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Inside The Crucible (Precious Metals Updates)

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  • #16

    Hello all, I decided to delay this week’s report to accommodate the release of April's FOMC minutes this morning. After reading them however I’m not sure I should have bothered, there’s little to get excited about. The minutes show several members cast doubt on the likelihood of a June rate hike, which came as no surprise, but didn’t fully rule it out. There’s been contraction in US growth in the first quarter of the year, which was put down to bad weather and a strong US dollar. Expectations are that the US economy should show signs of accelerated growth, which could raise the chances of a September rate rise. I’m still picking later than this.

    There was little reaction in the Precious metals markets, with Gold futures closing up US$2.60 on the day to US$1,209.30 per ounce, down from the pre-FOMC level of US$1,212.30. Trade has ranged from US$1,202.7 to $1,213.2 over night. If you recall last week’s report I noted that Gold prices were forming a wedge pattern, comprising of lower highs and stable lows. This setup usually signals a break out pattern, which was realised last week when Gold burst US$1210 resistance last Wednesday, spiking to $1232 by Monday in very short order. Now that we’ve broken our old predictable trading ranges, I believe we’re now in a new higher sideways trading range. I’m expecting the US$1200 -1205 level to establish a new base, with Gold prices struggling at the 200 day moving average of circa US$1225- 1230 resistance level. Silver should also follow suit, after finally breaching US$17 resistance. This isn’t to say that we can’t retest lower levels, it just seems less likely that we will stay down for too long. It’s a matter of what can’t go down must go up.

    We’ve seen the continued benefits of a weaker NZ dollar, edging precious metals higher in NZ terms. Over the past month the NZD has given up 4.2%, touching intraday lows overnight of 0.7281. The Kiwi opens this morning below 0.73, buying just 0.7298 U.S cents. We’re now on the cusp of breaching 12 month lows as attentions turn to todays Annual budget release and key U.S manufacturing and housing data for direction and support.

    By Adam Van Sambeek, Treasury Manager


    • #17
      This week's OMF Metals Report by Kevin Morgan highlights gold and silver's retreat as USD is resurgent. See link for post with full report including trading recommendations.

      LINK: https://plus.google.com/u/2/b/106509...ts/2D6hXgDaq5M


      • #18
        Sometimes you get days where market reactions can be difficult to quantify. Take last night for instance, it was all one way traffic, buying USD, selling everything else.

        After a three day weekend, it was the somewhat hawkish comments made last Friday by Federal Reserve chairwoman Janet Yellen that ignited the US dollar rally. Yellen stated that recent data was encouraging and could eventually lead to an interest rate increase this year. Well, the market loved this well-defined hint, and following a night of mixed data, which had traders focusing on the positives, a 1.3% rally in the US dollar ensued.

        It is widely known that a strong USD dollar has an adverse effect on commodities, which saw in a broad based commodity and equity sell off. In an environment where herd mentality is rife, you tend to get overreactions in some sectors. This appears to be the case in the precious metals. In reality, we’ve seen no significant change in the macro environment for gold, which suggests recent price action may have been driven more by external influences, particularly the dollar.

        Greek talks remain unproductive and combined with the new fear of gains by Spanish anti-austerity parties in regional elections added to the mood of uncertainty. Equities have been looking toppy and while last night’s equity sell off was pretty orderly, this could easily turn into a stampede if it gathers momentum. All very good reasons for not selling Gold.

        Support in Gold is around the US$1180 level, which suggests that current levels of US$1187 per oz. should be viewed as tempting. If we were content buying these levels a couple of weeks ago, and nothing materially has changed, then we should be buying happily again. Silver at 16.75 per oz. is just ‘back filling’ last week’s sharp move higher. These corrections, after extended spikes higher, help build stronger foundations. View last night’s move as an opportunity, rather than a setback. Be bold when others are scared.

        #gold #hold #USD #greece

        By Adam Van Sambeek, Treasury Manager.

        LINK: https://plus.google.com/u/2/b/111147...ts/E61b7rpAZiX


        • #19
          Link: http://morrisandwatson.com/blog/trea...-for-platinum/

          It may be a shortened week, but already we’ve seen plenty of excitement. Monday saw a surprising spike in Gold prices, making a brief foray above $1,200, but with very little follow through, prices quickly retreated. I couldn’t find any explanation for this sharp jump in price, except that Mondays are notorious for thin volumes, and being the first day of the new month, we tend to see a fresh allocation of managed funds hit the market. Once again, Gold prices settled back into the regular trading range between US$1175 and US$1225.

          Meanwhile, Greeks and officials from the ECB and the IMF remain locked in negotiations. Greece looks set to make a first repayment of 300 million euros to the IMF on June 5, but it’s still unclear how it will pay off the rest of its debt. The immediate concerns surrounding the looming debt deadline may have eased, diminishing part of gold’s safe-haven appeal, but it may not all be bad for Gold. If a deal is struck, its highly likely to see a resurgence in the Euro, driving US dollars lower and overall benefiting commodities. Last night’s upbeat German unemployment data and positive Greece talks saw the euro claw back 2.5% against the US dollar, its biggest gain in nearly 3 months.

          Looking at other precious metals, Platinum has been the worst performing metal in the sector, sliding 1.4% through May. Palladium didn’t fare much better dipping 0.6%, under-performing Gold, which gained 1.5% and Silver, up nearly 4% on the month. I can’t find sufficient reason for the under-performance by the PGM’s, so I’m buying Platinum, particularly at current levels around US$1100.

