantial shift in the outlook that would justify pausing further gradual rate hikes.” For some professional gold traders, these statements from the FED gives them mixed signals on whether to join the rally or sell into it.
Some gold traders said at these levels they would take a wait and see stance for the remainder of the week as they await Friday’s job numbers. Their preference is still playing in the oil arena, but if the market catches a bid and settles above the 200-day moving average today, some have indicated that they would abandon the oil market and concentrate on the gold market again.
Silver holding her head above water, rallying to $14.495 overnight in the March contract. With the lack of available one thousand oz. bars on the street, we have seen premiums increasing. The question remains, is this a indication of things to come as CME warehouse stocks continue to decline? And with the price of silver at these levels, we are witnessing some junior silver mining companies struggling to obtain financing to produce more silver.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
The price of gold was well supported over the last two weeks partially due to the increase of almost 2 million ounces into the ETF funds. Silver, in the same period was going in the opposite direction, seeing small redemptions in the ETF each and every day.
Fresh gold fund buying overnight helping gold hold its positive position this morning. As we start the week, we see the dollar index in negative territory, also a positive for the gold price. Gold seems to have some momentum at these levels and becoming a trend setter helping silver to catch a bid also.
Technical levels of resistance in gold to watch for is $1,132 in the April contract and $14.48 in the March contract for silver.
We still await some clarity on last week’s wild silver fixing numbers. As I said last week and still believe today, the process is broken and I wonder if there is a fix for the “fix”? The price is supposed to reflect a benchmark price at the time of day so that all the producers, hedgers and speculators can trade on, but after last week’s disaster, many are trying to figure out another way to fix a price. Some are going to the CME settlement price. But I don’t believe that’s a good alternative because it doesn’t reflect a London price which all the producers’ yearly contracts are based on and all sovereign mints use to sell their products. So I guess only time will tell if everyone can rely on the fix again? Sometimes it’s better just to leave things alone. I’m told it worked for 117 years, they had to be doing something right.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
For the time being, continued gold ETF inflows are helping to keep gold’s head above water. Going forward, with gold at these levels, I don’t expect to see new inflows continuing
into the ETF marketplace.
April $1,106 level is our first level of support, and in my opinion, for the market to hold its bullish sentiment we would have to hold that figure. With the lack of professional gold traders participating in the market, I expect it will create some downside pressure in the price short term. As I indicated in my previous comment, some gold traders have jumped ship and gotten involved in the crude oil market.
Second day in a row the LBMA silver fixing price was set below where the spot market was
trading. Today not as dramatic as the $ .80 cents difference yesterday, but still a concern for most participants. The spot silver price at the time of the fix was around the $ 14.20 area as the fix was settling at $14.08. I wonder if this pattern continues, if a fix ( no pun intended ) to this problem is available.
It looks to me that the electronic fixing platform for silver is becoming a market of its own with very little liquidity. This can become a serious problem for the world producers, government mints and refiners who have annual contracts selling and hedging their production on the silver fixing price.
Have a wonderful weekend.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Thursday’s London silver fix settled approximately $.80 cents off the March future price. Continue reading →
Good morning. I will be traveling to Dallas with the first flight out of Newark this morning, so unfortunately I will be unable to give my live market comments.
But I wanted to still communicate my thoughts on an aspect of the precious metals industry, so I decided to address the question:
Why do Central Banks buy Gold?
In recent months I have been told by some Wall Street professionals that they believe gold fundamentals have deteriorated. Not to mention the Fed’s decision to raise rates in December last year. And adding to this thought process, are some Fed governor comments that more rate hikes are a possibility.
Those facts and other reasons convinced the Wall Street pros that staying short gold was the right decision in the short term.
After talking to a few gold traders Tuesday morning, and witnessing a gold short covering rally today to $1,119, I believe, that their costly strategy has been covered and eliminated. So some look to recover their losses by trading the oil market instead.
Short covering and the continued increase in ETF holdings have supporting the gold price of late, but what you don’t see behind the scenes are the Central Banks continuing to add to their current gold holdings.
Global debt and the devaluation of some world currencies gives the Central Banks all the reasons to adopt that strategy.
Recently, countries have turned their back on the U.S. by selling Treasuries, giving up on us because of our current massive 19 trillion debt problem that has exploded under the current administration.
Where will it end?
