The Hightower Report

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OUTSIDE MARKET DEVELOPMENTS: Chinese equity markets were weaker off lingering concerns toward their property and development sectors. The Nikkei managed to recover from a 3 month low, but investors and traders there are still worried about the potential negative impacts from the latest developments in the Euro zone. European equity markets were also under initial pressure again today, as trade fears have now turned back toward Greece and away from France. Early action in the US equity markets showed noted weakness again as the fear of global slowing and the potential knock-on impacts from the Euro zone remain on the front burner.

GOLD: With another new low for the move overnight, weak global equity markets and adverse currency market action, it would seem like gold is facing almost the same overall environment as was seen on Monday morning. While the focus yesterday was on the potential for EU political and economic turmoil from the change in French leadership, the focus today appears to have shifted to concerns of political and economic turmoil from the change in leadership in Greece. Given all the turmoil and uncertainty in the Euro zone, flight to quality money is still flowing toward the Greenback and the Yen and that action has contributed to the weakness in gold prices so far this week. It is also likely that last Friday’s US payroll results are also contributing to the bear case in gold as the fear of slowing remains a fixture in the marketplace. A sharp jump in US Consumer credit figures yesterday afternoon has also fostered concerns of further slowing in the US as it would seem like US consumers are relying on credit and not income for a large portion of their spending. In fact, US Consumer Credit vaulted higher and in the process the March tally expanded at the fastest rate in over 10 years! With little in the way of scheduled US economic data today and a weaker equity market track, gold is likely to remain under pressure, as it tracks classic physical commodity market fundamentals. European gold traders continue to lament the lack of lift in gold prices off potentially beneficial changes to Indian import rules, but an improvement in Indian gold demand is probably being largely offset by fears of sagging global investment demand for gold. With an empty US report slate today, gold is likely to see some impact from two Fed speeches scheduled for this morning. Comex Gold Stocks were unchanged at 11.051 million ounces.

SILVER: Like gold, the silver market has forged yet another lower low and in the process the July silver contract has reached down to the lowest level since January 10th. With weakness in copper and platinum prices, more declines in equities and adverse currency market action, the outside market forces clearly favor the bear track. With little in the way of scheduled US data due out today, it could be difficult to displace the bearish environment facing physical commodities. It goes without saying that residual Euro zone concerns (apparently from Greece overnight) are set to weigh on commodity prices again today. About the most positive thing one can say about silver, is that prices are now down roughly $1.33 an ounce since the last COT positioning report was measured and that should be reducing the net spec long positioning significantly. With no significant scheduled economic data due out today from the US, the silver bulls might have to “hope” for something supportive from a couple Fed speeches later this morning. Comex Silver Stocks were unchanged at 142.018 million ounces.

PLATINUM: The platinum bulls have to hold onto the fact that platinum avoided a fresh new low for the move this morning. However, a broad based fear of global slowing, adverse currency market action and residual concerns of political and economic turmoil in Europe, would appear to leave the bear camp with a number of bearish themes. With the market also seeing adverse platinum supply and demand projections recently, it could be very difficult to throw off the down trend pattern that has effectively controlled platinum prices since late February. Resistance is seen up at $1,530 and there might be little in the way of support on the charts until the $1,512 level in the July platinum contract. Unless the US Fed provides a surprise easing hint today, (in one or both Fed speeches) or the US equity markets forge a surprise recovery, the path of least resistance in platinum prices looks to remain down.

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: Asian equity markets were mixed overnight, with the markets surprised by a positive Chinese Trade surplus reading. Apparently a pick-up in overseas demand countervailed slack domestic demand in China. The European markets were still generally off balance, because of last week’s soft US payroll report and also because of residual slowing fears in China, in the wake of their monthly trade balance figures that showed a softening of domestic demand. From the US scheduled report front today, the market will see weekly private US chain store sales figures, US Wholesale trade and a flurry of Fed speeches throughout the trading session. Also due out today are the results of a US 3 Year Note auction at mid day and traders will also see a World Ag Supply and Demand estimate report which in turn could have some indirect impact on metals and other physical commodity prices.

