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Inside The Crucible (Precious Metals Updates)

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  • Inside The Crucible (Precious Metals Updates)

    Hi all,

    I have access to some regular commentary and insights for precious metals. If there is interest, I can keep this thread up to date with these.

    Disclaimer: I may need to refer questions on to the author/s of the aforementioned resources.

    Kieran
    Last edited by kmor110; 12-03-2015, 12:25 PM. Reason: proof-reading

  • #2
    Inside the Crucible by Adam Van Sambeek, Wednesday 11th March 2015.

    Last Friday's better than expected US jobs data was the catalyst to finally push gold out of its narrow trading range. Gold prices broke lower, triggering sell stops below $1180 support, as the upbeat data increased the likelihood the Federal Reserve will raise interest rates in the near term. Given that US rate rises and a strong dollar have been on the agenda a long time, I’m surprised by the extent of gold's reaction, especially as the downward spirals in many currencies could well create risks of their own.

    Some market observers looked to China to push gold prices back towards the key psychological level of $1,200, demand has so far been unimpressive, raising concerns that prices have further to fall. I’m imagining that this recent sharp drop in Gold is more technically driven rather than outright negative fundamentals. Although I too wouldn’t rush into Gold here as the charts look damaged, with a possibility we still test $1130. Call me a contrarian, but now seems the ideal time to obtain some low cost exposure to the upside. June Gold Call Options are my preferred method. Limit risk (premium) with unlimited upside potential.

    Not all is rosy out there, the US equities have tumbled in the last few days, while the market seems to have ignored news that the ECB has just rolled out a 60-billion euro-per month quantitative easing programme in a bid to prop up its ailing economy. Remember, a lot still depends on the Federal Reserve actually moving interest rates. A major fall in the share market may cause the Fed to hold off, while USD strength could keep inflation so low that the Fed waits even longer before they raise rates.

    http://morrisandwatson.com/blog/gold...a-good-option/

    Last edited by kmor110; 12-03-2015, 03:38 PM. Reason: formatting

    Comment


    • #3
      OMF Metals report by Kevin Morgan, Wednesday 11th March 2015.

      Summary and link to full report below:

      *Gold Hits Three Month Low *Silver Slumps, Eyes Major Support *Chinese Copper Imports Lowest Since 2011 *US Now on Daylight Savings Time

      Full Report: http://morrisandwatson.com/blog/omf-...port-11_03_15/
      Last edited by kmor110; 12-03-2015, 04:05 PM. Reason: formatting

      Comment


      • #4
        Inside the Crucible by Adam Van Sambeek Thursday 19th March.

        Apologies for the delay in our weekly report, but with so much riding on the Federal Reserve’s Federal Open Market Committee (FOMC) report released this morning, it’s more beneficial to analyse its impact.

        Earlier this month a better than expected US jobs report fuelled speculation that the Fed would reveal a more hawkish stance in this morning’s announcement. In reality many were wrong footed by a subdued assessment of the US economy, leaving the market to rethink the timing of any increase in US interest rates. The FOMC noted that “economic growth has moderated somewhat” over the past month, which is a significant downgrade from the last statement wherein it said that activity rose “at a solid pace”. They also indicated that when interest rates do rise, they will likely rise at a slower rate than previously expected. Compared to expectations, this is a strongly dovish statement, resulting in a scrabble to cover and adjust positions.

        The most significant impact from the report was the sudden correction to the USD. The USD index (a basket of currencies against the US dollar) plummeting 5%, before settling 2.2% lower. Precious metals and commodities all benefiting, with Gold climbing back above US$1150 support to close near US$1170 (+1.6%), while Silver gained 2% to settle just shy of US$16 per ounce.

        Looking ahead, Gold still has plenty of headwinds, so I’m not getting overly excited unless we break and hold US$1180 resistance. As per last weeks suggestion, I do own Gold Call options, allowing me to benefit from any sustained Gold rally. With Platinum at US$1116, this is undervalued considering fundamentals, so I’m suggesting to hold and buy more with a view that we see a repositioning in the market which will carry Platinum to 1175-1180 resistance levels. (more on this next week)

        Link: http://morrisandwatson.com/blog/fomc...sd-correction/

        Comment


        • #5
          When Tuesday blues strike remember that every cloud has a silver lining. Read the latest report by Kevin Morgan to find out OMF's recommendations.


