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Gold & Silver: Uncertainty Leave Gold as “The” Primary Flight-To-Quality

by Blog Admin on September 6, 2011

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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.

After Downgrade, New Opportunities

by Dave Hightower on August 12, 2011

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Part of the market’s malaise since August 1st came as a result of bickering in Washington over whether to raise the US debt ceiling, but it also came from the European debt debacle, the S&P downgrade of the US credit rating and the cycle of poor economic data from around the globe. However, it is possible that the 17.5% plunge in the September S&P 500, the $23 decline in crude oil prices, the 37 basis point drop in 10-Year Note yields and the 16% drop in copper prices in just 7 trading sessions could have been an overreaction.

True, many players are disgusted with gridlock in Washington over raising the US debt ceiling, a primary factor behind the downgrade of the coveted triple-A rating. Many have lost trust in Congress and in turn have voted by selling the market. This sell-off, which has occurred across most markets, reflects concerns over an economic slowdown, but certain commodities market might have already factored in sustained slowing and the lack of clarity about the US and Euro zone debt problems.

In our opinion, commodities are and will continue to be less responsive to the downturn in the economy than other instruments. We also think that certain commodity markets will be able to turn back up with only minimal evidence of an economic recovery and certainly in the event that spending cuts are found by the Super Committee.

Therefore, the markets are in need of a catalyst, a measure of support or surprise to help shift sentiment from the “sky is falling” view to one of “hope”. Factors that could turn the tide include:

Super Committee progress on budget cuts,
Signs that a US Tax Code overhaul is possible,
Further support from US Fed (QE3),
Signs that the US economy has retained positive momentum.

No Sign of a Fundamental Bottom Yet – Look to the Technicals for Timing

In looking at a chart of the speculator positioning in a composite of a physical commodity markets, it is clear that a significant portion of the net long position in non financial commodities was liquidated in the April through July decline. Our estimate is that the close on August 10th put the net spec and fund long of non financial commodities at 1.2 million contracts, which closely equates to the reading that was posted the week of July 5th. The current positioning also appears to relate fairly well to the reading that was posted on July 27th of 2010. Therefore, we see the commodity markets sitting at a fairly critical pivot point or value zone. To see even lower prices ahead might require a broader acceptance of a “return to recession” mentality in the US.

With the Continuous Commodity Index having fallen to a fresh new low for the move as of August 10th and reaching its lowest level since early January, we suggest that traders remain negative towards those markets that have classically bearish fundamentals, like sugar, cattle and soybeans. At the same time they should wait until the fundamentally bullish markets like copper, corn, crude oil, hogs and platinum reach down to solid chart support levels before establishing long positions in them.

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Gold & Silver: Given the Strong Flight To Quality Move, Bull Track Will Be Hard To Shake

by Dave Hightower on August 11, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia were mixed during the overnight session, stock indices in Europe are generally stronger this morning. Early indications are that US equity markets will open with substantial gains later on today. The US Dollar is weaker against most major currencies this morning, although posting gains versus the Swiss Franc and Pound. There are reports that China may have reduced their target for public home construction next year by 20%. Turkey announced a ban on short-selling stock, joining Greece and South Korea to become the third major market to do that this week. Japanese Machinery Orders during June were up 7.7%, higher than market expectations. The final leg of the Treasury’s refunding, the 30-Year Bond auction, will have results announced at 12:00 PM. Major US economic numbers to be released this morning include the June International Trade balance and Weekly Jobless Claims at 7:30 AM

GOLD MARKET FUNDAMENTALS: While the fear toward the Euro zone debt crisis remains imbedded in market sentiment, gains in German stocks and a higher US equity market indication this morning could dampen some of those fears this morning. While the gold market hasn’t paid that much attention to classic supply and demand news lately, the gold trade could garner some support today from overnight news that South African gold production in June declined by almost 6% from last year’s output levels. To some analysts it is very surprising that the sharpest price rise in history seems to have had little impact on gold production levels, in one of the world’s most important production areas! The gold market might have been partially undermined by an increase in gold margins, but the market didn’t show that much of a backlash. It is also possible that action in the currency markets or action in equities could give some pause to the gold bulls this morning. As usual the gold market continues to see a wide range of price forecasts floated, with some analysts and traders predicting a spike to $2,500 an ounce and others calling for a massive sell off! Given the domination of the flight to quality story line, it could take something very significant to fully derail the bull track. Comex Gold Stocks were 11.345 million ounces up 5,914. Stocks have declined 13 of the last 20 days.

