Monthly Archives: November 2016

OPEC Reaches Deal to Cut Oil Production

30-Nov (WSJ) — OPEC representatives reached a deal to cut oil production after months of wrangling Wednesday, in an effort to lift sagging prices and reassert the cartel’s influence over a market increasingly dominated by the U.S., Russia and others.

The Organization of the Petroleum Exporting Countries said it agreed to cut production by 1.2 million barrels a day from the current 33.6 million barrels, representing about 1% of global production. Other oil producers from outside the cartel are expected to cut an additional 600,000 barrels a day, OPEC said.

Oil prices surged Wednesday afternoon, with U.S. crude up 8.8% to $49.20 a barrel.

[source]

Share
Posted in Markets |

The Daily Market Report: Gold Ekes Out New Cycle Lows on Solid Data


30-Nov (USAGOLD) — Gold slightly exceeded to 1170.63 low from last week, weighed by some solid U.S. data that offered further support to U.S. rates and the dollar. U.S. stocks were boosted as well.

The ADP jobs survey beat perhaps creates some upside risk for Friday’s nonfarm payrolls report. Right now, the market is expecting an NFP print of +165k with the jobless rate holding steady at 4.9%.

Good data elicits talk of rate hikes. However, that expectation has been baked into the cake for weeks now.

Dallas Fed President Kaplan emphasized the gradual removal of accommodations today, but went on to say that he wouldn’t pre-commit to a specific rate path. Fed Governor Jerome Powell said that timing should be downplayed in upcoming communications. He downplayed the veracity of the dot-plot as a predictive tool.

Both views are consistent with my previously stated thoughts that the FOMC will go out of its way to avoid conveying any sense of an accelerated normalization process at this next meeting. This is premised on my belief that the strength of the dollar must be raising concerns within the hallowed-halls of the Eccles Building.

Oil prices surged today, setting new 4-week highs above $49 amid reports that OPEC has reached a deal to cut production by 1.2 million barrels a day. That’s only about 1% of global production, but it’s a breakthrough nonetheless, that should at least underpin energy prices for the time being. Energy stocks are leading shares higher.

Share
Posted in all posts, Daily Market Report, Gold News, Gold Views |

Gold Prices Dented by Strong Dollar


30-Nov (WSJ) — Gold prices fell Wednesday as a stronger dollar and expectations of an interest-rate increase by the Federal Reserve in December put pressure on the metal.

…Investors are also in near consensus that the U.S. Federal Reserve will raise rates at a meeting in December. The likelihood of a rate increase is now at 94%, according to Fed fund futures tracked by CME. Because gold doesn’t bear interest, it struggles to compete when interest rates rise.

“[Gold is] going to be quite weak going into the December meeting,” said Nitesh Shah, commodities strategist at ETF Securities in London.

[source]

PG View: Gold was quite weak going into last December’s FOMC meeting as well. Once the Fed hiked, gold rose for the next 7-months.

Share
Posted in Gold News, Gold Views |

A ‘Wicked Rally’ in Gold Predicted

29-Nov – (StreetWiseReprots) — Precious metals expert Michael Ballanger charts recent moves in the gold market and sees a rally in the making.

…The sentiment numbers are telling me that there is a wicked rally coming and from where I sit, the GDXJ Feb $35 calls at $2 might be a decent defined-risk method of speculating on the turn.

…Keep your eyes open as we move toward year-end. The fireworks are going to be incendiary.

[source]

Share
Posted in Gold News, Gold Views |

Chicago PMI surged to 57.6 in Nov, well above expectations of 52.2, vs 50.6 in Oct.

Share
Posted in Economic Data |

Morning Snapshot: Gold consolidates as dollar remains firm

30-Nov (USAGOLD) — Gold is consolidating within the recent range. The dollar remains underpinned near recent highs, buoyed by persistent euro and yen weakness, which in turn is limiting the upside in gold.

This morning’s U.S. data was generally favorable, further bolstering the expectation that the Fed will hike rates in several weeks. All eyes are on Friday’s jobs report. This ADP jobs survey beat perhaps creates some upside risk.

Share
Posted in Gold News, Gold Views, Snapshot |

U.S. personal income +0.6% in Oct, above expectations of +0.4%, vs positive revised +0.4% in Sep; PCE +0.3% on expectations of +0.5%.