Entitlements and health care costs are out of control. And unless we address these problems we may witness the worst economic disaster this country has ever seen. Looking at the facts is a U.S. downgrade in order?
What’s in your safe deposit box?
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
How does one gage (no pun intended) the future movement in the price of gold? My best answer would be: by researching all aspects of the gold market each and every day; speaking to many different people, from traders around the globe, to folks at the Mints, refiners and dealers; listening to what the FED policy makers have to say and watching worldwide currency activity.
I’m always being asked, “What do you think the price of gold will do in the short term and for the year?” As in any market, trying to calculate the move in the next five minutes is always a challenge, if not impossible. And at times there will be conflicting information making it very difficult to put together a strategy.
Nonetheless, I find the most important factor in finding future movement in the price of gold is market trends, or in other words factors that create momentum.
Whether technical or fundamental (my favorite), there are different signs that indicate a possible direction. Two things stick out today. As I indicated in my previous comments, for almost two weeks now gold ETF holdings have continued their trend in increasing holdings each day. Another factor I found was option related: August $1,175 gold calls traded $26 dollars last week. Both are bullish indictors and as we all know there are NO guarantees.
No crystal balls, no magic wands. So we use the tools I indicated to TRY to determine a direction. Using these tools can provide invaluable insight that can add value to any conversation with any client.
At the time of this report, we witness a weaker dollar, lower crude prices and equities in negative territory. Gold is catching a bid here and at some point I believe that if this rally continues, some of the Wall Street traders will have to cover their short positions.
As we all know life is a gamble and trading precious metals is no different. But with a solid education and using the proper tools, your odds can improve.(Sounds like a fathers speech before sending a kid out to college.)
My apologies.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
We start the day on a quiet note with oil and the dollar in positive territory, something that we haven’t experienced for quite some time.
Gold feeling slight pressure this morning because of the stronger dollar and higher oil prices. We have also noticed that base metals as well as Silver, Platinum and Palladium all in green territory.
Gold in backwardation mode. Feb-April gold switch this morning trading .30-.40 back indicating a slight tightness in the metal. London EFP quoted a positive 20-40 figure, haven’t seen this in a long time. One might think, that the reason for this is, the recent increase in ETF holdings over the last ten days.
Refiners and government mints report steady demand for product and are right on target based on their expected models for the year.
A strong Equities market open is expected after seeing oil up over 5 pct. this morning. A welcome breather from all the madness of late.
Across the pond: ECB’s Draghi yesterday indicated downside risks increasing again and sees a need to continue stimulus at least to the end of March 2016. The news created a buy signal to our equity markets here.
Have a wonderful weekend.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Why you need to watch the price of gold with one eye and all the other markets with the other.
Can someone explain to me why the media and government officials stopped talking about the United States debt. At the time of this report, the US Debt is a staggering 19 trillion dollars. That’s $58,000 for each individual in this county. And the Government keeps spending a trillion dollars a year more than it takes in. Is anyone concerned yet, especially with the (I’ll be nice) folks running for president? Is that the best we can do?
Look at these numbers: Every day 10,000 baby boomers are retiring and are expecting to cash in on all the entitlement programs available. One third of them have no savings and will have to rely totally on Social Security. Currently there are 47 million Americans on food stamps. People are living longer. Going forward how can we pay for these entitlements?
In an election year I don t expect you will hear anything about entitlements. For each politician running for office, this topic is suicide and sure to destroy any chance of being elected. So we forget the debt and listen to the presidential candidates trade insults each day. That’s a sure plan for economic disaster.
As a gold trader, I need to understand how all this madness will turn into higher gold prices. I have a lot of theories and will share some of the ones that stick
out in my mind for the short term investment. Let’s look at the landscape now as I see it and have reported in the past.
Gold is virtually locked in a trading range between $1,075 and $1,095. In the last week and a half, buying in the gold ETFs has increased each day. Wall Street gold traders still sitting with short positions believing the Fed governors’ story that more rate hikes are in the cards. I still believe it’s one and done. I see no data to support another rate hike any time soon.
So we have a stalemate.
The longer gold stays in a trading range the more likely it will have a spring effect (or as they say) I expect a short covering rally.
Now let’s look at something I’ve been thinking about for a while. Let’s look at the stock market. Investors are highly leveraged and the volumes are low indicating to me that a sustained rally is out of the cards. Just the opposite I expect will occur. Lower earnings and continued lower oil prices should continue the Dow’s decline.
