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I made a brief video this evening to quickly run through some key charts I'm following and where I see the big picture trends.
In energy, I cover crude oil futures, $XOP and $XLE.
In precious metals, I cover the charts of gold, silver, platinum, and palladium futures, as well as the S&P/Gold ratio. In mining stocks I review $GDX, the GDX/GDXJ ratio, Newmont Mining ($NEM) and Pan American Silver ($PAAS).
For currencies, I stick to the US Dollar ($DXY), looking and both daily and long term monthly charts.
In fixed income, I review the 20-year treasury ETF ($TLT), mortgage backed securities ($MBB), and high Yield corporate debt ($JNK)
In equities, I take a quick look at the S&P500 and and the micro caps ($RUMIC).
As always, I hope this is helpful, and I welcome any feedback or questions.
Happy New Year! We are kicking off the New Year with stocks at all-time highs, oil prices spiking on Middle East tensions, and the precious metals complex following through nicely for our November/December videos. If you haven’t had a chance to watch those videos, they offer a helpful background on the technical setup for metals and the price action we are seeing today.
11-15-19 Gold Price Update (Video)
Gold finally broke out of a bull wedge in late December following a four month (healthy) consolidation I had labeled as wave 4 of 5 in a five wave Elliott Wave pattern. This pattern has been neatly contained within a rising channel from the $1180 low in summer of 2018 to the September high of $1565 (the 61.8% Fibonacci retracement from the all-time high in 2011). The breakout occurred at rising channel support, and unless this is a truncated fifth, the length of the rise should target a move to the 78.6% retracement at ~$1700. Gold has some work to do to get there, and will likely consolidate/pull back as it works through supply between $1560-$1580.
The move is supported by strong confirmation throughout the mining complex, the breakout in silver, the overbought levels in the RSI (strong indication that the bulls are in control), the outperformance of junior miners relative to the producers, and a falling gold:silver ratio. The dollar has also shown recent weakness, breaking down from a multi-month channel, and is coiling into a multi-year symmetrical triangle that is likely to break strongly up or down before year end.
I would also add that gold has been outperforming the S&P 500 since September of 2018. This is not well publicized, especially as equities continue to make all-time highs, but an important development, to be sure.
Lastly, I tweeted this chart of gold performance by months for the past 20 years. It is worth noting that January tends to be a very strong month for gold.
Silver has lagged gold for six years but is finally showing some signs of strength. The gold:silver ratio has fallen from a peak of 93 in July to a near term low of 79 in September, and has pulled back to 86 in recent week. However, the trend is now down, and the recent move is forming a bear flag that should take the ratio lower (good for the entire metals complex).
Silver has followed a similar pattern to gold, moving in a rising channel from the September ’18 low. A strong close above 18.78 would signal that a move towards the 38.2% Fibonacci retracement at 22 is the likely terminal move for Wave 5.
Platinum has underperformed the sector for years. Price has flirted with the psychologically significant $1000 level twice now since September. However, the key level for platinum is $10-40-$1050. A break above that level would set up a test of the 38.2% Fibonacci retracement at $1300.
Palladium has been the all star of the metals complex, even through the bearish six year trough for gold. Price skyrocketed to just under $2,000/ounce as it met with resistance at the 361.8% Fibonacci extension and multiple rising channel resistance. If Palladium can breakout here, the next price target is $2250.
I will not outline charts here of every mining stock I cover, but as a brief overview, see the charts below of GDX (Gold Miners ETF), PAAS (Pan American Silver), and Newmont Gold (NEM).
GDX has mirrored the technical pattern in gold. The key level is 31.50. A strong close above that level should usher in a swift move to 39.
Pan American has already broken out well above former resistance and seems poised for an eventual retest of all-time highs at 37, likely pausing at 29 along the way.
Newmont is just now breaking above the 43.30, but not definitively. A clean break above that level would set up a run to 51.
As always, I hope this is helpful, and I welcome any feedback or questions. Have a great weekend!
