Gold has traded between $1,257 and $1,270 today as the metal pushes above the critical $1,260 level to a 4-week high…as of 11:00 am Pacific, Gold is up $13 an ounce at 1,268…Silver is 18 cents higher at $17.29…Copper is off slightly at $2.56…Nickel is up 3 cents at $4.11…Crude Oil has gained 83 cents to $49.73 while the U.S. Dollar Index has rallied one-fifth of a point to 97.42…
An options market at expiration and some associated short-covering was a likely contributor to the rally in Gold today…Monday is a U.S. holiday, so we’ll have to wait until Tuesday/Wednesday to find out if there has been a confirmed breakout in the metal above key resistance at $1,260…one day does not a breakout make, but Gold is nonetheless looking quite bullish – especially when one considers that a rate hike is likely on the way in the U.S. in less than 3 weeks…
According to analysts at Commerzbank, physical Gold buying – notably from China and India – has been strong lately…
Clearly one of the key events for Gold this week, in our view, came Wednesday when Fed minutes showed how the central bank seems to have struck a consensus on a proposal to start gradually shrinking its $4.5 trillion in holdings of Treasury and mortgage securities later in the year…once the Fed starts to wind down its balance sheet, the idea that it will “double tighten” seems very unlikely – in other words, after 1 or 2 more rate hikes, the Fed will start focusing on its balance sheet and leave rates alone for a period of time…if the economy unexpectedly turns negative, they’ll also have the ability to adjust rates a little lower…this has to be interpreted as negative for the greenback and bullish for Gold…
The U.S. dollar chart has a decidedly bearish set-up for the final half of the year with a declining momentum trend and a 200-day moving average (SMA) that’s expected to reverse to the downside within a couple of months…this implies strength in commodities and the Venture during Q3 and Q4, perhaps even some highly powerful moves…President Trump is content with a falling greenback as that would strengthen the U.S. trade position…
Oil Update
Crude Oil sold off sharply yesterday, about 5%, in what was essentially a predictable “sell on news” event after a big jump in prices leading into yesterday’s OPEC meeting when a 9-month extension to the production cut agreement was officially announced…
Goldman Sachs attributed the drop to 3 aspects of the OPEC deal: 1) Lack of deeper cuts; 2) Failure to impose production caps for Libya and Nigeria, which are exempt from the reductions; and 3) the absence of “a clear exit strategy” beyond attempts to manage seasonal stockpile builds in the first quarter of 2018…those are reasonable points…however, one key theme that has been reinforced is that the Saudis in particular are determined to put a floor on Crude right around $50 a barrel with the intent to push prices significantly higher later this year…Saudis determination should not be underestimated…
Venture Update
Watching the Venture most of this week has been akin to watching paint dry…even excellent news from a number of companies has barely moved stock prices, but we view this as just temporary…even during the Venture’s previous bull market (2009 to early 2011), there were periods like this (and much worse) but the Index would always hold key support and ultimately regain momentum and push much higher…the key is to be patient and wait for the eventual turn in sentiment which will spark a sense of urgency among investors to jump in aggressively on the buy side…the Venture is in the very late stages of a healthy consolidation period that began last August after a rapid 82% climb in just 7 months…
Since mid-month, the Venture has been reasserting support at 800 where the EMA(8) and EMA(20) have now joined together…note the RSI(14) downtrend line…this is actually a bullish set-up for the summer as we expect a breakout above the downtrend line sometime in June, quite possibly after another Fed rate hike is out of the way…
Longer-term charts confirm the Venture bull market is fully intact and will enter a dynamic new phase during the 2nd half of the year, if not next month…trading has certainly been better today…
In today’s Morning Musings….
1. Overseas interest in CSR…
2. Fascinating chart for Eskay Mining (ESK, TSX-V) combines with Silver Standard dynamic…
3. RJK Explorations (RJX, TSX-V) raises more money for Maude Lake as drilling continues…
4. Daniel’s Den – why Manganese matters, and a quick rundown on 8 stocks…
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We also give first-time subscribers an industry-leading 100% money-back satisfaction guarantee. If you don’t believe BMR has helped you make money for your first 6-month subscription period, we’ll refund your subscription fee in full – no questions asked!
Did you know that for as little as just over $2 a day, you can be a BMR subscriber and tap into the best analysis and picks for the junior resource sector that you’ll find anywhere? Last year’s BMR Top 50 List returned a whopping 118% and we are delivering market-trouncing returns again in 2017. BMR was the first to call the new bull market in the Venture in early 2016, and our coverage of the commodities space gives you valuable daily insights into price movements and critical trends. BMR is daily information that puts you ahead of the crowd!
We also give first-time subscribers an industry-leading 100% money-back satisfaction guarantee. If you don’t believe BMR has helped you make money for your first 6-month subscription period, we’ll refund your subscription fee in full – no questions asked!
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