So here’s my take on the gold market short term. We still see central banks buying gold. Is there something they know that we don’t? I wouldn’t be surprised to see the Fed live up to their promise and raise rates (as some of the Wall Street traders predict) and crush gold only to turn around and buy it cheaper to support our currency. But the downside is, higher rates which will cost us more to finance the country’s debt. So the Fed’s hands are so tied up there is no escape. Look at all the world countries that have now turned sellers of our debt. What does that tell you?
Overall the government is in a sink hole with no rope to save itself. So going forward, I expect a weaker dollar against major currencies and gold to be the investment choice as our government has no alternative but to buy the metal. And eventually the retail investor will catch on, too.
In the meantime, I put my ear to the ground awaiting to hear the roaring rally on the gold train a comin’.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Oil in sell-off mode as Iran say it plans to increase oil production by 500,000
barrels a day now that sanctions have been lifted.
Dow industrials off highs as the oil news is released.
Gold lower with silver, platinum and palladium in positive territory.
Most Wall Street gold traders shift market trading interest into oil today as volatility increases in that sector.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
We start off the week with a federal holiday honoring the accomplishments of Martin Luther King Jr.
Precious metals activity overnight relatively quiet on light trading volumes. The Dollar Index and the Euro steady, virtually unchanged in morning trading. Crude Oil overnight in the March contract hit a low of $29.35 with most all traders and trade houses looking for a $24 dollar level to be met near term.
Peoples Bank of China is instituting new rules regarding the money flows of the Yuan in and out of the country. The new rules were implemented to minimize short selling of the Yuan outside the country, stopping future devaluation by offshore banks and speculators.
Of the four precious metals only gold continues to see new buyer interest emerging in the ETF arena. During the last seven days, ETF speculators have increased their ETF holdings. I expect, we will continue to see increases if we break above the $1,100 dollar level, otherwise if we extend our seemingly locked-in trading range a redemption is expected. For the most part ETF investors are short term investors and are more inclined to get out if the market looks weak. A sell off in ETFs could move gold back to the lower end of the most recent trading range.
Silver, it seems, is looking to her big sister gold for guidance as she just drifts around the neighborhood with nothing to do. Silver’s cousins, Platinum and Palladium, are still in rehab with no signs of being released anytime soon.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Today I wanted to talk about ETFs, exchange traded funds. Gold exchange traded products are exchange traded funds that track the price of gold. I expect there is a lot of confusion between owning paper gold and owning the physical product. The reason I decided to talk about this topic today is I noticed an increased participation in these funds in the last couple of days.
Some see it as a buying opportunity I guess, with the price of gold consolidating at these current levels.
The thought process in purchasing the ETF (paper gold) is to gain exposure to the spot price of gold without owning the physical metal. This a totally different mindset from the investor who buys the physical product. I believe that the holders of ETFs feel that they have more freedom with owning shares of gold. But if my intention is to own gold, why would I want it in paper form instead of owning the physical product? Physical gold is accepted all over the world and is extremely liquid.
An ETF is a credible alternative if a person wanted to trade gold in the short term. If however the investor’s desire to own gold is to diversify their portfolio, hedge against inflation, provide an alternative currency, remove counter-party risk, or own an asset that is not encumbered by Wall Street, the physical asset is clearly the better way to go as we have seen paper gold promises go up in flames for centuries, while the physical has an unbroken track record of wealth preservation.
On another note: I guess I have some company in believing that the FED will have no credible data to raise rates anytime soon. With the recent news out of China and uncertainties in our equity markets regarding future corporate earnings, some financial advisors have seen an increase in gold and silver demand. Some Wall Street traders indicate they have no intention of adding to, or changing their short bias at this time. This creates an interesting a tug of war between the retail investor and the Wall Street Trader. Only time will tell. What side of the ledger are you on?
Have a wonderful weekend.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
I would like to talk about things that effect the price of gold other than supply and demand issues.
Many times in my comments, I have indicated that the movement in the price of gold was effected by the price movement in the Dollar Index. Let’s look at what the dollar index is and how it effects the price of gold.
“The US Dollar Index is the value of the United States Dollar relative to a basket of foreign currencies often referred to as a basket of US trade partner’ currencies.”
