Gold Weakens on Technical Selling, Lower Oil in Thin Trading

P.M. Kitco Roundup: Gold Weakens on Technical Selling, Lower Oil in Thin Trading

Wednesday December 24, 2014 1:52 PM

(Note: I want to take this opportunity to wish all of my valued Kitco readers Happy Holidays. I have a great job, being able to provide you with my daily perspective on the markets. Thanks for your loyalty.—Jim)
 Gold prices ended the U.S. day session modestly lower and closed at a fresh three-week low close in quieter trading Wednesday. The yellow metal was pressured by more chart-based selling amid the overall bearish technical posture of the market. Lower crude oil prices were also a bearish “outside market” factor working against the precious metals markets Wednesday. Markets were also generally quiet overnight on this Christmas Eve day. Most U.S. markets closed early today and many traders and investors have already checked out for the week, if not for the rest of the year. February Comex gold was last down $2.80 at $1,175.20 an ounce. Spot gold was last down $2.00 at $1,175.40. March Comex silver last traded down $0.002 at $15.765 an ounce.
The buzz in the market place has been the dramatic rebound in the U.S. stock indexes the past week. The indexes were left for dead last week, but have come roaring back to establish record highs in the Dow (above 18,000) and S&P stock indexes. The big money flows back into the stock markets worldwide have dented many raw commodity markets, including gold and silver.
Market watchers are also discussing Tuesday’s big third-quarter GDP growth number, at up 5.0%, which is the strongest economic growth in a decade. The report falls squarely into the camp of U.S. monetary policy hawks—also bearish for the metals.
The Russian ruble has stabilized this week, following last week’s serious erosion against the U.S. dollar and other major currencies. Reports Tuesday said the Russian central bank sold $420 million of its foreign currency reserves last week to support the beleaguered ruble. Reports today said a major credit ratings agency is considering downgrading Russia’s credit rating to junk status.
Technically, February gold futures prices closed nearer the session low and closed at a three-week low close today. The gold bears have the firm overall near-term technical advantage. Their next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,203.60. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at today’s high of $1,181.20 and then at $1,185.00. First support is seen at this week’s low of $1,170.70 and then at $1,160.00. Wyckoff’s Market Rating: 2.0
March silver futures prices closed near mid-range today. Silver bears have the solid overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.00 and then at this week’s high of $16.175. Next support is seen at this week’s low of $15.53 and then at $15.25. Wyckoff's Market Rating: 2.0.
March N.Y. copper closed down 180 points at 284.80 cents today. Prices closed nearer the session low today. The copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 295.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 277.75 cents. First resistance is seen at today’s high of 287.40 cents and then at this week’s high of 290.50 cents. First support is seen at last week’s low of 282.70 cents and then at 280.00 cents. Wyckoff's Market Rating: 2.0.
By Jim Wyckoff

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What's Your Strategy - Full Coverage

Merry and Bright…

Wednesday December 24, 2014 17:55

Well, not so much gold and crude. Pricing continues under pressure for those two leading commodities and the end of the downward push is nowhere in sight.
Oil is a bit more complex than gold, but here is the short version on today’s slide. Supplies are building. No major producer has cut production and it is going into storage. They’re doing this in hopes that prices will turn around. The perverse effect is that such tactics only drive the price down lower. As you probably well know, this is a tactic that other commodity producers use when prices are low. Coffee is notorious for that game play. You probably also know that eventually it catches up with the commodity in question. A glut is a glut is a glut.
Gold, of course, has an assigned value, more or less agreed upon in the marketplace by traders and investors. It moves in relation to money; equities and outside markets such as oil. The relationships are clear. How those relationships move mechanically is not always clear.
Fundamentally at the moment we have some clear signals that do not look bullish. The U.S. economy is bellowing and snarling, a pent-up beast finally unleashed. So, a need for safe haven is out of the question. Crude keeps dragging gold with it. Unless consumption somehow ramps up and production is ratcheted down, there is no good reason why the price should rise anytime soon. And if oil rises, it won’t rise much.

