• Tag Archives Commodities
  • Gold Price Jumps in Dollars as ‘Low-Rate Yellen’ Gets Trump’s Backing

    Gold price gains continued for Dollar investors on Thursday but held flat for other traders as the US currency touched its lowest Euro value since January 2015 following yesterday’s “no change” decision from the Federal Reserve.
    “The actual path of the federal funds rate will depend on the economic outlook as informed by incoming data,” said the Fed’s July statement, seemingly delaying a move to start reducingits $4.6 trillion holdings of QE-bought Treasury and mortgage-backed bonds.
    Asian stock markets rose – as did most commodities and major government bond prices – but European equities then slipped as the Dollar bounced from its new 30-month lows versus the 19-nation single currency.
    Gold priced in Dollars today set its highest London benchmarking since 14 June at $1262 per ounce.
    But priced in Euros, gold fixed at only a 3-session high. The UK gold price in Pounds per ounce reached only a 2-session high.
    Thursday morning’s Dollar price stood 2.0% above the 2017 average to date.

    This post was published at FinancialSense on 07/27/2017.

  • Barclays Exit Of Energy Business Triggers Surge In Oil Options Trades

    Several hours before the US stock market opened on Monday, the commodity world was shaken by an unexpected surge in crude options trades, with traders noting that “someone is either moving positions, blown up or getting out of commodities. MASSIVE amount of blocks going through in crude options.”
    Someone is either moving positions, blown up or getting out of commodities. MASSIVE amount of blocks going through in #crude #options.#OOTT
    — Mark Scullion (@mscullion) July 24, 2017

    A Bloomberg alert shortly after confirmed the huge size of trades crossing the tape, when nearly $100 million in oil options traded simultaneously:
    WTI crude oil options traded the equivalent of 48m bbl of contracts via block, according to data compiled by Bloomberg. Total value of all options combined is ~$99m Options include contracts from September 2017 through December 2020 5 largest blocks were: 4.4k Dec. $90 calls, 2.8k Dec. $60 calls, 2.5k Dec. $125 calls, 1.7k Dec. $95 calls, 1.4k Dec. $46 calls

    This post was published at Zero Hedge on Jul 24, 2017.

  • Canadian Trading Trends: What Makes Markets Tick

    Everybody wants to make a buck on the markets. The problem for so many of us is that the financial markets can be confusing and intimidating at times. The S&P/TSX is the premier stock exchange for Canadians. It lists a large selection public companies and the market capitalization was reported at $2.2841 trillion as at 30 March 2017.
    There are multiple indices on the Toronto Stock Exchange (TSX) including the S&P/TSX Completion Index, the S&P/TSX 60 and the S&P/TSX Composite Index. Recently, the Toronto Stock Exchange hit an 8-month low. This presents many challenges to Canadian investors are looking to profit off the appreciation of stocks.
    Why are Markets Bearish in Canada? It’s important to understand that the Canadian economy is driven largely by commodities, notably crude oil. On Friday, 7 July 2017, the TSX plunged to a near 8-month low at 15,027.16. This was driven by multiple factors including weakness in oil prices and a desire for an interest rate hike by the Bank of Canada. Investors don’t miss an opportunity to make a buck on the markets. Since then however, the TSX has rallied. By Monday 17 July, 2017 the TSX was trading at 15,175.76 and is on a gradual uptrend. This is also being fuelled by rising oil prices, spurred by strong demand from China.

    This post was published at ZenTrader on July 24, 2017.