SILVER MARKET FUNDAMENTALS: While the silver market saw some attempt to rally overnight, the market hasn’t been able to throw off a general pattern of lower highs since the early August peak. The silver market has been tagged this week as a weaker market relative to gold, as silver prices haven’t risen in sync with the gold market. As in the gold market, the silver market seems to have discounted signs of increased silver production from a couple silver miners overnight. In other words, classic supply and demand news is generally being overshadowed by the ebb and flow of flight to quality interest. However, some traders suggest that recent weakness in silver prices has been the result of US slowing fears and therefore the scheduled data over the coming two trading sessions might be given some consideration. Comex Silver Stocks were 104.181 million ounces down 1,290,922 ounces. Stocks have increased 12 of the last 20 days.

PLATINUM: Platinum prices have forged a mostly positive track in the early Thursday morning trade, as platinum appears to be garnering some spill over buying interest from the gold market. Some traders think that platinum is drafting off gold strength, as there appears to be a psychological lift being derived from platinum trading at a discount to gold prices. The platinum market seems to have completely discounted news of rising platinum production from an Australian platinum miner overnight, perhaps because that company saw negative earnings results in the face of a 15% increase in production. There might be little resistance in the October platinum contract until the $1,800 level, with close-in support today pegged at $1,778.90.

Metals: Wild Gyrations Today as Precious Metals Confront Slowing Fears

by Dave Hightower on August 5, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe were generally weaker during the overnight session, early indications are that US equity markets will open with moderate losses later on today. The US Dollar is weaker against most of the major currencies this morning. Early indications are that the Bank of Japan sold 4.5 trillion Yen during yesterday’s intervention, a record amount. Germany, France and Spain are scheduled to have talks concerning the financial markets later on this morning. The French Trade deficit during June was 5.6 billion Euros, a smaller deficit than expected. A private survey of UK Housing Prices was up 0.3%, slightly higher than expectations. The UK PPI during June was up 5.9% year-on-year, in line with forecasts. Major US economic numbers to be released this morning, include July Non-Farm Payrolls, July Private Payrolls and July Unemployment at 7:30 AM.

GOLD MARKET FUNDAMENTALS: According to international press coverage, the world is expressing its displeasure with global leaders by selling stocks and buying flight to quality instruments. An equal portion of the press lays the blame of sharp equity market losses this week on the weak global economy, which in many cases is made out to be even more precarious because many governments and central banks are thought to be handcuffed by debt and policy restrictions. The gold market saw a round of higher gold price forecasts floated again overnight, but the market was also presented with news of a double digit month over month increase in Chinese gold production overnight. While the Chinese gold production gain might have a negative impact on gold pricing in normal market conditions, heightened anxiety and the lack of alternative flight to quality instruments probably means that the gold trade will give classic supply side stories little attention. Some gold bulls are a little concerned with gold’s temporary setback yesterday, as that action seemed to be partially tied to the broad based washout in commodities. In other words, the idea that a slower economy is bullish to gold, was at least temporarily challenged yesterday and therefore some traders will be watching gold’s reaction to the US numbers this morning very closely. While the dollar managed another new high for the move overnight, it was unable to hold those highs and into the US open today, the dollar was actually below yesterday’s closing level. In the end, it is possible that currency action yesterday was at least partially responsible for the mid day weakness in gold. Comex Gold Stocks were 11.440 million ounces up 7,204 ounces. Stocks have declined 13 of the last 20 days. Comex Gold stocks are at their highest levels in the past 10.