The dollar index is a weighted geometric mean of the dollar’s value relative to the following currencies:
The movement in the price of the US Dollar index can have a direct impact in the movement of the price of gold. The price of the Dollar Index usually trends in a negative correlation to the price of gold and is part of the Wall Street Trader’s arsenal in determining the future direction of the gold market.
The price of gold is traded in dollar terms around the world, therefore, any movement in the dollar index will likely affect the price of gold. In theory, as the dollar index falls the price of gold raises, and vice versa. I must comment that this negative correlation is “NOT” an exact science as other factors can impact both markets individually.
Because of the many countries included in the Euro Zone, (as compared to the smaller geographical coverage of the other currencies included in the basket), from time to
time I will refer to the activity in the price of the Euro as a direction mover to the price of gold.
There are times in history that one can argue my point, but overall the price of Dollar index should not be ignored and should be used as a tool to determine the future price of the yellow metal.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
NEW CASTLE, DELAWARE (Jan. 12, 2016) – The Commodity Exchange, Inc. (NYMEX or Exchange) and CME Group approved International Depository Services (IDS) of Delaware, a subsidiary of Dillon Gage Metals, to become an Approved Depository for gold, silver, platinum and palladium. The Exchange has approved IDS after a vigorous review process determined that the IDS facility met or exceeded the most stringent security and operational requirements expected by the Exchange. IDS becomes just the ninth precious metals depository in the world to achieve COMEX approval.
Continue reading →
The Shanghai stock exchange starts off the week down 5 percent as retail investors there continue to sell equities. China’s central bank intervened today trying to strengthen the yuan with hopes this will create some stability in the region. One trader told me that he expects the sell off to continue as the market is already down 15 percent in the first week of the year.
One would think as the Shanghai market continues to fall we would see a rotation into gold as a safe haven for the Chinese retail investor. “Not so fast” said a broker I spoke with this morning, as you look at the pricing landscape of other commodities still retreating. This morning we witness all base metals lower and who could ignore oil down to a 32 handle with no one standing up to support the oil market at this time.
After Friday’s strong employment numbers we see the dollar index slightly higher at the moment against the other major currencies.
Wall Street traders still smiling over Friday’s job numbers as they continue to maintain their bearish stance in the Gold and Silver market. Friday’s job number could help the Fed Governors keep their promise of multiple rate hikes in 2016. Higher interest rates would
make the dollar more attractive to yield seeking investors, but in turn will put pressure on gold and silver prices as most Wall Street traders are predicting.
Early Wednesday morning I will be traveling to see my friends in our Dallas office, so I will unable to give a live market commentary. So instead of asking for coverage, I created what think is an informative and educational piece explaining the workings of the “US Dollar Index.” I hope you will tune in.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Good morning from the Fun show in beautiful Tampa.
World equity markets take a breather today from the wild activity experienced earlier in the week. The Shanghai stock market today showed gains of almost 2 percent after the government lifted the circuit breaker rule and stepped in to stabilize the Yuan. I expect most believe this is only a Band-Aid approach to bring calm to the market. Ninety percent of the activity on the Shanghai exchange is retail investor activity. As the weekend approaches, the China retail investor is still very nervous knowing that the Government in the long run cannot control the direction of the market.
Gold down today after hitting a 9-week high yesterday. At the time of this report we see the dollar index higher and oil basically unchanged as the market awaits the job number at 8:30 eastern time.
Wall Street Gold traders feel a little better today, (not changing their bearish stance), but if world equity markets take another hit I expect a strong short covering rally to ensue. I believe if this happens it will be a confirmation to them that another Fed rate hike is not in the cards, no matter what these Fed presidents report on the business news channels.
Silver took her time to follow gold yesterday, but once she got started had a better day percentage wise than gold.
If you are looking for gold and silver this morning you find them hanging out on the street corner at 1100th and 14th Avenue. Stop by and say hello.
Have a wonderful weekend.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
The Gold market started the year on solid ground near the midpoint of its year-end trading range, but the question remains: “what will be the catalyst to push gold over the magical $1,100 dollar level and beyond?” Continue reading →
We start the year with higher gold and silver prices caused by geopolitical tensions in the Middle East. Also contributing to the higher price of Gold this morning is the decline in the world equity markets.