  • Gold and Silver Shine in the Midst of Commodity Slump

    Banks active in commodities have been hammered so far in 2017.
    According to reporting in the Financial Times, income from commodity trading and related activities at Goldman Sachs, Citigroup, JPMorgan and nine other investment banks dropped 40% in Q1 2017, and the struggles have continued into the second quarter.
    Weakness in the energy sector generally, and the price of oil in particular, drug down commodity trading. Gold and silver were the bright spot – an exception to the general commodity trend.
    Revenues shrank as banks became more wary of doing business with cash-strapped oil companies after the price of crude dropped below $30 a barrel. At the same time, there was little or no incentive for producers to hedge output at loss-making prices.’
    Goldman Sachs was the hardest hit. Its problems extended into the second quarter with another 40% plunge in fixed income, currencies, and commodities revenues. According to CNBC, the bank recorded its worst commodities quarter ever. Goldman CFO Martin Chavez called it a ‘challenging environment on multiple fronts.’

    This post was published at Schiffgold on JULY 20, 2017.

  • Gold Prices Rise 3rd Day as US Debt Ceiling ‘Blocks Fed Rate Hikes’, Dollar Falls

    Gold prices rose sharply for the third session running in London on Tuesday, gaining as world stock markets fell, commodities rose, and interest rates on major government bonds retreated to new lows for July.
    Silver stalled at $16.14, unchanged from Monday’s jump, while platinum gave back $10 per ounce from yesterday’s spike to 1-month highs at $934.50 per ounce.
    Peaking above $1238, gold priced in US Dollars recovered almost the last of this month’s earlier 3% loss, driven by “technical follow-up buying” after breaking above the “important” 200-day moving average according to a commodities note from German bank Commerzbank.
    “The weak US Dollar is also playing its part – it has depreciated to a 14-month low against the Euro.”
    Looking at US interest rates, “[Last week’s] unexpectedly dovish tone from Fed Chair [Janet Yellen] and weaker than expected CPI [inflation] data raised questions on the Fed’s ability to stay its course,” says a note from Canadian brokerage T. D. Securities.

    This post was published at FinancialSense on 07/18/2017.

  • Global Asset Allocation Update: Not Yet

    There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolio this month.
    Growth and inflation expectations rose somewhat since last month’s update. The change is minor though and within the range of what we’ve seen in recent months. The most significant change from last month is the continued drop in the US Dollar as growth expectations for the rest of the world continue to outpace US expectations. The dollar has lost considerable luster since the beginning of this year when everyone thought it had nowhere to go but up. Absent some kind of legislative win from the Trump administration, I see no reason to think the trend is about to reverse although sentiment is getting a mite negative on the greenback.
    The weak dollar is mostly having the impact on markets one would expect. International stock markets are outperforming which is nice since our portfolio is positioned to benefit from just such a trend. Gold and other commodities haven’t responded as positively but gold is at least up over the last six months. Commodities more generally are down on the year, mostly a reflection of the drop in crude prices. If the dollar keeps falling I would expect commodity performance to improve. Real estate, another real asset sensitive to dollar movements, is performing well both domestically and internationally.

    This post was published at Wall Street Examiner on July 17, 2017.

  • John Hathaway ::: Tocqueville Gold Strategy Second Quarter 2017 Investor Letter: Caught In a Lie

    Because the gold-mining industry has struggled to maintain reserve life (which stands at a 17-year low), we anticipate a wave of acquisition and consolidation activity over the next three to five years from which many of our holdings will benefit. Should the gold price provide a tailwind, we expect returns from our investments to be quite rewarding.
    The macro and market events that we anticipate will almost surely drive large capital flows into the relatively tiny gold sector. Gold, held in proper form is the most liquid asset in the universe devoid of financial-market counterparty risk. No other non-financial asset – including real estate, fine art, or commodities – measures up as a potentially effective or accessible hedge against a market meltdown.
    Gold, as we have noted in a previous letter, has been the top-performing asset class since 2000, the dawn of radical monetary experimentation. We believe that a hard look at the facts suggests that a return to the normality of the past is unattainable, and that the captains of economic policy are living in a dream world. In light of these considerations, investor disinterest in gold and the implied expression of trust in the sustainability of current economic arrangements bewilders us, especially when even small exposure to the metal would be the financial-asset analog of fire insurance on one’s home. We therefore recommend taking advantage of periodic pullbacks in the precious-metals sector to initiate or expand positions.