GOLD: While there continues to be hope that either China or the US will step up and provide some additional economic stimulus, that issue isn’t thought to be a front burner potential in the coming session. While some traders continue to fear periodic threats of global slowing and that in turn has periodically pulled support from under physical commodities like gold, there is hope that last Friday’s numbers has already caught the Feds attention. With four straight sessions of lower global equity market action, the global slowing threat was accentuated and that probably increases the attention on upcoming Fed dialogue. However, today the US equities look to break the recent trend of weaker equity market action, but that potential supportive outside market action might be tested, if a series of US Fed speeches today, fails to produce some dovish policy dialogue. In other words, many markets like gold will be parsing the Fed’s commentary today, in search of a softening in the Fed’s somewhat hawkish tone, that initially surfaced in the last FOMC meeting minutes release. Another development that might limit the upside in gold prices today, is news that Chinese gold production for the month of February rose by 11% over the prior month. However, that potential negative is probably countervailed by ongoing ideas that Chinese gold demand, has generally continued to grow and that growth is expected to soak up the added domestic gold supply. Comex Gold Stocks were 11.148 million ounces down 168,787 ounces. Gold stocks have declined 13 of the last 20 days.

SILVER: While the May silver contract attempted some upside action overnight, it generally remained well within the prior session’s trading range and that would seem to suggest the silver trade is in need of fresh guidance from the Fed, or from the US equity markets. Unlike gold, silver has been unable to forge a recent pattern of higher highs and higher lows and that in turn would seem to suggest that silver isn’t as upbeat on the potential for additional US easing as if a portion of the gold trade. With recent noted weakness in copper prices, it is also possible that silver is tracking with the industrial metals sector and that would explain a portion of the recent divergence between gold and silver prices. Therefore silver might take some direction from earnings news from Alcoa later today, as the fear of global slowing and more specifically the fear of slackening physical demand for commodities, has been a focal point for silver and copper traders this week. In a partially concerning development, the silver market continued to see a rise in silver exchange stocks, with Comex Silver Stocks yesterday afternoon, rising to 140.059 million ounces, with a single day gain of 539,505 ounces. Comex Silver Stocks are now at the highest level since 08/06/2008. Silver stocks have increased in 13 of the last 20 days. Silver looks to take most of its direction today from classic physical commodity market factors, but the action in the US equity market might have some influence on silver prices today.

PLATINUM: While July platinum initially managed a range up probe overnight, that track has been clearly reversed and the Monday low has already been taken out. Some traders were pointing to a minor gap area on the charts down at $1,611.30 to $1,611.20 as a necessary downside target. Other traders are pointing to a somewhat definitive pattern of lower highs and lower lows on the charts since the late February high, as a sign of a downtrend pattern. Therefore July platinum might be headed back to the recent low of $1,590.20 unless the macro economic outlook improves quickly and or the US Fed dialogue today hints at some fresh near term assistance for the US economy.

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: Asian equity markets were generally higher overnight, as Chinese developers continued to garner some lift from the recent change in policy at the PBOC. However, European equity markets were weaker off some soft PMI data and renewed talk of slowing/recession in the Euro zone. The US equity markets are showing a mixed early track today, as those markets brace from a corporate tax reform plan and a National Association of Realtors home sales reading.

GOLD MARKET FUNDAMENTALS: From last week’s lows to the highs this morning, April gold forged a rather impressive $54 an ounce rally and that in turn might have left the market short term overbought. While concern toward the Euro zone economy was fostered again overnight in the wake of news of a softening of the Euro zone service sector, fears of a full blown financial contagion have generally remained in check. Clearly the gold market was lifted in part by news of fresh easing from the Chinese yesterday and it is also possible that gold saw some minor support this morning from news that the BOE might have eased even further, but the BOE feared aggressive action might foster anxiety toward the economy. Gold probably saw some minor support from favorable longer term gold import dialogue from Indian officials overnight and gold might also have benefited from favorable gold price forecasts from a major US investment banking firm. However, at the start of the Wednesday US trade, the gold market might be facing slightly adverse currency market action and a choppy track in global equities and that in turn might prompt some gold longs to bank profits from the recent surge in gold prices. On the other hand, gold might see some support from a US home sales report and gold might also see some lift off the unveiling of a US corporate tax reform plan. Comex Gold Stocks were 11.432 million ounces up 460 ounces. Stocks have declined 12 of the last 20 days.

SILVER MARKET FUNDAMENTALS: March silver was unable to definitively charge into a distinct upside breakout yesterday and that might have been the result of softer than expected Chinese silver import data or that might have been the result of gold maintaining the lion’s share of overall investment demand for metals. In fact, the silver market could have seen higher Indian silver import expectations as an offset to softer Chinese silver import news but silver in general doesn’t seem to be tightly tracking classic supply side fundamentals. The bull camp is probably fortunate that silver seems to be discounting classic physical supply side developments, as Comex Silver Stocks yesterday afternoon were put up to 129.282 million ounces, for another noted gain of 472,832 ounces. Silver stocks have now increased in 11 of the last 20 days.