Some analysts and think-tankers are saying that the Saudis and a few of their cohorts in league with the United States are keeping prices as low as possible to hurt ISIL/ISIA and to punish the Russians and other pro-Assad forces in Syria. It’s a sort of win-win for the forces of stability at any price.
Just as an aside, the Saudis have about $1.4 trillion in reserves. They could stop producing oil tomorrow and have 10-years’ worth of money in the bank.
Let’s be reminded that volatility is our main watchword in the holiday season. Today has been extraordinarily quiet, as will be Friday and much of next week.
Wishing you as always, good trading, and to all a good night…
Gary Wagner

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Dec 24 FYI Christmas week market schedule Ron Nicklas

Christmas week market schedule

Dear PennTrader:

Here's the holiday schedule for U.S. and Canadian exchanges.
Wednesday, Dec 24 -- Christmas Eve
US and Canadian markets are open only half-day. Both close at 1pm EST - that's 10am PST. PennTrade will close then also.

Thursday, Dec 25 -- Christmas Day
US and Canadian markets are closed for Christmas. So are we.

Friday, Dec 26 -- Boxing Day
US markets are open normal hours. Canadian markets stay closed for Boxing Day. PennTrade is open regular hours.

Monday, Dec 29
Things return to normal. US and Canadian markets are open regular hours, and so is PennTrade.

All of us at PennTrade wish you and yours a Very Merry Christmas.

As Tiny Tim said, "God bless us, every one!"

Ron Nicklas

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Dec 24 From Weak Hands into Strong Hands Bob Moriarty

From Weak Hands into Strong Hands

Bob Moriarty
Archives

At market tops, shares move from strong hands into weak hands. At market bottoms, the opposite: from weak hands into strong hands.
Sheldon Inwentash of Pinetree Capital (PNP-T) had some early Xmas presents for investors as Pinetree Capital managed to violate covenants of their convertible debentures in November and then again in early December. On November 10, the company announced the first, on December 2, announced the second. As a result, Pinetree has been dumping shares with both hands to raise cash.
As those shares have moved from weak hands into strong hands, they offer an unusual opportunity. The first time I saw shares literally being thrown off a cliff was with the shares of Sanatana (STA-V) on the 8th of December as the price plummeted from $.065 to $.025 on volume of more than 23 million shares. That was 25% of the float. Those shares have recovered 50% already. Nothing at all changed with the company other than Pinetree needing cash.
For the last ten days, Pinetree has been dumping Gold Canyon (GCU-V). Pinetree/Sheldon owned 12 million shares. While it’s impossible to know exactly how many shares they have remaining, about 12 million shares have traded hands. No doubt there were other weak hands anxious to capture the very bottom with their sales.
If you like gold, Gold Canyon offers one of the best opportunities to leverage the price of gold. The Northern Miner did a piece on the company in early 2013 showing an NPV of $579 million with gold at $1300 and silver at $25.
The Springpole project has a 43-101 resource of about 5 million ounces of gold and 26 million ounces of silver. The company has $1.5 million in the bank and will sit until the price of gold and silver recovers. The shares were $.25 just over a month ago and touched $.09 days ago under the weight of 12 million shares being dumped. They will recover. At $.10 a share, you are paying about $2.60 an ounce for gold in a safe jurisdiction. That’s pretty hard to beat. Who knows, gold might go up someday.
Gold Canyon is not an advertiser. I do own shares. Do your own due diligence.
Gold Canyon Resources

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Dec 24 Crude Oil, US National Debt, and Silver

Crude Oil, US National Debt, and Silver

Gary Christenson

Conclusion:
Crude oil and silver prices have crashed before, and they will again.  But the one constant in our financial universe that seems inevitable, for the foreseeable future, is increasing debt.  Crude oil and silver prices will follow increasing debt.
*****
Examine the following chart of monthly crude oil prices.  In the past 26 years crude oil prices have crashed 65%, 59%, 54%, and 76%.  The current crash is about 51% so far.