    This post was published at Sharps Pixley

  • Faced With Rampant Inflation, Argentines Turn to Barter

    Instead of selling his soybeans for devalued pesos, Gustavo Tione exchanged 30 tons of soy for about 8,000 liters of diesel from the state-run oil company. This is just one example of a growing barter economy in Argentina as a 24% inflation rate rapidly erodes the value of the country’s currency.
    As Bloomberg reports, the rise of barter is simple economics. Commodities hold their value better than than cash.
    So, why bother with fiat currency if you don’t have to?
    Barter is the most basic economic transaction. You give me something I want or need. In exchange, I give you something you want or need.
    YPF, the Argentine energy company, uses barter to bypass the peso. The company barters with farmers, trading fuel for wheat, soy, and corn, and then sells it on the dollar-based export market for grain. Of course, this scheme will fall apart if the dollar crashes. Nevertheless, it illustrates the power of barter.

    This post was published at Schiffgold on JULY 12, 2017.

  • “Quant Quake”: What Was Behind Last Week’s Historic CTA Crash, And Is Another One Imminent

    While on the surface the market last week did nothing all that exciting, below it things were in abrupt turmoil – driven by the decoupling between stocks and bonds and the volatile, countertrend move in commodities and oil in particular – which was nowhere more evident than in the world of Risk-Parity funds and CTA, which suffered their worst two-week plunge since 2003.
    A subsequent report from Bloomberg revealed that the damage among trend-following CTA was especially severe, “by some measures, commodity trading advisers are on track to post the worst yearly return since 1987, when data were first collected on the group.” It also prompted the WSJ to write “Oil Up? Oil Down? Blame the Algorithms.”
    But what really happened last week, and will it happen again?
    For the answer we go to one of the foremost vol experts on Wall Street, the team of Chintan Kotecha, Ben Bowler et al at Bank of America, who today described what took place last week ‘Quant quake’, and who continues a long trend of pointing out just how “weird” and fragile the market is (no really, in late May he wrote “While not obvious on the surface, these Markets Are Very Weird“) by noting that markets continue to set long-term records for price instability or ‘fragility’, with a five standard deviation (5-sigma) sell-off in the S&P 500 on 17-May, a 3-sigma drop in the Nasdaq 100 on 9-Jun, and most recently a sharp rise in the bank’s cross-asset Fragility Indicator.

    This post was published at Zero Hedge on Jul 11, 2017.

  • Wonderful Monetary Policy and Beautiful Deleveragings — Doug Noland

    While traditional analysis would look first to U.S. economic fundamentals (including household and corporate debt, earnings, employment and inflation) for indications of underlying market vulnerability, I would point instead to Global Market Bubble Dynamics – while reminding readers that the current backdrop is distinct to previous Bubble experiences. As such, market indicators this week at the periphery – EM as well as European – were flashing heightened susceptibility to de-risking/de-leveraging and the potential for liquidity challenges. Considering the enormity of recent flows, perhaps EM will provide an early test for the thesis of Market Structural Vulnerabilities.
    Here at home, 10-year Treasury yields rose eight bps to 2.39%. In equities, there was more of this choppy topping action rotation away from tech/high-flyers and into financials/laggards. Corporate debt markets are beginning to feel the strain of rising global yields. High-yield bond funds saw another $1.1bn of outflows, though investment-grade corporates are still attracting large inflows. The high-yield ETF (HYG) traded near a two-month low. Commodities, as well, seemed to support the thesis of fledgling ‘Risk Off’ and waning liquidity. With crude down almost 4%, the GSCI Commodities Index dropped 1.8%. Copper fell 2.4% and gold lost 2.3%. But it was wild trading in silver (down 7.2%) that might have provided a harbinger of more general market liquidity issues to come.
    That Treasuries, equities, corporate Credit and commodities all seem to be indicating a (thus far subtle) shift in market liquidity, we can look to ‘risk parity’ – and similar multi-asset class strategies that incorporate leverage – as a possible weak link in a Vulnerable Global Market Structure. And we’re supposed to savor this moment and pay a debt of gratitude to courageous central bankers? Strange world.