          By Adam Van Sambeek, Treasury Manager.


          • #20
            OMF Weekly Metal Report 9 June by Kevin Morgan. Overview, commentary and recommendations on gold, silver and copper metals.



            • #21

              Link: http://morrisandwatson.com/?p=5149

              Last week I noted Gold's test of the resistances just over US$1200, now we've seen long held support come under pressure this week. This all stemmed from last Fridays much watched US employment numbers which exceeded estimates, driving up expectations that the Fed would move sooner rather than later to increase interest rates. The resulting speculative jump in US dollar saw Gold fall below long held support around US$1175, which in turn triggered protective Sell stops placed just below this key level, spiking prices to US$1162 lows. Gold had declined in four of the five sessions last week as US data gradually confirmed the Federal Reserve recent minutes, which said declining first quarter growth was due to temporary factors like the unseasonably harsh winter. The Fed removed all calendar references in its forward guidance and said that recent economic weakness might be "transitory" in nature. This means that bank is now entirely dependent on data so a rate increase could happen at any future meeting.

              Meanwhile in Greece, the country delayed last Fridays 300-million-euro repayment to the IMF until the end of June, increasing the risk of a Greek exit from the bloc. Concern over this situation however has failed to propel interest in gold. With investor sentiment for gold so weak, gold prices may well continue lower but I feel this is leading to a better buying opportunity. And given developments in Greece and with the potential for corrections in other asset classes, it may not be too long before the markets start looking for a safe haven again.

              As for Silver, this has dropped below the $16 mark for the first time since May 1 and has struggled to regain and hold this level. Currently we're sitting just below that at US$15.968 per oz. Technical charts indicate that we're sitting on an ascending support line, which originated in March of this year. Silver should be viewed as oversold and therefore valuable to a corrective bounce. I'm a buyer of Silver at these levels with a protective Stops at 16.87.

              By Adam Van Sambeek, Treasury Manager


              • #22
                ANZ expects the gold price to top $2,000 an ounce by the end of the decade while Capital Economics has a $1,400 forecast for the end of this year....


                • #23
                  Greek Gold Rush Fails to Materialize (OMF Metals Report by Kevin Morgan)


                  LINK: http://morrisandwatson.com/?p=5224

                  Overview *Greek gold rush fails to materialize *Silver slides beneath support *Copper bounces on Chinese hedge fund actions
                  See page 2 of the report for trading recommendations.


                  • #24
                    OMF Metals Report by Kevin Morgan 8th July 2015

                    Overview *Gold unfazed by Greek tragedy *Silver looking cheap compared to gold *Copper slumps on China fears

                    See page 2 of the report for trading recommendations

                    #china, #silver, #gold, #copper, #USD, #NZD, #greece, #asia

                    LINK: http://morrisandwatson.com/?p=5242


                    • #25
                      gold tanked to us$750 after the 2008 crisis

                      but 2009 - 2012

                      it went on a run to over us$1500

                      its days of volatility are not over

                      so its ability to produce good gains over the medium term is still there
                      have you defeated them?
                      your demons


                      • #26
                        Adam's insights:

                        Be careful for what you wish for! After an extended period of low volatility global markets have been shaken up thanks to an escalation in the Greek saga and China’s announcement of a wave of new measures in an attempt to halt the collapse of the Chinese stock markets. Traders love volatility, until they’re actually faced with it...read more at http://morrisandwatson.com/?p=5249


                        • #27
                          Meanwhile, gold bugs continue to feel the wrath of bullion's decline.
                          Gold fell for the 10th straight day Wednesday,
                          marking its longest losing streak since 1996.
                          "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


                          • #28
                            Is the Worst Yet to Come?

                            What a start to the week, within a matter of seconds, the gold price shed nearly five percent of its value...

                            Scores of Chinese traders offloaded more than five tonnes of metal - pushing the price from around $1,130 all the way down to $1,085. It was brutal, falling prices triggering other sell stops sitting below the $1,100 level, exaggerating the move. It seems very strange that such a large flow of orders were placed on such a thin market. Monday morning isn’t the shrewdest time to transact large orders, due to the absence of Europe and Western volumes. Japan was also out due to a National holiday, so either this was an attempt at market manipulation or an execution error.

                            With only a week to go before Option expiry, I suspect an Option play could have been a motivation behind the move. Prices have recovered to the $1,100 level, which I expect should see Gold do a lot of work around this level if this is fact the case. The once very cheap 1,100 August Gold Puts Prices have since jumped 15 fold since last week.

                            Last Friday China released figures that showed its Gold reserves had not increased as much as analysts predicted from the previously released figures, some six years ago. So another theory is that the sharp move may have been sparked as investors now feel that China will not increase its Gold reserves and thus cutting off a strong source of demand. I’m not sure any figures out of China can be truly relied on, there’s talk that the figures released are grossly understated with China previously reported buying up to 2,000 tonnes of gold each year for the last few years.

                            Goldman Sachs are predicting the worst is yet to come for Gold and prices could fall to $1,000 per ounce, saying the risks are clearly skewed to the downside in this environment. I’m not about to argue with the mighty Goldman Sachs, but predictions like this tend to follow large market moves. Similar predictions were made when Gold was screaming up around 1,900 per oz. and everyone calling for $2000.



                            • #29
                              READ MORE: http://us3.campaign-archive2.com/?u=...&id=92f1dec53d

                              Last week’s capitulation through wavering support may well have attracted Gold some much needed buying interest...