I produced this video on the gold and silver mining sector last night, and as of this morning gold is up significantly and all of the mining stocks continue to follow through. Gold (see chart above) just broke above horizontal resistance and is now looking to break up from the August downtrend channel. A move above $1495 would resume the uptrend from 4Q18, where channel support recently held. As presented in early November, I continue to believe this is a Wave 4 of 5, and that we will retest the highs at $1560-$1580. A close above $1495 would confirm it.
$GDX $GDXJ $ABX $NEM $XME $WPM $GOLD.V
In this video, I analyze the Bitcoin chart. Opinions on bitcoin tend to be very polarized; some believe bitcoin will rise to over $100,000 per coin, or even a million dollars. Others believe bitcoin is head for zero and into the dustbin of history. In this video I try to take a balanced view and simply look at the long term chart and where price is trending. I overlay this chart with Fibonacci and Elliott Wave analysis to arrive at the conclusion that bitcoin is still very much in a long term uptrend.
What do you think? We'd love to hear your feedback.
In this video, I analyze the S&P500 chart, which is now meeting up with 20-year long term resistance and the upper bound of its year long channel, but is also breaking out above the 261.8% Fibonacci extension from the 2007 peak to the 2009 bottom in equities. My short term view is bearish, as I think overhead resistance is stout and the RSI is overbought. However, longer term, the break above the 261.8% extension is significant and supportive of higher equity prices in the coming months.
Picking up from last week’s video, I wanted to do a deep dive into gold, particularly because there is a diversity of opinions regarding whether we break down from here or we make another leg higher. In this video, I address a recent chart from JC Parets at All Star Charts and my opinion regarding his analysis in the short term.
The big question is whether gold has completed a fifth wave from the $1170 low (setting up and A-B-C correction), or whether the recent high was only wave 3, setting up a fifth wave higher. I am of the latter opinion.
As always, we would love to hear your feedback whether you agree or disagree.
Demand for gold as a reserve asset strengthened considerably in 2018, rising by 74% compared to 2017, in response to the geopolitical and macro-economic environment. It also broadened. Our flagship training programme for reserve managers, held in conjunction with the National University of Singapore, received a record number of applications from central banks globally keen to learn how gold can help them meet their safety, liquidity and other objectives. Our mid-year central bank survey reported that one-fifth of central banks surveyed intended to increase their gold holdings over the next 12 months, with none planning a decrease.
An ex-J.P. Morgan Chase trader has admitted to manipulating the U.S. markets of an array of precious metals for about seven years -- and he has implicated his supervisors at the bank.
John Edmonds, 36, pleaded guilty to one count of commodities fraud and one count each of conspiracy to commit wire fraud, price manipulation and spoofing, according to a Tuesday release from the U.S. Department of Justice. Edmonds spent 13 years at New York-based J.P. Morgan until leaving last year, according to his LinkedIn account.
Will a government guarantee for an exchange-traded fund be enough to lure investors back to gold?
On Wednesday, Australia’s Perth Mint Physical Gold ETF, the first with bullion holdings guaranteed by a sovereign entity, will start trading on the New York Stock Exchange. The fund, backed by physical metal of at least 99.5 percent purity, debuts at a time when investors are fleeing the asset class, taking holdings in all ETFs tracked by Bloomberg to a seven-month low.
“We believe investors will have greater confidence with the knowledge that their wealth is physically stored in one of the most secure central bank-grade vaults in the southern hemisphere,” Richard Hayes, the Perth Mint’s chief executive officer, said in a statement. “AAAU is a truly unique offering for investors as it adds a new layer to hard asset investing in the United States,” he said, referring to the ETF by its ticker.
The ETF allows holders to exchange their shares for gold. Investors can get the physical metal delivered to their doorstep by Perth Mint, which refines and manufactures precious metals product.
The University of Texas Investment Management Co. will examine its $1 billion gold position in the portfolio of the largest public university endowment in the U.S.
“We’re in no rush to sell but it may not be a long-term strategic hold,” Britt Harris, the new chief executive officer at Utimco, said Thursday during a break at a board meeting in Austin. The endowment is also looking at fixed-income investments because of their poor returns, Harris said.
The gold position is about 3 percent of the portfolio. Utimco oversees $31 billion in assets for the University of Texas and Texas A&M University as of Dec. 31. It manages another $12.3 billion in operating funds.