    This post was published at Credit Bubble Bulletin

  • Guest Post: “Pirates, Arbitrage and The Silver Flash Crash”, by Viking Analytics

    Our friends and subscribers at Viking Analytics have written an interesting article regarding last week’s sudden, 10% drop in the price of Comex Digital Silver.
    Most everyone here at TFMR saw or heard about the “flash crash” in Comex Silver that occurred at 7:06 EDT last Thursday evening. With theories abounding as to how and why it happened, we thought we’d post this commentary for discussion.
    “Pirates, Arbitrage and The Silver Flash Crash”
    by, Viking Analytics
    One of the quotes that guides my investment and trading philosophy is attributed to Benjamin Graham:
    In the short run, the market is a voting machine. In the long run, it is a weighing machine.
    – Benjamin Graham
    I usually think about this quote with the second sentence in mind. ‘In the long run, the market is a weighing machine.’ As such, I look for occasions when commodities and stocks have diverged from fundamental or benchmark values. After a 25-year career in energy and commodities, I look for ways to profit from those fundamental divergences. But, that is a topic for another article.
    In this article, I want to focus on the first sentence: ‘in the short run, the market is a voting machine.’ I believe that this sentence provides some insight into the recent “flash crashes” that we have seen in tech stocks, gold and most recently, silver.
    Here is the one of the problems with the ‘voting machine’ market in the short-run: there are entities who have the ability to stuff the ballot box and profit from nano-second moves in the markets. Perhaps especially during times of limited liquidity, the market “voting machine” can easily become an “arbitrage machine.”

    This post was published at TF Metals Report on Sunday, July 9, 2017.

  • Gold Awaits Fundamental Shift

    Last week we wrote that Gold’s poor performance in real terms could reflect its worsening fundamentals. Real interest rates are rising because the rate of inflation has peaked and bond yields are rebounding. It is a double whammy for precious metals. This is not permanent but something that could last a few quarters. Gold needs inflation to accelerate or bond yields to drop significantly. One historical analog argues that with respect to the Federal Reserve, a change in policy could be part of the fundamental shift needed to drive Gold into a bull market.
    The best analog for current Fed policy and market performance could be the 1999 to 2000 rate hike cycle. In the summer of 1999 the Federal Reserve hiked rates for the first time in more than two years. It wasn’t the nine year drought between 2006 to 2015 but the hike was well telegraphed and it came amid a nasty bear market in Gold and hard assets. Gold, gold stocks and commodities rallied after that first hike but were unable to sustain it as the Fed would hike five more times. The stock market though continued much higher as Gold and gold stocks turned lower.

    This post was published at GoldSeek on Sunday, 9 July 2017.

  • Is This a Contrarian Buy Signal for the Commodities Bust?

    Here’s how commodities fared in the first half. Some people might consider this development a flaming contrarian buy signal for commodities:
    ‘Goldman Sachs Group Inc., the dominant commodities trader on Wall Street, is reviewing the direction of the business after a slump in the first half of the year,’ Bloomberg reported, citing ‘people with knowledge of the matter.’
    Will Goldman exit commodities trading?
    In 2009, Goldman’s commodities trading revenues reached $3.4 billion. By 2016, it was down to $1.1 billion, ‘according to one of the people’ cited by Bloomberg. In April, Goldman blamed its lousy first-quarter results in part on ‘significantly lower’ net revenue from commodities trading. It pointed out at the time that client volumes suffered as crude oil volatility averaged the lowest level in over than two years.

    This post was published at Wolf Street on Jul 9, 2017.