SILVER MARKET FUNDAMENTALS: As in gold, the trend in silver is widely expected to continue pointing to the upside, but given the sharp gains and the propensity for volatility, traders should brace for a very active end to the trading week. With the trading range yesterday in September silver a rather robust $3.82 an ounce, many traders are suggesting that silver reached a critical junction. With gold and silver prices seemingly being bulled down by slowing fears and broad based physical commodity market liquidation at times yesterday, it seemed as if silver temporarily lost its flight to quality standing. Therefore a large portion of the trade today, will be keen to measure the resolve of the flight to quality bulls, in the wake of the US payroll report this morning. In other words, seeing silver weaken in the face of slack payroll readings, could signal a crack in the bull’s foundation. Some traders also think that a decent number from the US today, could dampen flight to quality sentiment for silver and therefore opinions are diverse and conflicted into the key payroll report release. Comex Silver Stocks were 105.297 million ounces down 459,420 ounces. Silver stocks have increased 14 of the last 20 days.

PLATINUM: The platinum market has already rushed to factor in at least a portion of global slowing this week, as October platinum prices to the overnight low were as much as $122 an ounce below this week’s highs. To the overnight low, October platinum prices were also $211 an ounce below this year’s highs and therefore platinum is being seen as a physical commodity market facing slowing ahead. However, October platinum has now returned to a level of $1,675 on the charts, which has managed to hold up the platinum market up on 4 separate and distinct occasions over the last 11 months! There was a fresh labor issue in South Africa overnight, but the market doesn’t look to garner much in the way of fresh buying, off minor and perhaps temporary supply side threats.

Metals: Slowing Fears and Other Outside Market Forces Influence

by Dave Hightower on June 16, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe are generally weaker during the overnight session, early indications are that US equity markets would open with moderate losses later on this morning. The US Dollar is higher against most of the major currencies this morning, although posting a loss versus the Yen. The Prime Minister of Greece will reshuffle his cabinet and pursue a vote of confidence in order to pass new austerity measures as part of a potential new aid package for his nation. The ruling party in Japan may raise corporate and income taxes to repay government bonds used for funding post-earthquake reconstruction. Euro zone CPI during May was up 2.7%, in line with market forecasts. UK Retail Sales during May were down 1.4%, weaker than expectations. Major US economic numbers to be released this morning include Weekly Jobless Claims and May Housing Starts at 7:30 AM, and the Philadelphia Fed’s survey of US Business Conditions during June at 9:00 AM. In addition, Fed Regional President Fisher will give a speech during the session.

GOLD MARKET FUNDAMENTALS: While gold prices seemed to forge some upside action yesterday off the uncertainty in the US economy yesterday, others were simply impressed with gold’s ability to hold together in the face of weakness in a broad cross section of physical commodity markets. Perhaps the gold market was partially undermined by news of rising Chinese gold production from the first four months of 2011, but that negative impact could be partially countervailed by news overnight that Russian gold and currency reserves reached up to the highest level in almost 3 years. News that the Russian central bank has generally been building its gold and currency reserve base in each of the prior two years might also cushion the gold market against what appears to be a pattern of weakness in a host of physical commodity markets. At least at times yesterday, the gold market seemed to benefit from evidence of slowing in the US economy, but initial expectations for the scheduled data today wouldn’t seem to give a definitive signal on the direction of the US economy. More than likely, gold remains in a position to garner some lingering support from the Greek debt crisis, especially since the Euro has started the Thursday US trade off on a slightly weaker footing. However, a stronger Dollar probably countervails some of the flight to quality lift for gold off the ongoing Euro zone debt saga. Comex Gold Stocks were 11.267 million ounces down 26,783 ounces.

SILVER MARKET FUNDAMENTALS: The silver market seems to be somewhat off balance as a result of broad based slowing fears and perhaps because of weakness in a host of physical commodity markets. While Comex silver stocks remained below the potentially psychological level of 100 million ounces overnight, the stocks yesterday saw a daily increase of 600,511 ounces to stand at 99.4 million ounces. Comex Silver Stocks have declined in 12 of the last 20 days. Talk of strong Asian demand for silver might also be providing the market with some support against what at times seems to be a broad based physical commodity market liquidation bias. Silver continues to see generally up beat analysts forward price projections, although some forecasts have recently been pulled down from levels forecasted earlier this year. In the mean time, silver might have to rely on flight to quality or safe haven support, as classic physical commodity market fundamentals could be undermining in the short term. So far, the silver market hasn’t taken much in the way of direction from earnings and production news from a series of silver miner results this week.