PLATINUM: The platinum market continues to garner some support from fears of tightening supply off an ongoing strike at an Impala mine. In fact, the platinum market is starting to see forecasts of tightness developing later this year and that is lending some fresh support to platinum prices which recently have mostly been dominated by big picture macro economic issues. The bear camp might suggest that platinum is partially overbought technically, after the four day run up in prices of roughly $107 an ounce. At least in the near term, fears of more lost supply at the Impala mine could help platinum ignore a developing overbought technical condition on the charts. Initial support in April platinum is seen at $1,692.00 and then again down at $1,684.90. Resistance is seen up at $1,711.90.

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 generally higher during overnight trading, early indications are that US equity markets will open with substantial gains later on this morning. The US Dollar is sharply lower against most of the major currencies this morning. An Italian newspaper is reporting that Italy may receive a 600 billion Euro loan from the IMF if their debt problems get worse, although the IMF later denied that report. Belgium has passed a new austerity budget and may be closing in on forming a new government. A major credit rating agency warned that the current debt crisis could threaten the sovereign debt ratings of all Euro zone nations. The only major US economic number to be released this morning will be October New Home Sales at 9:00 AM.

GOLD MARKET FUNDAMENTALS: With an initial risk on vibe in place, precious metals and a host of physical commodities are starting off the week on a very positive track. In addition to sharp overnight gains in equities, noted strength in the Euro and calls for a wave of global stimulus, the bull camp in gold might be embracing a number of potentially bullish themes. However, the back bone of the bullish vibe today seems to be hope that the IMF might be poised to help Italy with as much as 600 billion Euros and that would certainly seem to be a large enough backstop to quell debt fears from Italy. With the reversal of last week’s vulnerable stance in gold, it is also possible that gold is seeing some classic short covering buying interest this morning. With the rise this morning, December gold has reached up to the highest level since November 21st and that might be the result of a measure of short covering. However, given the action in equities and the broad based price gains being seen in a number of physical commodity markets this morning, there might also be some justification for fresh outright buying of gold. With the gains starting in Asia and the Asian trade pointing to hope for Italian debt relief, commentary from the IMF might be critical for gold this week. It is also possible that part of gold’s gains today are the result of OECD calls for global stimulus, as several countries including the Euro zone, might be poised to reduce rates in an effort to cushion the world economy against Euro zone affairs. Others have even suggested that the US and UK need to launch additional QE measures as austerity in the UK and forced spending cuts in the US are expected to be a check on future growth rates. Some gold players might be buying gold off hopes that this Friday’s US Non Farm payroll reading will contribute to the risk on view. News that a major gold producer saw some reduced output probably isn’t contributing significantly to the bullish vibe this morning.

SILVER MARKET FUNDAMENTALS: While the gold market has forged a noted upside breakout overnight, December silver as of this writing wasn’t able to rise above the Friday highs. However, a broad based physical commodity market rally and significant gains in equities have fostered a favorable environment to start today and December silver has forged an early gain in excess of $1.00 an ounce. Some players even suggest that massive voter turn out in the Egyptian election is contributing to the optimism today. With a weaker dollar and hopes for another “European Plan” to contain the debt contagion, silver is seeing a number of optimistic tracks in the headlines this morning. However, for December silver to catch a definitive wave of technical short covering buying, might require a rise back above last week’s highs around the $33.04 level. In the near term, calls for global stimulus from the OECD and ideas that the IMF could ride to the rescue, have calmed frayed nerves and given the risk on crowd a temporary but suspect edge. The ultra bulls in silver might also suggest that silver is drawing some buying interest from hopes of a decent gain in US Non Farm payrolls at the end of this week.

PLATINUM: Platinum is catching some lift from the strong gains in gold prices overnight. However, gold seems to have caught a lot of initial support from favorable Asian hopes for the Euro zone. A weaker dollar and sharply higher equities also gives the platinum bulls some hope this morning. With January platinum to the lows Friday, sitting as much as $67 an ounce below last week’s highs, it is possible that a portion of today’s initial rise is indeed technical short covering buying. However, with calls for global stimulus from the OECD overnight, a bullish tilt toward the Euro zone situation and very positive US holiday sales talk, platinum is seeing a very favorable physical commodity market environment to start the new trading week. Initial support in January platinum is seen down at $1,558 and there might not be much in the way of resistance until the quasi double top of $1,574.

