Roy’s Commentary 5/10/16

Despite a weaker than expected reading on U.S. employment data to close out last week gold, was unable to challenge $1,300.00 as we closed the month of April with gold feeling a bit vulnerable. On the back of continued talk of a slowing Chinese economy, most commodities opened lower and continued to sell –off after trading opened on our Sunday night. As all four precious metals moved lower throughout the day yesterday and again this morning, gold is looking to hold support in the low $1,260.00’s while silver pivots around $17.00.  From a technical perspective, our market may trade in a narrow range for a few days as we await the next “jolt” which gives us a clearer direction.  Until that happens,  gold should continue finding support in the low $1,260.00’s and again around $1,250.00, the 50 day moving average is currently $1,248.25.  On the upside, resistance can be expected at $1,275.00, $1,285.00 and at $1,300.00.  Silver support should be found at  $16.85 while resistance can be expected from $17.40 through $17.50.

The World Gold Council just released data for Central Bank activity for Q1.  While central bank buying slowed a bit in Q1 of 2016 as compared to the second half of 2015, it did increase when compared to Q1 of 2015.  Featured buyers in Q1 were Russia, China and Kazakhstan as they purchased 46, 35 and 7tonnes, respectively.  Many will debate what if any impact central bank activity has on the outright gold price.  I have always felt that when a central bank commits to buying gold, it is speaking quite loudly.  As central banks diversify their holdings, it is likely they are selling USD in order to buy gold and, in my opinion, that sends a signal that everyone should be noticing.

Roy’s Commentary 5/4/16

Despite the continued weakness of the USD, falling bond yields and a weak stock market, the rally in precious metals has stalled as short term speculators have opted for locking in profits on recent purchases.  In addition, there has been talk of producer selling this week as hedging may have been increased with gold at a 15 month high.  While gold was not able to hold above $1,300.00, it has fared better than silver in recent days as witnessed by the gold silver ratio which has moved back up towards 74.00. Physical demand from our corner of the market has slowed a bit with the higher price points. Demand from China has been weak but the demand for gold ETF’s has picked up sharply and certainly adds to the bullish sentiment gold currently enjoys as our market is receiving much more press coverage than it has in many months. Technically speaking, gold has already breached my first support level today in the mid $1,280.00’s but better support should be found in the mid to low $1,260.00’s.  On the upside, momentum traders are likely to jump on the bandwagon if gold breaks above $1,310.00 with my target being $1,340.00 before another round of profit taking sets in.

Roy’s Commentary 4/27/2016

Precious metals have been resilient on the recent uptick in volatility when the downside has been tested.  Despite the sharp drop in prices we often see in our market,  gold has continued to hold the low $1,220.00’s and silver has again bounced impressively after recent dips below $17.00.  Physical demand which had slowed a bit at the recent loftier levels has once again picked up as traders and investors continue to look for price points to enter the market.  The recent rise in U.S treasury yields has done little to strengthen the USD which, in my opinion, still feels vulnerable to weakening,  this should support higher precious metals prices. As we saw yesterday, economic data here in the U.S. continues to be mixed at best.  The decline in durable goods orders last month coupled with a fall in the Conference Board’s consumer confidence index weakened the USD as gold and silver reversed early losses, moved higher throughout the day and the rally continues this morning.

This afternoon brings us a statement from the FOMC which is concluding a two day meeting.  While a rate hike today is not expected, the tone of the statement should give a clearer picture on what Chair Yellen and her colleagues intend to do at the next meeting, which does not take place until June. In recent days, many market participants and commentators who were not looking for a June hike have changed their opinion and believe June will bring a quarter point hike. I continue to think the rate hikes, if they do come, will not begin before September.

While silver continues to impress with the gold silver ratio falling below 72,  I think gold needs to take over the leadership role.  Gold should find support in the mid to upper $1,230.00’s and again at the previously mentioned low $1,220.00’s.  A break below $1,220.00 could set us up for a test of $1,180.00. Rally attempts above $1,250.00 are likely to be met with short term traders taking profits and a bit of producer selling as we approach month end. A benign FOMC statement today could propel us back to $1,265.00.  Keep an eye on crude oil which is up another two percent this morning as the market tests $45.00. Further gains in crude could support a rally in gold to $1,285.00 – $1,300.00.

