The Hightower Report

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe were sharply lower during overnight trading, early indications are that US equity markets will open with substantial losses later on today. The US Dollar is sharply higher against most of the major currencies this morning. A study conducted by the European Central Bank stated that the current sovereign debt crisis may put the sustainability of the Euro into question. There are reports that Qatar may be in negotiations to take a stake in major French bank BNP Paribas. A private survey of Chinese Manufacturing during August came in at 49.4, a decline of 0.5 from July. A private survey of German Manufacturing during September was 50.0, roughly in-line with forecasts. A private survey of Euro zone Service Industries during September was 49.1, roughly 2 points below market expectations. Euro zone Industrial New Orders during July were down 2.1%, weaker than projections. The Treasury’s quarterly auction of 10-Year TIPS securities will have results announced today at 12:00 PM. Major US economic numbers to be released this morning include Weekly Jobless Claims at 7:30 AM, and a private survey of Leading Economic Indicators at 9:00 AM.

GOLD MARKET FUNDAMENTALS: Clearly the fear of global slowing and historic easing measures from the US Federal reserve have failed to inspire fresh investment in gold overnight, as gold prices have slumped to the lowest level since August 26th. Surprisingly the dollar has also remained in favor, despite the news of additional quantitative easing yesterday and that has probably added to the aggressive liquidation tilt in gold over the last 24 hours. In fact, with manufacturing readings from China and the Euro zone coming in below the growth/no growth line on the charts, the trade is embracing the threat of recession and that apparently fosters liquidation action in gold. While the need to raise margin capital for equity market positions is probably causing some of the slide in gold prices this morning, there would also seem to be some players exiting gold because of fears that slowing will result in a bad overall environment for gold and commodities. In other words, simply seeing a global recession might not be “enough” uncertainty for gold. However, some gold traders are holding out hope that something even worse than a global recession could be seen, in the event the euro zone fails or breaks up and that is probably serving to cushion gold against even more aggressive liquidation. In the early action today, traders apparently fear equity market spillover selling pressure in gold and that in turn could make the US claims release an important pivot point for gold traders. While there are speeches today from the Treasury Secretary, the World Bank President and the Managing Director of the IMF, it is unlikely commentary can alter the macro economic expectation of further and more severe slowing ahead. Comex Gold Stocks were 11.409 million ounces down 610 ounces.

SILVER MARKET FUNDAMENTALS: December silver has also managed a downside breakout overnight and in the process the market fell to the lowest level since August 12th. Like gold, a higher dollar and fears of slowing have resulted in a negative vibe toward commodities and precious metals. Certainly the fear of equity market margin calls, has fostered some liquidation of silver and gold but one would think that relationship would become less significant going forward. Apparently silver traders are seeing a return to global slowing as a negative and it could take something very significant like a US credit rating downgrade or a Euro zone break up to rekindle flight to quality interest again. Given the fact that December silver has fallen below a series of points on the charts overnight, some traders expect to see a measure of follow through technical selling today. As in gold, the silver market is likely to see some reaction to the US claims data, but it is unlikely that a single second tier economic reading will be able to dramatically alter what is becoming an entrenched expectation of a return to recession. A number of traders are suggesting that silver might have little in the way of support until the $37.50 level, which was a pivot point for the market back in the early August correction. Comex Silver Stocks were 104.393 million ounces down 858,819 ounces.

PLATINUM: Given the sharp range down failure in platinum, one could quickly come to the conclusion that platinum is tracking its classic physical commodity market fundamentals. Therefore, fears of slowing and evidence of slowing are likely to throw platinum prices back toward the early summer lows. At least in the near term, classic internal supply and demand fundamentals might be tossed aside as big picture recession views are prompting capital flight from almost all commodities, into what seems to be a limited number of safe haven instruments. For the time being, lofty analysts price goals for platinum are discounted and the negative flow of outside market action looks to dominate. Next downside targeting in October platinum could be $1,708, with $1,675 possible if the threat of a global recession is fully priced.