          *Gold and Silver rebound on Federal Reserve *Try sell Gold at USD 1190 with a $15 stop OCO take profit at USD 1170 *Try sell silver at USD 17.05 stop at USD 17.50 take profit at SD 16.20


          LINK: http://morrisandwatson.com/blog/omf-...deral-reserve/

          Comment


          • #6
            Gold backed up last week’s price gains, climbing back above our previously mentioned US$1180 resistance, reaching a 3 week high of 1195.30 overnight. Prices are on course to post their longest winning streak since January last year, with investors backing bullion over the past few days because of a slump in the dollar after the Federal Reserve's cautious stance on the US economy and diminishing likelihood of an early rate increase. The dollar remains the main driving factor of gold price and traders will be looking very closely towards (Fed officials') comments to gauge when and how rapid the rate hike will be.

            As manufacturers we've observed that, while bullion sales may have waned, weak prices have spurred an increased in demand of precious metal for manufacturing into jewellery, semi-finished and/or final products. This anecdotal observation has been supported by a recent report from New York-based CPM Group, forecasting an increase of over 4% in 2015 of fabricated Gold products. Marking the second straight annual rise, and feeding my optimism of higher Gold and Silver prices. Demand is still out there, just that we’re observing it in a different form.

            In last week’s report I pointed out an opportunity in Platinum, “at US$1116, this is undervalued considering fundamentals” and suggested that buying with “a view that we see a repositioning in the market which will carry Platinum to US$1175-1180 resistance levels.” Today’s platinum price now resides around US$1150, so we’re witnessing this correction unfold. If Gold continues its test of US$1200, then we should see our Platinum target met.

            By Adam Van Sambeek

            LINK: http://morrisandwatson.com/blog/why-...um-up-with-it/

            Comment


            • #7
              It shouldn't have come as any surprise that following last week’s meteoric rise in Gold, involving the longest winning streak in over a year, we would witness some sort of correction. The pullback in gold picked up steam after Federal Reserve chairwoman Janet Yellen said late on Friday that an increase in the benchmark federal funds rate "may well be warranted later this year" given a sustained improvement in US economic conditions. This was enough to see Gold prices retreat back to $1180 support, having stumbled around the $1200 psychological resistance. Many may argue that last week’s rally is in fact the correction to a market in a strong downward trend. That may be the case, but more weight should be placed on Gold’s recent resilience and how convincing $1150 support has become.

              As stated many times before, USD is the main driving force for commodities, and in particular the increasingly public debate on when the Fed will raise interest rates. This has become highly speculative, with traders forecasting the Fed’s next move anytime data is released. Last night’s data was no exception, a weaker-than-expected ADP employment report followed by disappointing ISM Manufacturing data saw traders selling USD, with subsequent gains for commodities. This heightens volatility in an already uncertain market, making trading decisions increasingly difficult. Don’t expect any respite as we head into Easter, Employment and Non-Farm Payrolls are due tomorrow night, and in a holiday thinned market, expect volatility. (Non-Farm Payrolls are expected to show an increase of 245k with the Unemployment Rate holding at 5.5%. )

              I particularly like Bullion priced in NZD. Last night’s disappointing Global Dairy Trade auction saw the index fall 10%, while New Zealand Whole Milk Powder falls 13.3%. All this should put NZD under pressure, which is long overdue for exporters into Australia who've been suffering a near parity exchange rate of late. Happy Easter everyone.

              By Adam Van Sambeek

              LINK: http://morrisandwatson.com/blog/gold...driven-by-usd/

              Comment


              • #8
                Gold consolidates just below the $1,200 per ounce with no fresh news or direction for traders to latch on to. Renewed dollar strength follows unclear FOMC minutes, which could’ve been interpreted anyway to suit your own view on the FED’s ultimate intentions. This is capping any sustained Gold rally. Gold failed to hold key 1205 support, after briefly climbing to 1224 just before Easter, returning to its high volume comfort zone of around 1200. Traditionally, precious metals now enter the seasonally-low period where physical demand historically declines. However, the yellow metal is showing resilience, with higher lows and higher highs, with the next few trading sessions crucial for bulls that we maintain above the 1190 level. Last night did see this level break, only to claw back losses, closing at $1193, after weaker than expected US retail sales and slump in small business confidence.