PLATINUM: The platinum market saw noted downside action on the charts overnight and given the apparent softening of the US economic outlook, the initial weakness today isn’t that surprising. With the market also seeing evidence of Indian tightening overnight and renewed Greek problems in the headlines it would seem like the platinum market almost totally discounting evidence of strong Chinese platinum import data. Typically seeing a physical commodity market discount favorable Chinese import/demand news story is usually a sign of broad based macro economic negativity in the marketplace. With the expectation of lower equities and some strength in the Dollar, the platinum market also looks to face a wave of negative outside market factors. Near term downside targeting is seen at $1,750 basis the July platinum contract.

Metals: Under the Influence of Economic Uncertainty

by Dave Hightower on June 9, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe were generally weaker during the overnight session, early indications are that US equity markets would open with moderate gains this morning. The US Dollar is weaker against most of the major currencies this morning, although posting gains versus the Yen and Swiss. News reports indicate that a potential Greece aid package may ask private creditors to swap their current holdings for longer maturities. The IMF has urged China to let the value of the Yuan rise further in order to help rebalance the Chinese economy. Japanese GDP during the first quarter was down 3.5% year-on-year, weaker than market expectations. The UK Trade deficit during April was 7.39 billion Pounds, a smaller deficit than projected. The Bank of England will announce their monetary policy decision at 6:00 AM, while the European Central Bank will announce their monetary policy decision at 6:45 AM. Major US economic numbers to be released this morning include Weekly Jobless Claims and the April International Trade Balance at 7:30 AM, and April Wholesale Trade at 9:00 AM. In addition, Fed Vice Chairman Yellen and Fed Regional Presidents Plosser and Pianalto will give speeches during the session. The final leg of the Treasury’s monthly refunding, the 30-year note auction, will have results announced at 12:00 PM.

GOLD MARKET FUNDAMENTALS: The gold market starts the Thursday US trading session off on a slightly weaker footing despite somewhat supportive currency market action. Apparently residual concern of slowing in the US economy has lost its capacity to foster safe haven buying of gold, or perhaps the magnitude of the slowing fears in the US aren’t higher enough to prompt fresh buying action. Some players think the impending ECB rate decision has spooked some longs to the sidelines, while others think that the ECB won’t be able to justify a hike in this meeting, especially given the damage to sentiment caused by the most recent round of Greek debt troubles. Some traders think that gold is deriving some support from the tensions in the most recent OPEC meeting, where the cartel was clearly divided between raising production and holding production steady. Those OPEC members against raising production levels suggested that they were concerned about overheating in the Chinese economy, especially if energy prices were reduced in the wake of a higher output move. In fact, the main dispute inside OPEC was on the outlook for the global economy and that could indirectly provide some support to gold prices ahead. In looking ahead, the gold market will see a couple US Fed speeches today, with the Fed’s Plosser already weighing in with a partially dovish statement overnight. With the Fed Beige book, US data and recent Fed statements mostly leaning toward more slowing in the US, it is possible that some gold bulls are becoming hopeful of a delay in the end of QE2 or some other gold supportive stance from the US Fed. Comex Gold Stocks were unchanged at 11.214 million ounces.

SILVER MARKET FUNDAMENTALS: Somewhat surprisingly the silver market is showing some minor early gains today and that could be a sign that silver is starting to sense a softening of the US Fed tone. Clearly silver would be undermined in the event the ECB raises interest rates this morning but that isn’t a widely anticipated development. Seeing silver rally and gold decline today could also suggest that macro economic uncertainty isn’t high enough to support gold and that type of action could also suggest that silver is indeed hopeful of a delay in the end of US QE2. Some traders are suggesting that silver is coiling for some type of key decision ahead and therefore the last month’s high and low prices could be seen as critical technical points directly ahead. Comex Silver Stocks were 101.015 million ounces down 7,683 ounces. Silver stocks have declined 12 of the last 20 days.