  • Market Talk- July 7th, 2017

    Following on from the weak US session, Asia tended to drift in sympathy. Ahead of the US NFP’s it was always going to be light volume but with G20 also just stated numbers were even lighter. The Shanghai has managed a positive close (+0.17%), but not so for the Hang Seng which closed down -0.5%. After trading hours China released Foreign Reserves which were mildly better than expected at $3.057 trillion for June a rise of just $3bn. In Japan the BOJ was rumoured to be in action supporting 5 – 10yr JGB’s as we have seen bond markets fall globally this week. This programme failed to support todays Nikkei action which closed down -0.3% and also watched as the JPY traded close to 114 through US Dollar strength. This move was accelerated after the NFP report but we’ll discuss that further down. Australia is feeling the pinch as commodities, geopolitics and slowing trade unnerves trade flow which impacts confidence. The ASX closed almost 1% lower and saw the A$ trade back in the 0.75 handle.

    This post was published at Armstrong Economics on Jul 7, 2017.

  • Gold Stocks’ Summer Bottom

    The gold miners’ stocks have drifted lower over the past month, slumping back to major support. This weakness has naturally intensified the bearish psychology engulfing this small contrarian sector, traders want nothing to do with it. Yet summers typically see gold and its miners’ stocks meander sideways to lower. These summer doldrums spawn the best seasonal buying opportunities of the year in gold stocks.
    Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
    Gold exhibits high seasonality, which seems counterintuitive. Unlike grown commodities, the mined supply of gold is fairly constant year-round. But supply is only half of the fundamental supply-demand equation that drives pricing. Gold’s investment demand happens to be highly seasonal, and that’s what sets gold prices at the margin. Investors favor gold buying far more during some parts of the year than others.

    This post was published at ZEAL LLC on July 7, 2017.

  • SWOT Analysis: Gold Has Outperformed the Stock Market Since 2000

    The best performing precious metal for the week was silver, with a fall of just 0.51 percent with platinum just behind that. Following wild price swings on heavy volume Monday and Tuesday in a suspected erroneous trade, gold traders and analysts remained bullish for a second week, reports Bloomberg. On Monday, 1.8 million ounces of the yellow metal were sold in a single minute and on Tuesday prices spiked in early European trading with about 815,000 ounces of gold bought in five minutes – a suspected reverse on the Monday fat finger trade. The euro has climbed to a 13-month high on speculation that Mario Draghi’s ECB is poised to reduce unprecedented monetary stimulus, writes Bloomberg News. This has allowed Europeans to pay the least this year to buy gold, the article continues, while comments from Fed Chair Janet Yellen this week did little to support the U. S. currency. HKEK and the Chinese Gold & Silver Exchange Society signed MoU on Thursday to consider cooperation on matters such as product promotion and storage vaults, according to a statement on the Hong Kong Exchanges & Clearing website. MoU signifies strategic partnership that aims to build a major gold and commodities trading center in Asia Pacific, said CGSE President Haywood Cheung in a statement, reports Bloomberg.

    This post was published at GoldSeek on 3 July 2017.

  • Bi-Weekly Economic Review: Draghi Moves Markets

    In my last update two weeks ago I commented on the continued weakness in the economic data. The economic surprises were overwhelmingly negative and our market based indicators confirmed that weakness. This week the surprises are not in the economic data but in the indicators. And surprising as well is the source of the outbreak of optimism in the bond market and the yield curve.
    We’re growing at 2% or so and it is apparently going to take something big to move us off that number. Investors thought for a while that the new Trump administration would supply that something big in the form of tax cuts, regulatory reform and healthcare reform. All that has faded as the reality of governing in a deeply divided country bites into expectations for rapid change.
    The Trump agenda was marked to market over the last few months and came up a bit shy. Bond yields fell, the yield curve flattened, gold rose and economically sensitive commodities fell. The dollar also fell as economic growth expectations equalized between the US and the rest of the world. And it appears more and more that the equalization is equal parts worse in the US and better everywhere else. The global economy is not supposed to be a zero sum game but it sure has looked that way in recent years.