China setting the tone for the world equity markets this morning. A 7-percent drop in the Shanghai Stock market triggered circuit breakers that halted trading on the first trading day of 2016. The main contributing factor to the Shanghai decline this morning was the news that China’s manufacturing surveys show that factory activity slowed for the 10th straight month.
On the opening bell of the Dow this morning, we see the industrial average down over 300 points on concerns of China’s data, escalating Middle East tensions and higher oil prices.
In the middle east, Gold is finding safe haven status after Saudi Arabia broke off ties with Iran when protestors stormed its embassy in Tehran upon hearing the news of the execution of a popular Shiite Muslim cleric. The price of crude oil is higher today by 2 pct. because of the actions of the Saudis, the world’s largest exporter of oil.
Wall Street traders back from their long Christmas holiday indicate that they are forced to take on a defensive position covering their small short positions carried over from last year. After speaking to some traders this morning, it appears they expect 2016 to be the same as 2015. Many looking at a decline in the price of Gold and Silver around 15 percent, weaker than the 13 percent decline
in both metals in 2015. I’ll take the other side of that trade. I expect metals will be higher this year because of tensions building in the Middle East. I believe countries will be forced to pledge their allegiance to one side or the other, making it even more important that we have the proper commander in chief in the White house next year. If the world markets decline, I expect any increase in the Fed fund rate will be put on the back burner for a while giving me more confidence that a higher price of gold is in order for 2016.
With the news out this morning, some retail brokers expect clients to take some profits off the table and look for alternative investments in the new year. Some financial advisors indicate that clients will be looking at bonds or precious metals as alternate investments in 2016 if equities decline due to world economic pressures and escalating Middle East unrest.
Nonetheless, in the event that our markets go higher and the demand picks up in 2016, don’t look for the refiners or the mints to make more product available. Most are reporting status quo for 2016. I have not heard of any mint or refinery hiring more folks or buying more equipment in 2016.
Have a wonderful week and a healthy and prosperous 2016.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.
Market rallies $12.00 in a blink of an eye as everyone watches the December- February gold switch trade in a backwardation. Current Dec / Feb Gold switch trading a $ -.20 cents back after trading on the positive side earlier in the day. Backwardation in the gold market will give the shorts a real concern for their lives and as we witnessed a fast short covering rally bringing us to a daily high today $1,083.10 in the December contract. We will continue to watch the movement in the Dec / FEB Gold switch and report any unusual moves
that would indicate future moves in the market.
December Gold broke thru the well-supported $1,073 area yesterday, reaching a 5-year low. For those who are short the yellow metal, they all await the Wall Street trader’s next technical level of $1,050 to be tested.
On the other side of the ledger we all await the FOMC minutes to be released this afternoon to hear if they give any clues that would indicate that a rate hike in December is a done deal.
Silver finally catching the falling knife that Gold experienced of late, trading this morning down to $13.99 in the December contract, just above the next level of support at $ 13.95. Silver coin demand continues to moderately increase along with the premiums.
A lack of Chinese demand in the metals arena, along with the strong dollar, puts a lid on any Gold price appreciation for the short term.
For those who follow Copper, that base metal traded yesterday at a six and a half year low.
With the strength and momentum in the equities market, the average retail Precious Metal investor is nowhere to be found. One broker told me that it would be suicidal for him to recommend buying Gold over a good paying dividend stock. With the price of Gold continuing to fall, one broker told me, “the next time you hear from me probably will be by mail in a Christmas card.”
The only news that could turn this bullish sentiment away is an indication that a rate hike in December won’t happen. So in the absence of any unexpected news from the FED minutes today, we expect the trend to continue.
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.
We start the week with Far East buying in the overnight Gold market on the tragic news of the Paris attacks. Usually these news story rallies are short lived. Gold is still trade bound and I don’t expect anything different for the time being.
Silver also locked in a trading range with most financial advisors indicating that their precious metal inquiries have gone dry. Most retail investors indicate that before they put new buy orders in the Silver market, the price of Silver has to decline well below the $14 dollar level. United States Mint Silver Eagle allocation lower this week due to the Veteran’s Day holiday last week.
Premiums continue to be steady, some buying around but not enough to get any dealer excited.
Support levels unchanged from my comment last Wednesday. Unfortunately, the market is very quiet and
I struggle to find news that will excite anyone.
Have a wonderful week.
With over four weeks to the next FOMC meeting and no significant news to report, the markets just continue to be in a pause mode.