PLATINUM: The platinum market was showing some minor weakness in the early Thursday US trade, despite an initial attempt to rally in the silver market. However, weakness in copper and energy prices and a lack of direction in world equity markets seems to have left the bear camp with a slight edge. Platinum and other physical commodity markets are probably fretting the ECB rate decision this morning, even though US central bank comments recently have leaned more toward an extension of easing. While platinum recently saw favorable comments toward Ford motor company shares, the tone of the Fed Beige book yesterday would seem to be somewhat restraining of platinum and other physical commodity prices. Platinum has also shown some coiling action for the month of June and that could mean that the trade is waiting for a clearer track on the US economy before committing to a fresh trend. Up trend channel support in the July platinum market is seen at $1,818.80 today and that level rises to $1,825.20 on Friday.

Metals: June Gold Highest Since May 4th; Silver Higher

by Dave Hightower on May 31, 2011

Global equity markets were generally higher during the overnight and early morning hours, with indications that US equity markets would open with sizable gains this morning. The US Dollar is generally weaker against most of the major currencies, although posting a strong gain versus the Yen. News reports indicate that Germany may drop their attempts to have Greece have an early rescheduling of their debt as a condition for any new aid package. A major credit rating agency put Japan on a sovereign debt watch for a possible ratings downgrade. Japanese Industrial Production during April was up 1.0%, lower than market forecasts. German Unemployment during May was 7.0%, in-line with expectations. Euro zone Inflation during May was up 2.7% year-on-year, lower than projections. Major US economic numbers this morning will include a private survey of US Home Prices at 8:00 AM, a private survey of Chicago area Purchasing Managers at 8:45 AM, and a private survey of US Consumer Confidence at 9:00 AM.

GOLD MARKET FUNDAMENTALS: The gold market managed another new high for the move overnight, with the June gold contract reaching the highest level since May 4th in the early Tuesday US trade. Apparently a slightly improved outlook for Japanese manufacturing and decent Euro zone economic readings have provided a somewhat positive macro economic backdrop this morning, which might be accentuated by renewed strength in energy prices. With the Dollar also falling to the lowest level since May 6th, the gold market is probably benefiting from the overnight currency market action. Unfortunately, for the bull camp in gold, US gold prices this morning might be somewhat restrained by weakness in Indian gold prices overnight. Some traders are suggesting that the prospect of weak US scheduled numbers later this morning could kick up the currency related support for gold, but that line of reasoning would seem to conflict with the positive initial reaction in gold prices last night to the hope that some idled Japanese manufacturing was poised to get back on its feet. Comex Gold Stocks were 10.875 million ounces down 271,824. Comex Gold Stocks are at the lowest levels since 09/27/2010. Comex Gold stocks are at the lowest in the past 10 readings. The Commitments of Traders Futures and Options report as of May 24th for Gold showed Non-Commercial traders were net long 213,515 contracts, an increase of 18,535 contracts. The Commercial traders were net short 259,797 contracts, an increase of 20,177 contracts. The Non-reportable traders were net long 46,282 contracts, an increase of 1,641 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 259,797 contracts in gold. This represents an increase of 20,176 contracts in the net long position held by these traders.

SILVER MARKET FUNDAMENTALS: The silver market appears to be caught up in a positive early wave that has also served to lift gold, equities and energy prices. A weaker Dollar is also serving to lift silver prices, which are probably garnering some positive vibes from hopes of improved physical demand for some commodities in the face of more positive Japanese manufacturing talk overnight. Some players even think that gold and silver are deriving some lift from talk of a possible deal that would allow Greece to cut its value added tax, which in turn is thought to be a stimulus to that troubled economy. Comex Silver Stocks were 101.428 million ounces down 383,025. Stocks have declined 12 of the last 20 days. The Commitments of Traders Futures and Options report as of May 24th for Silver showed Non-Commercial traders were net long 24,246 contracts, an increase of 180 contracts. The Commercial traders were net short 43,120 contracts, an increase of 883 contracts. The Non-reportable traders were net long 18,875 contracts, an increase of 705 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 43,121 contracts. This represents an increase of 885 contracts in the net long position held by these traders.

