For the immediate time being, let me just put up a quick chart of the Goldman Sachs Commodity Index so that the reader can see for his/her self how much damage has been done to the complex. With crude oil collapsing lower today and with the grains imploding in reaction to an overwhelming bearish report, there was little to support the various commodity indices.
The GSCI not only confirmed a double top on the charts but has now lost all of its gains on the year and has gone negative.
Gold bulls has best rejoice in the woes in the Portuguese bank sector and the turmoil in Israel ( one has to feel sadness for those folks having to endure that sort of thing ) along with the Iraq mess, because that is what is keeping gold afloat right now as the prices for tangibles are sinking.
Rising commodity prices tend to support higher gold prices just as sinking commodity prices tend to undercut its price. Safe haven bids are still at work however due to the events mentioned above. Any change in those and gold bulls had best watch out!
Here is the chart... It is not pretty. The price has collapsed vertically over the last three weeks.
so I guess the question is, as we play musical chairs, who will be the last man standing? Meats, Bonds, or Stks? Forget even trying to value the currencies against each other; just a mugs' game.
ReplyDeleteDan, wouldn't confirmation of a double top require losing support in the 605 area? Otherwise, it just looks like a trading range, albeit a rather broad one. Thanks.
ReplyDeleteTom;
DeleteThanks for the comments. It is a double top in the sense of confirming the end of any fledging uptrend that was underway this year but you are correct in the sense that it merely confirms the top of a range trade with that 605 level as the bottom of the range.
Prior to the fall below the April low, the pattern was more of a grinding move higher. The first warning that something was changing in the commodity sector was the loss of that downside June low.
Today's move shifts the sentiment firmly into the bearish camp. as long as that April low held, one could argue that the retracement in price was merely a deeper retracement in an ongoing slog higher. Now the bears are back in control.
Thanks Dan. Definitely looks ugly, by any stretch. Just wanted to make sure I understood the pattern correctly.
DeleteWild week Dan. Thanks for being with us.
ReplyDeleteLoren;
DeleteYou sure have that right! I am exhausted!
have a great weekend! I need another 3 day weekend myself!
Sure enough commodities of every race, stripe, and color except for gold and silver are getting obliterated.
ReplyDeleteAny chance that the Fed will raise interest rates when prices are falling off a cliff?
ZERO
NADA
ZIP
And with crude and gasoline falling off a cliff,
ReplyDeleteNow you know that reading 417 posts on jsmineset talking about Ukraine and Iraq and potential inpact on energy markets or destabilizing global financial markets was A COMPLETE WASTE OF TIME.
Stay in the system
Don't get bamboozled.
Mark oil is unique as we approach peak oil. The crude chart since 2008 is definitely indicating this. As the Chinese trade bikes in for cars and the US economic boom continues I still stand by my bold prophecy that $175+ oil by late 2015 is in the cards.
DeleteIt should start basing around $100 before the next leg up.
Dan, I think it is a sign of desperation when Kitco runs a segment exhorting us to "Accumulate Gold, not invest in it"http://www.kitco.com/news/video/show/FreedomFest-2014/725/2014-07-11/Accumulate-Gold-Not-Invest-In-It-John-Browne
ReplyDeleteany thoughts on this "belief-based" approach?
Cult behavior.
DeletePostcolonial;
DeleteOne can accumulate gold, or stocks or bonds or any investment. Heck, they can accumulate bee hives if they are like me.
I personally think one buys physical gold for insurance. It throws off no yield and only a few clever folks know how to lease it out and turn it into an interest producing asset so for most, it is protection against geopolitical or monetary uncertainty.
In effect, rooting for sharply higher gold prices is akin to rooting for the destruction of the current monetary system or for global chaos. It is like hoping for one's home to burn down so that they can collect on the insurance. Self-defeating....
Appreciated your comments, if you could have written plain simple English I would have been appreciated a little more..
DeleteThanks..
I put a bid in wheat hoping it would get support at the "double bottom" of 550 area. As it turned out, it was one of those "don't try this at home" trades. It was working well for a couple days until the report came out today.Thank goodness for a light position and tight stop...
ReplyDeleteHere comes Michael Pento with his bold prediction:
ReplyDeleteAll types of fixed income and high-yielding debt will collapse.
The real estate market will tumble as flippers are once again forced to dump their investment properties.
The equity bubble will burst when the record amount of margin debt has to be liquidated.
All forms of adjustable-rate consumer and business loans will come under stress.
Bank capital will be greatly eroded as bank assets go under water just as rates on deposits are increasing.
The Fed will become insolvent as its meager capital vanishes.
Interest payments on the national debt will soar, causing annual deficits to skyrocket as a percentage of the economy.
The over-$100 trillion market for interest-rate derivatives, in which Pimco now plays a big part, will go bust."
And what happens to gold in this scenario?
Probably crash down to $600.
As usual, the gold pushers are constantly pushing for their own demise.
While instead, they should be cheering for a synchronized global recovery and economic boom.
Any wonder why gold is now back on the upswing? Because there are now unseen industrial and medical applications for the metal being developed which will greatly boost demand.
And also booming sales of gold jewelry being anticipated as gold will now replace stainless steel and platinum as a "fashion statement".