Tuesday, May 22, 2018

Gold And Silver - I Am An Optimist

It happened at last. Now there is high or even extreme pessimism among big speculators trading precious metals futures on the COMEX. Look at these two charts:

                                   source: Simple Digressions

and this one

                                  source: Simple Digressions

The chart shows current (as of May 15, 2018) net positions held by money managers (big speculators) in gold and silver futures at the COMEX. Note that these traders are very pessimistic about gold (red circles on the upper panel of the chart) and silver (blue circles on the lower panel). 

For example, money managers trading silver futures hold a large, net short position. Interestingly, even at the end of the latest bear market in precious metals (December 2015) these speculators were less pessimistic. 

The same pattern is visible on the gold chart - yes, money managers are now less pessimistic than at the end of 2015 but their pessimism is comparable to that visible at the latest bottoms (red circles).

As a result, as a tough contrarian, I am once again optimistic about gold and silver in the short and long-term perspective.

Sunday, May 20, 2018

Fifth Issue Of The Simple Digressions Newsletter

The fifth issue of my Newsletter has been just dispatched. Please, check your e-mail boxes and let me know if there is any problem.

Wednesday, May 2, 2018

Despite The US Dollar Getting Stronger The Gold Holds Quite Well

After the FED's decision to keep interest rates unchanged the gold was quite strong. Despite the US dollar making another ultra-short term top, gold prices held well:

source: stooq.com

Note that yesterday (May 1) the US dollar broke above its resistance (the red line) but gold did not break below its ultra-short-term support (the green line). So there is a small, positive (for gold) divergence.

What does it mean? Generally, in the long term it means nothing at all (the big picture remains unchanged) but in the ultra-short-term we may see gold prices going a bit higher now (as I wrote in my latest piece - it is a very primitive short term trade). 

What is more, the GDX / gold ratio is supporting a relatively bullish thesis on gold:

source: Simple Digressions

As the chart above shows, since late March 2018 the ratio has been in its upward trend. Interestingly, this time it is a promising medium-term signal (the shares of precious metals mining companies are stronger than bullion). It looks like Mr. Market wants to tell us:
"Not everything is that bad with precious metals as it looks"

Monday, April 23, 2018

Silver - The Big Selling Has Just Started

Gold bulls are definitely excited. As the chart below shows, most recently gold and the goldollar index got very close to their strong resistance. What is important, both instruments did it in tandem:

source: Simple Digressions

Additionally, a silver / gold ratio made impressive breakout supporting a bullish thesis on the precious metals market:

source: Simple Digressions

However, my advise is simple: do not even touch this market. In my opinion, a prudent speculator should stay away from gold in particular. Why? Well, in the long term there is no pivotal change here - gold still cannot break above its resistance at $1,350 - $1,375 per ounce and each short-term upswing is followed by a counter-action. In other words, in the long-term we see the same old story (consolidation period) and in the short-term the game is quite primitive: buy gold when it is 2% - 3% down from the recent ultra-short-term top and sell when it hits the $1,350 - $1,375 zone.

Last thing - a few days ago JP Morgan started its typical game. After a long period of silver accumulation the bank (or, better said, somebody storing silver in the JP Morgan warehouse at the COMEX) started selling silver bullion. This game is also very simple - the excited silver bulls started buying silver bullion en masse and higher demand was met with appropriate supply. As a result, in just four days the bank withdrew 3.0 million ounces of silver from its warehouse:

source: Simple Digressions

In other words, silver bulls should keep in mind that there is somebody to satisfy their hunger. What is more, he has a lot of silver...

Wednesday, April 11, 2018

Will the Gold Break At Last?

Today gold was at a tiny distance from breaking above its strong resistance level but...it failed.

However, the current move still looks good:

 source: Simple Digressions

The chart shows the goldollar index and gold prices. Note that this time both instruments go in tandem, which validates the current move in gold prices.

Thursday, April 5, 2018

Note To The Subscribers - The Fourth Issue Of Newsletter Has Been Dispatched

The fourth issue of the Simple Digressions Newsletter has been dispatched. Please, find it enclosed in your e-mail boxes.

Thursday, March 29, 2018

And They Are Still Hoarding Silver

This year, up to now, JP Morgan has hoarded as many as 20.4 million ounces of silver in its COMEX warehouse:

source: Simple Digressions

Interestingly, the JPM warehouse has been reporting higher silver stocks since 2015 (no matter at what price the silver was trading). If they continue hoarding silver at the same pace as in 1Q 2018, at the end of 2018 they would have had around 200 million ounces of silver (now there are 140 million ounces at JPM warehouse).

For better comparison, SLV, the world's largest private owner of silver bullion, holds 318 milion ounces of silver now (JPM Morgan also has its silver stake there).

Well, it is a lot of silver (global annual mine production is around 900 million ounces) so the question is:
Why are they doing it?