PLATINUM: The platinum market managed a distinct range up extension this morning and in the process the July contract reached the highest level since May 5th. Apparently the market is benefiting from hope that some Japanese manufacturing might be set to restart and that in turn is seen as a direct benefit to platinum demand expectations. Keep in mind, the platinum market has tracked tightly with global auto sector developments and therefore it is possible that some fresh buyers are stepping into platinum off hopes of increased physical demand ahead. There was a minor supply side setback overnight in platinum, but this morning’s attention seems to be fixated on the demand side of the equation. The Commitments of Traders Futures and Options report as of May 24th for Platinum showed Non-Commercial traders were net long 21,961 contracts, a decrease of 1,159 contracts. The Commercial traders were net short 25,095 contracts, a decrease of 1,264 contracts. The Non-reportable traders were net long 3,134 contracts, a decrease of 104 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 25,095 contracts. This represents a decrease of 1,263 contracts in the net long position held by these traders.

Bin Laden Death Lifts Equities; Break In Silver; Small Planting Window For Corn

by Dave Hightower on May 2, 2011

There is a general bearish tone of many physical commodities overnight. This partly due to a higher dollar, but also a possible reduction of geo-political uncertainty with bin Laden’s death. Saudi Arabia has increased oil production. US weather has a couple dry day’s schedule for planting, but a cold wet pattern forecast to return.

Gold & Silver: If Gold Rallys Off Positive US Numbers, It’s Looking At Inflation Propects

by Dave Hightower on April 20, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Euro were generally stronger during overnight trading, early indications are for the US stock market to open today’s session with sizable gains. The Dollar is weaker against most of the major currencies during overnight trading, although posting a gain versus the Yen. Spain was able to auction 3.4 billion Euros worth of longer-term bonds, with good levels of demand from the market. The Swedish central bank raised benchmark interest rates in that nation by 0.25%, the sixth time they have done so in the past 10 months. The Japanese Trade surplus during March was 196.5 billion Yen, lower than expected. German PPI during March was up 6.2% year-on-year, lower than forecasts. Major US economic numbers to be released this morning include March Existing Home Sales at 9:00 AM, and a private survey of mortgage applications released during the session.

GOLD MARKET FUNDAMENTALS: Outside market forces have once again shifted to favor the bull camp, as the US Dollar is weaker, energy and commodity prices are higher and even equities are showing noted strength in the early US Wednesday morning trade. Apparently the gold trade prefers to see favorable US economic numbers and the trade generally expects to see a somewhat positive existing home sales report later this morning. Gold did not seem to be undermined by hints of aggressive austerity cuts from the US Treasury Secretary yesterday and gold also doesn’t seem to be undermined by growing talk that the Fed is preparing for a change in policy. With June gold rising through the $1,500 mark this morning that might spark a wave of media coverage that could fan bullish dialogue and eventually talk of an overbought condition. However, seeing higher equities, grain, energy and industrial metals price action overnight, would seem to favor the bull camp to start this morning. The gold market also saw a downward revision in 2011 gold production estimates from Polymetal a Russian miner. The trade was apparently tossing around rumors of a possible take over of Harmony gold but that talk was discounted by company officials. In the end, residual concerns from the US credit rating story early in the week appears to have sparked a wave of investment flow toward gold and that flow apparently isn’t discouraged by a recovery in US equities. Traders will be watching the gold market reaction to the scheduled US numbers closely this morning as the ability to rally again off positive US economic readings, suggests that the gold trade isn’t focused on the prospect of rising rates, but instead the market is focused on the prospect of inflation. Comex Gold Stocks were 11.089 million ounces up 5,300 ounces. Gold stocks have declined 12 of the last 20 days.

SILVER MARKET FUNDAMENTALS: The silver market continued to flash higher overnight, as the metals markets are being presented which a much more upbeat outside market environment this morning. In addition to positive equity market action, the silver trade is also seeing supportive currency market action, rising oil and physical commodity prices and at least in the early action today, the trade thinks that the US will see somewhat positive economic readings. Not surprisingly, the silver market seemed to mostly discount news overnight that Hochschild Mining was on track to reach its 1st quarter 2011 silver production target, perhaps because the silver market also saw evidence of a noted decline in silver output from a Russian silver mining operation. Polymetal saw a noted year over year quarterly decline in silver production of 23%, but recently the silver market has been more concerned with demand prospects, than with changes in physical supply. With the recent strength in silver and the markets recent out performance of the gold market, the headlines are starting to fill up with predictions of a return to all time high silver prices. Comex Silver Stocks were 103.120 million ounces up 300,345 ounces. Silver stocks have declined 15 of the last 20 days.