    This post was published at Wall Street Examiner on July 2, 2017.

  • Gold is Weak in Real Terms

    Intermarket analysis is a rather new field in technical analysis but one of my favorites because it is critical in understanding Gold. Asset classes like stocks and bonds are enormous and aren’t as influenced by as many factors as Gold. Trends in stocks, interest rates, commodities and currencies impact Gold in one way or another. We have written many articles over the years analyzing Gold with respect to its outlook and standing in real terms. Gold, when in a true bull market outperforms against all currencies and the global equity market. Unfortunately that is not the case at present. In real terms, Gold is weak, getting weaker and it could be a reflection of the metal’s worsening fundamentals.
    In the first chart we plot Gold along with Gold against foreign currencies (FC) and Gold against stocks (inverse). While Gold (in nominal terms) has yet to break its 2017 uptrend, Gold/FC has and the Gold/Stocks ratio remains on the cusp of a major breakdown. Gold/FC has broken down from a mini head and shoulders top, lost its 200-day moving average and closed at a 6-month low. Meanwhile, the Stocks/Gold ratio is on the cusp of a breakout to a 2-year high. In short, Gold against both currencies and equities is weak and likely to get weaker.

    This post was published at GoldSeek on 3 July 2017.

  • Gold Bounces vs ‘Reflation’ Euro as FANG Tech Stocks Get 2.5% of Global Fund Allocations

    Gold funds ticked higher Wednesday morning as world equity indices slipped for the second day – led by pre-market trading in US tech stocks such as Google – and the Euro retreated from 1-year highs versus the Dollar hit after Euro central-bank chief Draghi said the currency union may be enjoying economic “reflation”.
    Currently holding deposit rates for commercial banks at minus 0.4% per year and buying 60 billion of Euro government debt each month until at least December, the ECB “will announce a tapering [of stimulus measures] in September, to begin in January,” reckons J. P. Morgan’s global strategist Mike Bell.
    “Financial markets are usually most responsive to any early signs of monetary policy shifts,” says a note from bullion and investment bank ICBC Standard.
    “By the time the actual rate changes occur, the currency has already experienced much of the benefit.”
    The Euro, however, sank almost 1 cent today from Tuesday’s new top above $1.34 after Italy reported slower inflation in May, missing analyst forecasts.
    Silver tracked commodities higher, touching a near 2-week high at $16.86 per ounce while gold priced in Dollars rallied to touch $1254 per ounce – almost unchanged for the week after Monday’s 1.5% plunge.

    This post was published at FinancialSense on 06/28/2017.

  • “Markets Have A Mind Of Their Own” But One Trader Warns “Nothing Lasts Forever”

    Despite new record highs in stocks, Bloomberg’s former FX trader Richard Breslow fears other markets (the dollar’s downfall, collapsing rates/curves, crashing commodities) have become too “fatalistic” amid the summer doldrums.
    Let’s start with some of the things we know with certainty. Yield curves will keep on flattening. Probably invert and drive home the point to everyone that the Fed committed a dreadful policy mistake. The dollar will never rally again. Just look at the numbers and you have to be a U. S. bear. And look how efficiently the latest European bank bailouts were handled this weekend. They really have their act together. Oil? It’s going to single digits, of course. And there’s nothing you can do to stop it or the carnage it will cause in places like Norway and Canada.
    It’s summer, markets have a mind of their own and there’s no percentage in fighting the tape.
    In fact it’s odd how fatalistic people seem to be. We used to furiously debate where and when we’d find the canary in the coal mine warning of an imminent market reversal to pounce on. Now, there seems to be blanket resignation that the trend is your master.

    This post was published at Zero Hedge on Jun 26, 2017.