By: Adam Hamilton, CPA, Zeal Research - 25 October, 2019
Speculators’ collective gold-futures bets can stay extreme for some time, but sooner or later a catalyst hits forcing them to start normalizing. The radical leverage inherent in that market makes selloffs self-feeding. Gold, silver, and the stocks of their miners are going to remain precarious with serious downside risks until that necessary gold-futures selling comes to pass. Jumping the gun on buying will be punished.
Keeping an open mind when it comes to trading the markets is paramount. If one gets locked into one scenario and refuses to acknowledge any other possibility you will eventually find yourself on the wrong side of the trade. Even though I have a ton of bullish charts for the PM complex I also have just as many charts which show possible negative price action. Full Story
This market has been difficult for both the longs and the shorts for months now. While it has been unwilling to break down, it has also been equally unwilling to break out.
What makes me scratch my head even more of late is that the Fed has come to the table with its “not-really-QE-4” of $60 billion a month. For those that remember, QE1 was approximately $100 billion a month on average, QE2 was $75 billion, and QE3 was $85 billion. But, to see the Fed coming forth with this type of liquidity injection when the market is hovering just below its all-time highs is a bit surprising. Yet, the market is still unable to break out. Full Story
By: Steve St. Angelo, SRSrocco Report - 24 October, 2019
Three of the largest silver producers in the world saw their combined mine supply continue to weaken in the first seven months of 2019. While Mexico and Chile experienced declines in their silver production, Peru was by far the biggest loser. Peru, which is the second-largest silver producer in the world, suffered an 11% decline in the country’s domestic mine supply Jan-Jul 2019. Full Story
Gold is not rising on higher chances that a US-China trade deal will be done next week. Federal Reserve is expected to cut interest rates next week. Brexit will also be on focus. Rest there are no new factors. A US-China trade deal can result in a short term correction in gold and silver. However I will prefer to use sharp dips to invest in gold and silver. Full Story
Gold, which “just sits there” retaining value over time, looks even more compelling if the alternative is holding cash which is guaranteed to depreciate. It looks downright irresistible compared to something like government bonds redeemable in the fiat currency of some insolvent government.
Nations such as Austria, Argentina, and Mexico have begun issuing “ultra-long” 100-year bonds. Officials at the U.S. Treasury Department are thinking about it. We doubt investors buying these instruments have any intention of sitting on them for the next hundred years.
They would have to be crazy. The only asset worth wagering on over that time scale is gold. Full Story
So, if they go at it pumping money again with QE4, they could keep the stockmarket elevated provided that they are able to firefight any liquidity issues arising from the increasingly extreme instability. If not and things get out of control, markets will crash anyway. Action late last week suggests that, for a while at least, we are going back to risk on mode, which could see the stockmarket make new highs and safe haven assets, which both the dollar and gold are now, drop back, and we see that both the dollar and gold dropped back late last week. Gold’s chart has been weakening with a potential intermediate top forming and its latest COTs are by normal standards bearish, with the Commercials now holdings heavy short positions, which usually means trouble. Any significant reaction from here will be viewed as presenting a great opportunity to build positions across the sector, because QE4 will eventually cut the legs from under the dollar, leading to hyperinflation.
Bloomberg’s Lisa Lee reports that leveraged loan investors are “getting increasingly angsty, and their fear may be a harbinger of more pain coming in credit markets.” Leveraged loans are performing worse than junk bonds, which is surprising since they have been considered a lower-risk way to invest in junk-rated companies. Lee adds that “the loans have grown into a $1.2 trillion market” and that “safeguards and protections for investors have weakened.” While most economists rightly argue you can’t have a recession without a credit blow up, the green brown shoots are beginning to show their color. Full Story
There is still a chance of Brexit by 31st October. This is the reason why cable has not crashed and gold has not zoomed. US-China trade talks will be closely watched as the month progresses. Crude oil and industrial metals will be very volatile. Full Story
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