Disclaimer:  The content in this commentary is provided for informational and educational purposes only and all estimates and opinions included in this commentary are as of the date of the document and may be subject to change without notice.  It is not a solicitation or offer to make or enter into any sale, purchase or exchange of precious metal products. All items and prices listed are indications only.  Call for exact pricing and availability.  Subject to prior sale.  Neither MTB nor the author of this commentary make any representations or warranties about the accuracy or completeness of the information provided, and will not be responsible for the consequence of reliance upon any opinion or information contained herein or for omissions therefrom.  The precious metals market is random and highly volatile so it may not be suitable for some individuals.  MTB’s employees are not brokers, investment advisors or financial advisors.  MTB and its employees do not render legal, tax or investment advice.  All prospective investors should always consult with a broker or investment adviser before investing any money in precious metals

Roy’s Commentary 4/20/16

Silver was the shining star yesterday as it rallied above $17.00 for the first time since June of 2015. The rest of the complex followed suit as all recorded solid gains with platinum breaking back above $1,000.00.  Silver, which has been the headline story recently, has been consistently supported by physical demand from our corner of the market all year and most recently by a surge in physical demand reported to be coming out of China. The gold / silver ratio, which is a favorite subject of mine and something I watch very closely, has also been in play since I mentioned it a few weeks ago when I was looking for silver to lead the complex higher. As witnessed by the holdings of the major silver ETF’s which have risen sharply in the past 6 weeks and are now 30 million ounces higher than where they were at the beginning of the year, it has become clear that most investors have looked more favorably upon silver than gold. This is further supported by looking at the gold / silver ratio which was flirting with 80 not to long ago and is now testing 73.  With silver having done its part rallying up to a well-defined band of resistance, from $17.25 to $17.40, it may be up to gold if the rally is to continue.  The next objective for me is gold testing $1,285.00 and the gold / silver ratio dropping a bit further to 72 which takes silver to $17.85.

As China continues to flex its might on the global economy, it has also set its sight on the global precious metals market where it clearly intends to be a leader.  This week,  China launched the SGE Gold Benchmark.  As the world’s largest producer, importer and consumer of gold, China’s new “gold fixing price” is based on the price of .9999 gold and is priced in Chinese Yuan.

Roy’s Commentary 4/6/16

Precious metals had a “good day” yesterday as strong physical demand in Japan and China carried over into Europe, and then the U.S., as weak equity markets and falling bond yields brought traders and investors to our market. Unfortunately, yesterday’s gains have been followed today by all four precious metals being lower this morning as silver is once again trading below $15.00. As the market continues to be range bound, I will put forth a few factors in the current tug of war.  On the positive side, we continue to receive mixed, at best, economic data from the U.S. and abroad. The recent rally in equity markets appears to be running out of steam and interest rates are again moving lower as witnessed by the U.S. 10 year bond now yielding just 1.75 percent which weakens the USD. On the negative side, we have an FOMC here in the U.S. which has told us interest rates are going up this year and in years to come, the only question is at what pace. I still believe we will see one 25 basis point hike in Q3 and one in Q4 this year, but a third hike along the way could weigh heavily on precious metals. Equally concerning is the lackluster demand for physical metals; not only in the U.S. but throughout the entire market. Along with this we have seen a slowdown in demand for ETF’s and a sharp fall in gold demand in India where imports have fallen by one-third, as compared to this time a year ago.  As gold historically does best in times of uncertainty, we need to look no further than the race for President here in the U.S. to justify everyone having gold and precious metals in their portfolio.

Disclaimer:  The content in this commentary is provided for informational and educational purposes only and all estimates and opinions included in this commentary are as of the date of the document and may be subject to change without notice.  It is not a solicitation or offer to make or enter into any sale, purchase or exchange of precious metal products. All items and prices listed are indications only.  Call for exact pricing and availability.  Subject to prior sale.  Neither MTB nor the author of this commentary make any representations or warranties about the accuracy or completeness of the information provided, and will not be responsible for the consequence of reliance upon any opinion or information contained herein or for omissions therefrom.  The precious metals market is random and highly volatile so it may not be suitable for some individuals.  MTB’s employees are not brokers, investment advisors or financial advisors.  MTB and its employees do not render legal, tax or investment advice.  All prospective investors should always consult with a broker or investment adviser before investing any money in precious metals