PLATINUM: The platinum market is showing some positive action this morning but it would appear that the market is having trouble keeping pace with gold and silver price action. Perhaps the platinum market is being held back by its industrial standing as the global auto industry is still being threatened by supply chain disruptions and fears for the Japanese economy. In retrospect, the platinum market seems to be caught in a $1,801 to $1,775 trading range in the July contract, even though the rest of the metals complex is in overdrive. The path of least resistance is pointing upward but platinum appears to be the weakest link in the metals complex.

Gold & Silver: Waiting to See What Happens With US Shutdown

by Dave Hightower on April 8, 2011

OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally stronger this morning. Early indications are for the US stock market to open today’s session with moderate gains. The Dollar has been weaker against most of the major currencies during overnight trading, but is posting a gain versus the Yen. Negotiations between the White House and Congressional leaders have failed to put together a budget agreement that will prevent a US government shutdown. The Spanish Economics Minister said that the possibility of Spain asking for EU aid was out of the question. The German Trade surplus during February was 11.4 billion Euros, lower than expected, but exports and imports both beat estimates. UK PPI during March was up 5.4% year-on-year, higher than forecasts. The only major US economic number to be released this morning will be February Wholesale Trade at 9:00 AM. In addition, Fed Regional President Lockhart will give a speech early in the trading session.

GOLD: The June gold contract in the early Friday action has forged a range up move to fresh new all time highs. In addition to ongoing concern of a US government shutdown, the gold market also saw a sharp range down extension in the Dollar overnight and therefore the bull camp has a string of fundamental arguments in their court. In addition to the potential failure to reach a budget deal, the gold market might also be rising off the fact that the US budget cuts are minimal in the grand scheme of the multi-trillion dollar US budget! In other words, leaving US government spending high and the deficit growing is seen as an inflationary development, and as a development that weakens the Dollar and lastly increases the flight to quality sentiment in the gold market off the rising prospect of a US credit rating downgrade. Those same ratings agencies that were grilled by Congress over their slack pre-sub prime ratings efforts, should probably slap US debt with a downgrade once the puny US spending cuts are put in perspective. While the gold market could have been held back by news of a rise in Gold Fields quarterly gold production for their 1st quarter, that potential production gain actually follows a decline in gold production from that company in the previous quarter. Nonetheless, the gold market hasn’t paid that much attention to the physical supply side of the equation recently. With some budget negotiators calling for a mid morning deadline on a deal, there could be two volatility events today, one this morning and another into the afternoon closes in the event that no deal is reached. Comex Gold Stocks were 11.011 million ounces down 21,750 ounces. Comex Gold stocks are at the lowest in the past 10 readings.

SILVER: With the May silver contract rising above $40.00 early this morning, the bull camp is benefiting from the headline flow. Like gold, the silver market is probably benefiting from a fresh new low in the US Dollar and also because of the failure to make progress on the US Budget fight. With the silver market seeing a series of upward revisions in price targets from several brokerage firms overnight, the silver market also appears to be getting a distinct lift from the headline flow. With higher equities and gains in platinum and copper prices, the silver market is certainly catching a lift from the outside market environment. Comex Silver Stocks were 104.681 million ounces down 205,562 ounces. Silver stocks have declined 14 of the last 20 days.

PLATINUM: Platinum has managed to join gold and silver with noted upside gains overnight, but the market also forged a very wide trading range. The July platinum market managed to reach the highest level since March 9th off a combination of a falling dollar and dialogue that some Japanese auto production would be restarted around mid month. However, while platinum appears to be rising in sync with gold and silver prices, and therefore the platinum market might not be happy with a breakdown of budget talks and a sharp setback in the US equity markets later in the session today. Initial resistance is pegged at the $1,825 level, but platinum could begin to track its industrial commodity market background later in the trading session today.

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