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: Equity markets in Asia and Europe were weaker during overnight trading. Early indications are that US equity markets will open with moderate losses later on today. The US Dollar was stronger against most of the major currencies this morning but posting a loss versus the Yen. Greece passed a new austerity budget this morning, which was unable to reach their deficit targets. The “official” Chinese PMI index during September was 51.2, slightly below expectations but well above the critical 50 level. The Bank of Japan’s Tankan survey of Japanese economic conditions during the third quarter of 2011 was plus 2, in-line with expectations and a move back into positive territory. A private survey of German manufacturing during September was 50.3, higher than market expectations. A private survey of UK manufacturing during September was 51.1, was higher than market forecasts. Major US economic numbers to be released this morning include August Construction Spending as well as a private survey of US manufacturing at 9:00 AM. In addition, Fed Regional President Lacker will give a speech after the session.

GOLD MARKET FUNDAMENTALS: With equities generally lower, the dollar higher and gold prices seeing a strong early bid to start the new month and quarter, one gets the sense that gold might have shifted back into a flight to quality mode again. The ultimate test of the focus of the gold trade will be the gold markets reaction to scheduled US data later this morning. However, some traders think that gold could be set to get enough lift off the ongoing fear of a Greece breakdown and that US scheduled data might be simply discounted. On the other hand, estimates for the US ISM readings aren’t expecting a definitively strong ISM manufacturing result this morning and that could leave the focus of the trade in the gold market on international events. Overnight the press reported higher Indian gold price action, but the trade supposedly saw some physical buyers balk at the higher gold price level. A strong Indian currency should deflect some of the higher flat price of gold to Indian buyers, but the ebb and flow of European debt problems looks to garner the most attention going forward. Despite seeing a reduction in net longs held by the Non Commercial and non reportable camps in the most recent positioning reports, the gold market has managed some gains this morning and for some bulls that might be a noted signal of a possible return to a classically bullish environment. The Commitments of Traders Futures and Options report as of September 27th for Gold showed Non-Commercial traders were net long 158,754 contracts, a decrease of 44,278 contracts. The Commercial traders were net short 199,751 contracts, a decrease of 52,037 contracts. The Non-reportable traders were net long 40,998 contracts, a decrease of 7,757 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 199,752 contracts. This represents a decrease of 52,035 contracts in the net long position held by these traders. Comex Gold Stocks were 11.223 million ounces down 42,906 ounces. Stocks have declined 12 of the last 20 days. Comex Gold stocks are at the lowest in the past 10 readings.

SILVER MARKET FUNDAMENTALS: Unlike the gold market, December silver was unable to forge a quasi upside breakout on the charts this morning. However, December silver is trading within relatively close proximity to last week’s late highs. Silver might be somewhat held back by its physical commodity market standing today, but seeing early gains of almost $1.00 an ounce would seem to suggest that even silver is garnering some spillover flight to quality buying interest. In other words, weaker Copper and platinum prices probably held back silver prices this morning, especially with a noted brokerage firm overnight lowering its price targets for silver, for the coming month and quarter. At least in the near term, silver is likely to take more direction from the gold market and perhaps silver is poised to track inversely with the equity markets, in the face of renewed Greece default fears. Like gold, silver also saw a decline in the speculative positioning in weekly COT report and to some that might be a bearish signal, but to others that is old or backward looking information. The Commitments of Traders Futures and Options report as of September 27th for Silver showed Non-Commercial traders were net long 19,894 contracts, a decrease of 8,908 contracts. The Commercial traders were net short 30,248 contracts, a decrease of 18,522 contracts. The Non-reportable traders were net long 10,354 contracts, a decrease of 9,615 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 30,248 contracts. This represents a decrease of 18,523 contracts in the net long position held by these traders. Comex Silver Stocks were 106.742 million ounces down 482,339 ounces. Stocks have increased 13 of the last 20 days.

PLATINUM: The platinum and copper markets appear to be tracking their physical commodity market standing this morning, despite what appears to be renewed flight to quality strength in gold and silver prices. Therefore, platinum probably looks to take more direction from US scheduled data than other portions of the precious metals complex. Some bull players might be discouraged by the slight decline in speculative longs in platinum in the COT report, while others might simply discount that news as old news. Platinum might have seen some fundamental support from favorable Japanese auto sales figures overnight and the US platinum trade today might garner some support from any improvement in US domestic auto sales figures later today. However, even if US auto sales are positive, they might be lost in the focus toward the Euro zone and the platinum market might be destined to trade in sync with the US equity markets. The Commitments of Traders Futures and Options report as of September 27th for Platinum showed Non-Commercial traders were net long 20,785 contracts, a decrease of 3,438 contracts. The Commercial traders were net short 24,514 contracts, a decrease of 6,039 contracts. The Non-reportable traders were net long 3,729 contracts, a decrease of 2,601 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 24,514 contracts. This represents a decrease of 6,039 contracts in the net long position held by these traders. Extremely critical support in January platinum contract is seen at $1,510.30 and then again down at $1,504.40.

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.