Roy’s Commentary 3/21/2016

Following an overnight sell-off during the Asian trading session, gold continues to show weakness this morning as the sharp rally brought on by last week’s dovish FOMC statement on Wednesday has been short lived. While overall volume picked up throughout the week, which is always a good sign, physical demand was not enough to take on the speculators who bought on Wednesday but were content with taking a profit before the end of the week. Despite the increased buying from our corner of the market and the continued rise in the holdings of ETF’s, gold struggles to hold a rally as sellers emerge above $1,265.00, while buyers enter as we begin trading below $1,240.00.  In the short term, we are again faced with a tight trading range as witnessed by the 10 day average in gold at $1,252.60 being within a good days trading range of the 100 day average which currently stands at $1,134.00. Keep an eye on the gold silver ratio in the coming days which is currently trading around 79.00.  While silver failed to hold above $16.00 which was a bit disappointing, I continue to think the demand for silver which continues to be quite good will propel silver into a leadership role sooner than later and be the catalyst for a rally that sees silver testing $17.25 – $17.40.  A silver rally towards these levels likely brings the ratio back towards 75 but enables gold to test $1,300.00.

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Disclaimer:  The content in this commentary is provided for informational and educational purposes only and all estimates and opinions included in this commentary are as of the date of the document and may be subject to change without notice.  It is not a solicitation or offer to make or enter into any sale, purchase or exchange of precious metal products. All items and prices listed are indications only.  Call for exact pricing and availability.  Subject to prior sale.  Neither MTB nor the author of this commentary make any representations or warranties about the accuracy or completeness of the information provided, and will not be responsible for the consequence of reliance upon any opinion or information contained herein or for omissions therefrom.  The precious metals market is random and highly volatile so it may not be suitable for some individuals.  MTB’s employees are not brokers, investment advisors or financial advisors.  MTB and its employees do not render legal, tax or investment advice.  All prospective investors should always consult with a broker or investment adviser before investing any money in precious metals

 

Roy’s Commentary 3/16/16

Gold has now fallen over $50.00 from the recent highs after briefly trading above $1,280.00.  The market has been pressured by short term traders who have taken profits and liquidated long positions along with producers who have taken advantage of the rally and have been hedging. In addition, there has been the reemergence of short sellers who are encouraged by higher bond yields, a generally stronger USD and news of a sharp fall in gold demand in India and China.  While physical demand remains good in the U.S. and elsewhere and investment in the ETF’s has at times been robust in 2016 gold appears to be at a cross road and I am looking for a $100.00 move from the current price of $1,230.00 sooner than later.  With that being said, I will not predict which way it goes but I will say gold falls to $1,130.00 or moves up to $1,330.00 in the coming weeks.

As we await the statement from Chair Yellen later today following the FOMC meeting, our market is trading quietly on very light volume with all four precious metals trading slightly above yesterday’s settlement prices.  I do not expect any policy changes from the FOMC today but the tone and content of Chair Yellen’s statement could bring fireworks to all markets.  Any reference to inflation remaining very low and concern about domestic and global growth would indicate a rate hike is likely not on the agenda and no more than two rate hikes the second half of 2016 are likely to occur.  This scenario would certainly support precious metals.  The flip side would be comments about inflation is picking up (which is what the FOMC wants to see) and the uncertainly about economic growth is now behind us as witnessed by the rebound in global stock markets. This scenario will certainly pressure precious metals and set the stage for a possible rate hike as early as next month when the FOMC meets on April 26 & 27.

 

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Disclaimer:  The content in this commentary is provided for informational and educational purposes only and all estimates and opinions included in this commentary are as of the date of the document and may be subject to change without notice.  It is not a solicitation or offer to make or enter into any sale, purchase or exchange of precious metal products. All items and prices listed are indications only.  Call for exact pricing and availability.  Subject to prior sale.  Neither MTB nor the author of this commentary make any representations or warranties about the accuracy or completeness of the information provided, and will not be responsible for the consequence of reliance upon any opinion or information contained herein or for omissions therefrom.  The precious metals market is random and highly volatile so it may not be suitable for some individuals.  MTB’s employees are not brokers, investment advisors or financial advisors.  MTB and its employees do not render legal, tax or investment advice.  All prospective investors should always consult with a broker or investment adviser before investing any money in precious metals