                Interestingly, the Commodity Futures Trading Commission (CFTC) reported that the Comex speculative traders increased their net-long positions in gold to 100,757 contracts, which marks a five week high, up from 80,019 a week earlier. A sustained build in price and an adjustment in current bearish sentiment, could rise the likelihood for further long accumulation and short-covering in the coming weeks. However this still poses risks, as this data proves the market remains highly speculative, and therefore vulnerable to price swings. Good news is we’ve already seen Crude oil prices recover 15% over the past month, leading a small commodity revival, as investors seek value in beaten up sectors. Will Gold and Silver follow suit?

                By Adam Van Sambeek, Treasury Manager.

                LINK: http://morrisandwatson.com/blog/will...ude-oils-suit/

                Comment


                • #9
                  Worth a watch from the 11min mark https://www.youtube.com/watch?v=O5CXTT_EYjA

                  very bullish out esp Silver

                  Disc-Holding 700oz Silver bullion, ASX Gold/Silver producers

                  Comment


                  • #10
                    Originally posted by JBM View Post
                    Worth a watch from the 11min mark https://www.youtube.com/watch?v=O5CXTT_EYjA

                    very bullish out esp Silver

                    Disc-Holding 700oz Silver bullion, ASX Gold/Silver producers
                    Hey JBM, it's an interesting point of view. What is stopping Japan from re-valuing gold? Or any other country for that matter?

                    Comment


                    • #11
                      LINK: http://morrisandwatson.com/blog/be-c...-you-wish-for/

                      Be Careful What You Wish For…

                      Posted on April 29, 2015 by Kieran Morris

                      After weeks of low volatility range trading, precious metals finally broke trend, with sharp losses seen last Friday, with Gold settling below the key support of $1180. Fridays have been particularly bearish sessions as investors concerned with holding long positions over the weekend opt to close positions out. Rumours that Greece was closer to a bailout deal after Thursdays summit of Eurozone ministers fuelled those concerns. However, the Greek debt situation still appears far from over, especially after Greek Prime Minister demoted lead negotiator and Finance Minister following months of ineffectiveness in resolving the countries debt obligations. This saw the yellow metal regain lost ground to close nearly $30 higher on Monday. In fact we’ve witnessed a complete turn-around in the fortunes of precious metals. On the one week performance, Silver led the surge higher jumping 6.1% higher, while both Platinum and Gold climbed 3% from this time last week.

                      Meanwhile, the US dollar index has been dragged lower, after disappointing U.S data (weaker Consumer confidence) and dampened expectations that the Fed will hint at this week’s FOMC of an imminent rate hike. This is the latest in a series of lacklustre data from the states, with yesterdays the US flash services PMI also missing consensus. A weaker USD is positive for commodities like gold which are priced in USD as it makes them cheaper for non-dollar users. Unfortunately the weakness in USD has also pushed commodity currencies such as the NZD higher. So in NZD terms, Gold is still hovering around the $1600 NZD per oz. level. Undervalued on medium term charts.

                      Looking ahead, the next 24 hours should be very eventful. Tonight we get an update on US 1st quarter GDP with estimates as low as just 0.1% annualised. Followed by tomorrow morning’s Federal Open Market Committee meeting. Then closer to home, we get the latest thinking from our own Reserve Bank. Expectations are that they will try and talk the NZ currency down given how low inflation is currently running. Personally I’m looking for higher levels in the NZD/ Gold levels in the coming week.

                      By Adam Van Sambeek, Treasury Manager.

                      Comment


                      • #12
                        Gold settling below the key support of $1180
                        Appears to be at US$1209 on the CNBC website at the moment.
                        "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

                        Comment


                        • #13
                          Hi Muppet, that particular piece of the article was covering a recent event - it stated that gold settled below 1200 "last Friday".

                          A few sentences later the OP moves closer to the present position "This saw the yellow metal regain lost ground to close nearly $30 higher on Monday."

                          The article is an opinion piece and is not intended to be used for live pricing. It solely aims to provide a market update from Adam's own perspective covering recent, current and sometimes speculating about future events.