As I said in the past, I’m not a guy who relies on the charts, but I must give credit where credit is due to my technical pals who said $1,073 would be the first level of support in the gold market on the downside. Kudos to them! At $1,073 in December futures, we saw good bids, so the market bounced off that number and then settled back into its boring trading range.
For those who follow open interest figures, gold opening interest figures for the last 2 days are down 12,000 contracts indicating more longs getting out of the market. Continued Gold ETF redemption figures can’t be ignored as investors give up on any appreciation in the price of the yellow metal.
Coin premiums continue to be small even with most mints still on allocation. Dealers are lowering premiums just to keep clients happy and at the same time trying to keep their piece of the pie. Refiners reporting business as usual with no new orders on the horizon that would excite the management team. Producer’s contract negotiations for next year’s month by month production is in full swing, with no sign of easing premiums on their products due to the falling price of the metal.
Four weeks is a very long time in any market and anything can happen, so we always evaluate our position every day. But as your Gold reporter, I scour the markets every day for any bit of information that I believe would excite your clients, good or bad. It seems I’m just wearing out the soles of my shoes these days. So to reward myself every Friday I wear Sketchers to work. Black for those who are curious.
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.
Who has the key to unlock this market? We all realize that this market was oversold after the final down day after the job number, so is there any event or news that can unlock the trading range we are in? I’m having a tough time finding any. So unfortunately we just sit here until the next FOMC
meeting. A month away you say? I’m sorry to say there’s a possibility of no real news on the horizon.
Wall street traders continue to express a bearish attitude if that helps anyone.
For those who follow Platinum, spot Platinum fell to its lowest level in seven years.
There really not much else to write about, so for those who like the technical side of the market here’s some levels of support and resistance. Gold support is $1,073, then $1,050 with resistance at, no surprise, $1,100. Silver support is $13.95 then $13.70 with resistance at $14.74.
In a quiet market like this with lack of quality bids around the market tends to drift lower.
I tried to fill the page because I get paid by the character, but I guess I’ll have to go without lunch today.
Have a wonderful Wednesday and, a serious note, thanks to all of our veterans for their service to our country, keeping freedom alive.
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.
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.
A surprise job number was released at 8:30 this morning. October jobs came in at a healthy 271,000. Most economists and a panel on CNBC predicted the number would come in at 180,000. Immediately after the number was released we experienced selling pressure in precious metals.
The news moved gold from $1,106 to $1,085 and silver from $15.02 to $14.77. A good friend brought to my attention that gold was down the last 14 out of 16 days. And if I can be so bold to use his phrase: “The last time this happened was, NEVER.” A very interesting comment to say the least. As we reported last week the turning point in the gold market was when we reached the $1,190 area and could not follow thru to $1,200 as we witnessed in one day, half of the new longs that brought the gold market from $1,114 to $1,190 decided it was time to get out. Since then it’s been a bloodbath for anyone trying to establish a long position.
By the way, this job report number moved the chances of a rate hike into December from 48 percent chance it will happen to 74 percent.
The question I’m asking myself this morning is, when will this selloff end? One would think that such a sustained move to the downside, would eventually bring buyers into the market place thinking enough is enough. Well it’s tough to stand in front of a freight train with momentum, but at some point the train must stop to change the crew and unload some of its payload.
In the meantime, my best guess is that this market must settle down for a breather and if not, I have an idea. You old folks probably remember the Superman series with Clark Kent and Lois Lane, right in the beginning of the show you saw Superman stopping an out of control freight train? Well, with Halloween just ended, costumes are 80 present off. I think I’ll go buy a Superman costume and try to stop this market from falling any further.
But if I can’t, you are all on your own.
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.
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:
Palladium:
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.
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
| 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 |
| Coin | Sales in oz. /#coins | + from 9/16/15 |
|---|---|---|
| One oz. |
37,129,500 37,129,500 |
1,075,000 1,075,000 |
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:
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.
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
| 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 |
| Coin | Sales in oz. /#coins | + from 9/16/15 |
|---|---|---|
| One oz. |
36,054,500 36,054,500 |
1,000,000 1,000,000 |
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.
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
| 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 |
| Coin | Sales in oz. /#coins | + from 9/16/15 |
|---|---|---|
| One oz. |
35,054,500 35,054,500 |
750,000 750,000 |
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.
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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.