Roy’s Commentary 2/18/16

Precious metals are holding above the key psychological levels of $1,200.00 gold and $15.00 in silver after the sharp sell-off earlier in the week.  With short term technical support in gold coming from the 10 day moving average which hovers just above $1,200.00, short sellers are not likely to pressure the market unless this level is convincingly breached. While physical demand from our corner of the market has been quite good, overall market volume is falling as many traders and investors have either covered short positions or taken a profit on a long position. Thus, we have a market where “money” is on the sidelines waiting for a sign of where the next 5 plus percent move in the market will take us. Support and optimism for another move on the upside comes from the FOMC minutes from the January meeting where many of the voting members expressed concern over the state of the domestic and international economy along with the extreme volatility in many financial markets.  This would seem to indicate the FOMC will remain on the sideline, continue to be data driven and, in my opinion, not raise rates until Q3 at the earliest. Crude oil has recently become a contra-indicator for the gold market, meaning a move up in crude which has historically been good for gold may no longer be the case.  As I see it now, a move higher in crude will tell the FOMC the economy is improving and inflation is moving closer to their target which will support an increase in the Fed Funds rate which would strengthen the USD and depress gold.  Crude oil continuing to probe lower sends the opposite signal, keeping rates low and unchanged, which supports gold.

Roy’s Commentary 2/9/16

The health of the domestic and global economy continues to be a growing concern for investors of all sizes. Adding to this are mounting geo-political concerns in many regions which have most market participants looking for the exit sign on equities while they move into U.S. treasuries and precious metals.

A few weeks ago, all markets were poised and pricing in a U.S. interest rate hike every quarter for 2016.  In recent days, it now appears that any hikes are likely to occur no sooner than the second half of the year with many “experts” already calling for a single hike in Q4 or none at all for 2016. As sentiment has changed, investors have been purchasing U.S. treasuries which has pushed the yield all the way down to 1.75 percent which has further supported gold and company. Gold touched $1,200.00 yesterday as heavy, broad based buying continues to drive the market to levels not seen since June of last year. You have to look no further than YTD results in order to see why gold and company should be a part of every well balanced, diversified portfolio.

So far this year, the Dow Jones Industrial Average has fallen almost 10 percent while gold and silver have gained over 12 and 10 percent respectively.  In the short term, gold may struggle a bit at $1,200.00 as producers do some hedging while speculators lock in profits but the landscape is changing for our market and I expect dips to be well supported by physical buyers with a longer term perspective on investing along with traders who will rotate into precious metals from a technical basis.

 

 

 

Disclaimer:  The content in this commentary is provided for informational and educational purposes only and all estimates and opinions included in this commentary are as of the date of the document and may be subject to change without notice.  It is not a solicitation or offer to make or enter into any sale, purchase or exchange of precious metal products. All items and prices listed are indications only.  Call for exact pricing and availability.  Subject to prior sale.  Neither MTB nor the author of this commentary make any representations or warranties about the accuracy or completeness of the information provided, and will not be responsible for the consequence of reliance upon any opinion or information contained herein or for omissions therefrom.  The precious metals market is random and highly volatile so it may not be suitable for some individuals.  MTB’s employees are not brokers, investment advisors or financial advisors.  MTB and its employees do not render legal, tax or investment advice.  All prospective investors should always consult with a broker or investment adviser before investing any money in precious metals

Roy’s Commentary 1/27/16

Precious metals continued moving higher yesterday as gold and silver tested resistance levels at $1,125.00 and $14.50. Fueled by uncertainty over the health of the U.S. economy, many “experts” are now calling for no more than two rate hikes by the FOMC this year. Earlier consensus opinion along with comments by FOMC members had all markets pricing in four rate hikes in 2016.  The result of fewer rate hikes should be favorable for gold and the commodity sector as a USD that does not rally, and perhaps actually weakens, would be very supportive for precious metals. The extreme volatility in the stock market may also be lending a hand in the recent rally as equity investors make changes to their portfolios. Month to date figures show ETF holdings in gold have risen almost 4.00 percent in January. Later today, we will get a statement from the FOMC as they conclude their first meeting of 2016. A dovish tone could send gold towards the 200 day moving average at $1,133.00 while silver takes a look at the 100 day average which is $14.65.