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia were generally lower during overnight trading, stock indices in Europe are stronger this morning. Early indications are that US equity markets will open with substantial losses later on today but well above their overnight lows. The US Dollar is close to unchanged levels against most of the major currencies this morning, with large gains forged versus the Swiss Franc and Japanese Yen. The Swiss National Bank announced that the Swiss Franc will have a minimum exchange rate of 1.20 Francs to the Euro. The German Finance Minister stated that Greece will get no more emergency debt aid if that nation does not receive a positive result from ECB and IMF inspectors. Euro zone Retail Sales during July were up 0.2%, above market forecasts. Euro zone GDP during the second quarter was up 1.6% year-on-year, in line with expectations. The only major US economic number to be released this morning will be a private survey of US non-Manufacturing industries during August at 9:00 AM. In addition, Fed Regional President Kocherlakota will give a speech during the session.

GOLD: The gold market ramped up to another new high overnight but that action was tempered somewhat by reports of currency intervention overnight. While gold seemingly became short term technically overbought, with the sharp upward extension overnight, residual macro economic uncertainty toward the US economy and renewed European debt concerns have rekindled safe haven interest in gold regardless of the adverse currency market action. Some gold traders might even suggest the Swiss Franc was damaged as a flight to quality instrument by the SNB peg and that in turn leaves gold as part of a shrinking flight to quality contingent. While US equities are expected to open sharply lower this morning and that might add to the uncertainty in the marketplace, it could take a noted decline in the ISM Non Manufacturing reading to push fresh additional buying into gold, especially after the additional range up action this morning. The gold market could have garnered some support from news that the Russian central bank was planning to buy some gold this week, but the quantity of that anticipated purchase wasn’t that significant. The gold market might also be impacted by a Fed speech around mid session today, as the promise of easing from the Fed might tamp down some macro economic concerns. Comex Gold Stocks were 11.584 million ounces up 7,570 ounces. Gold stocks have increased 11 of the last 20 days. The Commitments of Traders Futures and Options report as of August 30th for Gold showed Non-Commercial traders were net long 232,638 contracts, a decrease of 15,331 contracts. The Commercial traders were net short 274,457 contracts, a decrease of 15,182 contracts. The Non-reportable traders were net long 41,820 contracts, an increase of 149 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 274,458 contracts. This represents a decrease of 15,182 contracts in the net long position held by these traders.

SILVER: At least in the early US Tuesday action, the December silver contract was unable to take out the prior session’s high and that seems to have prompted talk overnight that silver is destined to lag behind gold prices. It is possible that silver is being partially held back by its industrial component, but with the intervention seen against the Swiss, some traders are suggesting that the list of effective flight to quality instruments has been reduced and that in turn could ultimately benefit the silver market. In another element that could be detracting from the bullish bias in silver, the trade saw news recently that Mexico had become the world’s largest silver producer, but since that was the result of a 1st half 2011 decline in silver production from Peru, many traders probably come away from that news with a somewhat bullish supply side vibe for silver. Comex Silver Stocks were 102.891 million ounces down 1,446,794 ounces. Stocks have declined 11 of the last 20 days. The Commitments of Traders Futures and Options report as of August 30th for Silver showed Non-Commercial traders were net long 33,577 contracts, a decrease of 1,936 contracts. The Commercial traders were net short 53,599 contracts, a decrease of 3,704 contracts. The Non-reportable traders were net long 20,022 contracts, a decrease of 1,767 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 53,599 contracts. This represents a decrease of 3,703 contracts in the net long position held by these traders.

PLATINUM: While platinum did manage a temporary higher high for the move overnight, it wasn’t able to return to its contract highs. Like silver, platinum seems to be periodically undermined by its physical commodity market roots. However, the platinum market recently hasn’t paid that much attention to classic physical fundamentals lately and that suggests that a flighty to quality focus generally remains in control of prices. In fact, the market doesn’t seem to be that interested in the prospect of a major platinum miner being forced to sell partial ownership to the Zimbabwe government. The Commitments of Traders Futures and Options report as of August 30th for Platinum showed Non-Commercial traders were net long 26,942 contracts, a decrease of 1,582 contracts. The Commercial traders were net short 33,155 contracts, a decrease of 1,233 contracts. The Non-reportable traders were net long 6,213 contracts, an increase of 349 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 33,155 contracts. This represents a decrease of 1,233 contracts in the net long position held by these traders. There might not be much in the way of solid support in October platinum until the $1,860.50 level.