                          Comment


                          • #14
                            Posted May 6th: http://morrisandwatson.com/blog/prec...volatile-week/

                            Silver again out-shined with a 3% gain, Palladium + 2%, while both Gold and Platinum traded 1.5% higher from the same time last week.

                            Trading hasn’t been without some trepidations, bullion traders once again closing positions into the weekend. Fridays have now become renowned for this mass exodus of risk. Gold sinking to six week lows, breaking below $1,170 per oz. before clawing back slightly into the close. Even a falling US dollar and generally poor US data didn’t support Friday's metal prices. Recognising this trend allows us to identify opportunities and eliminate panic decisions. Monday saw safe-haven buyers back in the market after developments in the Middle East over the weekend and bargain hunters restore last week’s Gold losses. Though the recovery did pick up steam following last night’s US data miss, temporarily reaching key psychological $1,200 level, to currently settle just below at $1,195.

                            Fundamentals are slowly moving back in the favour of holding precious metals. Physical demand in Asia appears to be picking up again at the currently lower prices. While US data fails to deliver promised growth. Overnight, US trade deficit of $51.4 billion was much larger than the expected $41.2 billion and the worst reading since October 2008. This highlights the dollar's strong headwind effect on US manufacturing, eroding the country's global competitiveness. How long can the US dollar maintain present strength?

                            Looking ahead, most participants should remain cautious ahead of Friday's blockbuster US non-farm payroll data, which is forecast at 231,000 in April, after an unusually weak reading of 126,000 in March. Following some soft US numbers and the central bank's shift to a data-dependent stance of monetary policy, the data could provide clues on when the Federal Reserve will raise interest rates, and therefore the direction of precious metals dominate pricing factor, the US dollar.

                            By Adam Van Sambeek, Treasury Manager.

                            Comment


                            • #15
                              Strong Demand for Gold and Precious Metal Continues in Spite of Data-Filled Week

                              Posted on May 13, 2015 by Kieran Morris
                              LINK: http://morrisandwatson.com/blog/stro...a-filled-week/


                              After a data filled week, precious metals still remain in relatively tight trading ranges, barely changed from this time last week. While we’ve still experiencing some whippy trading sessions, the ultimate outcomes have done very little to denote direction. Friday’s much anticipated US non-farms payroll data was viewed as positive on meeting market expectations. Revisions lower from last month’s pervious report perhaps tempered traders relief following a recent string of weaker economic releases. Although one piece of less negative data shouldn’t rise expectations of interest hikes happening anytime in June.


                              Across in China, news of further stimulus from China’s central bank cutting their one year lending rate by 25 basis points to 5.1% should have a positive flow on effect for commodities. These changes are aimed stimulating their slowing economy to reach its 7% growth targets. Expectations are that this is not the last stimulus, with further easing to follow in the coming months. Lack of commodity demand out of China certainly hasn’t gone unnoticed by the precious metals sector.


                              Closer to home, we’ve finally found some relief from a high NZD. Since the NZ Reserve Bank hinted it would cut interest rates if demand weakens and inflation remained low, many major banks have come out revising their interest rate forecasts. ANZ Bank is calling for interest rate cuts in both June and July, along with First NZ Capital calling for cuts. This resulted in sharp 2 cent correction in the NZD/USD. Adding fuel to calls for interest cuts, NZ employment data released late last week showed our unemployment rate for the first quarter remained at 5.8% vs expectations of a drop to 5.5%. Our rock star economy may be having Justin Bieber like fall from fame. This isn’t of course all bad, those holding Gold paid in NZD will be reaping the benefits. So noted in this report, I’ve fancied Gold in NZD terms, therefore the recent demise of NZD has seen Gold values in NZD climb 2%, while USD pricing remain stagnant.


                              Gold's trading patterns appear to be forming a wedge, with declining highs, but with lows remain unbroken, forming progressively resilient support. This doesn’t mean that we can now assume a price floor is in place, it just highlights strong demand for Gold at the US$1150-1170 per oz. area. On the topside, we’ll need a break of US$1205 per oz. before we can feel more convinced about future higher prices. Otherwise we have a clear trading range in which we can sell into spikes around US$1200-1205 with protective stop losses close to US$1210 -1215 per oz. However, my preference is to buy on dips around US$1175-1180 per oz.


                              By Adam Van Sambeek, Treasury Manager

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