Examine the following chart of monthly silver prices.  You can see similar crashes of 64%, 46%, 51%, and 68% since 1986.  Prices rallied after these crashes and went considerably higher.  Sometimes it took years, but like the national debt, silver prices have substantially increased since 1913.

Examine the US national debt, which is currently over $18 Trillion = $18,000,000,000,000.  Unfunded liabilities, which might be ten times larger, are not even considered in the following graphs.  Adjust the national debt for population increases so we see only the per capita national debt.  As expected, it is climbing exponentially higher, and accelerating since 9-11.
Following the increase in national debt is an increase in the currency in circulation and the prices for most commodities and consumer goods.  Examine the graphs for population adjusted national debt, crude oil, silver, and the S&P 500 Index, all of which show annual averages of weekly prices.  Note that all prices have been indexed to 1971 = 1.0 for comparison purposes.

Note that the recent crash in crude oil prices is not yet reflected in the annual average of weekly prices.


Conclusion:
Crude oil and silver prices have crashed before, and they will again.  But the one constant in our financial universe that seems inevitable, for the foreseeable future, is increasing debt.  Crude oil and silver prices will follow increasing debt.

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Dec 24 Gold In 2015: A Quick Heads-Up

         

Gold In 2015: A Quick Heads-Up

 

Gold in 2015 will find mine output slowing, the dollar rally questioned, and China's demand ever-more important.

[This article originally appeared on BullionVault and is republished here with permission.]
After 2013 belonged to equity investments worldwide, and gold prices sank with silver, 2014 saw a split between the U.S. and the rest of the world.
Pretty much anything stamped "Made in America" gained sharply this year, as our Annual Asset Performance Table shows.

Yet gold has held steady versus the almighty dollar, gaining in euros and sterling terms, and flying versus the Japanese yen and Russian ruble. Silver, on the other hand, has fallen badly again, dragged down by being an industrial metal caught in the same commodity slump as crude oil and copper.
So what might 2015 bring?
U.S. monetary policy will be crucial again. But not quite as much as most analysts are now forecasting.
QE ending this year in the U.S. was already priced in by 2013's near-record crash. As we said at the start of 2014, a lot of good news was also priced in to other asset classes, especially the stock market.
2015 is now expected to bring the first rise to U.S. interest rates. Yet the Fed's new buzzword—that it will be "patient"—says any rise will likely be small, a mere token. Delaying and disappointing the dollar's bull run could see a marked rebound in dollar gold and silver prices.
And in truth, I think QE has not really ended. It’s only taking a pause.
Looking to the floor for precious metals, world gold mining output is likely to have peaked this year. Cost-cutting is starting to delay or close new projects, and lower investment means lower output further ahead. This might not matter immediately, but mining costs suggest a psychological floor for 'hot money' traders to work with around this $1,200 level.
Silver could also see mine output slip from near-record levels in 2015, because it's mostly a byproduct of mines wanting to get other metals, and the commodity slump is denting new spending there as well. Current prices are well above whatever cost an analyst might put on digging up silver. Still, it is perhaps a signal that this month's sharp crash to near five-year lows came right around estimates for primary silver mining costs at $14 per ounce.
On the demand side, the growing threat of a slow, global deflation could hurt both gold and silver buying. But savers wanting to preserve their wealth will always find gold has appeal, especially if deflation risks credit defaults and bank failures.
Silver, in contrast, may find technology and other end-user demand suffers. 2014's new five-year highs in the gold/silver ratio suggest "store of value" is winning over industrial growth.
Most urgently, though, we still don't know how China's huge private gold buying will respond to a slowdown in the world's second-biggest economy (and it is the No. 1 consumer of pretty much everything), let alone a "hard landing" or credit bubble collapse.
2015 looks increasingly like the year we might get to find out at last.

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