Share
Posted in Economic Data |

U.S. ADP jobs survey +216k in Nov, well above expectations of +160k, vs negative revised +119k in Oct (was +147k).

Share
Posted in Economic Data |

U.S. MBA mortgage market index – 9.4% in the week ended 25-Nov; purchases -0.2%, refis -16.2%.

Share
Posted in Economic Data |

Gold lower at 1184.60 (-4.24). Silver 16.67 (-0.016). Dollar higher. Euro lower. Stocks called mixed. U.S. 10-year 2.36% (+7 bps).

Share
Posted in Markets |

The Daily Market Report: Gold Retreats on Persistent Dollar Strength


29-Nov (USAGOLD) — Gold retreated into the range after the dollar rebounded toward nearly 14-year highs. However, last week’s low in the yellow metal at 1170.63 remains protected and some buying interest emerged during New York trading.

The greenback remains buoyed by weakness in other currencies, particularly the euro and yen. Additional support is being garnered amid heightened growth expectations in the wake of the recent U.S. election and a certainty that the Fed will move to raise interest rates next month.

U.S. data out today lent some additional credence to the notion that the recovery may be accelerating. Q3 GDP was revised to 3.2%, from the 2.9% advance number, versus 1.4% in Q2. Consumer sentiment surged to 107.1, its highest reading since 2007.

That exuberance may have translated into a good start to the all-important holiday shopping season. While all the data aren’t in yet, The National Federation of Retailers is suggesting that shopping on Black Friday and over the weekend was robust. “It was a strong weekend for retailers, but an even better weekend for consumers, who took advantage of some really incredible deals,” said NRF President and CEO Matthew Shay.

While the dollar strength creates a bit of a conundrum for the Fed, I don’t think they can walk back expectations at this point. That’s going to make the guidance proffered at the next FOMC meeting critically important. I don’t think they can indicate an accelerated pace of normalization without sending the greenback ballistic. Despite the improvement in the data, I think they will reiterate that slow and steady is still the order of the day.

It was that very same signal last year — though without the support of improving data — that launched gold on the rally that dominated much of this past year. Ongoing troubles overseas should continue to offer an underpinning to the yellow metal as well.

Keep in mind that the last time a Fed rate hike was in the offing, gold was trading around $1080. The last time the dollar index was at these levels, gold was below $350!

Share
Posted in all posts, Daily Market Report, Gold News, Gold Views |

Gold slides as market looks to Fed rate rise

29-Nov (Reuters) — Gold prices fell on Tuesday due to expectations of rising U.S. interest rates and a higher dollar and improving sentiment for global economic growth, which means investors are likely to favour risk assets such as equities.

Spot gold was down 0.5 percent at $1,187.4 an ounce as of 1036 GMT. U.S. gold futures slid 0.5 to $1,185.9 per ounce.

The U.S. Federal Reserve is seen raising rates in December and boosting the U.S. currency, which when it rises makes commodities more expensive for non-U.S. buyers.

The dollar index, which tracks the greenback against a basket of six major rivals, hit a nearly 14-year peak of 102.050 last week.

[source]

Share
Posted in Gold News, Gold Views |

U.S. consumer confidence surged to 107.1 in Nov, above expectations of 101.1, vs positive revised 100.8 in Oct.

Share
Posted in Economic Data |

S&P/Case-Shiller Home Price Index for 20-cities (nsa) +0.13% to 191.78 in Sep, vs negative revised 191.53 in Aug; +5.08% y/y.

Share
Posted in Economic Data |

Morning Snapshot: Gold retreats into last week’s range as dollar rebounds

29-Nov (USAGOLD) — Gold has fallen back into last week’s range as fresh euro losses pushed the dollar index back toward 13-year highs. The euro remains under pressure amid rising expectations of market disruptions triggered by Sunday’s Italian referendum.

While sources have suggested the ECB is prepared to escalate purchases of Italian bonds, it has been reported that as many as eight Italian banks are at risk of failure in the aftermath of a “no” vote. And perhaps most importantly, such a vote may well push Italy along the path toward a referendum to leave the EU.

Note however, that even though the dollar index is near 14-year highs, gold is holding above the 9-month low that was set last week. That suggests to me that haven buying is offsetting and perhaps will ultimately overwhelm the algorithms that automatically sell paper gold when the dollar rises.

Share
Posted in Gold News, Gold Views, Snapshot |

ECB ready to buy more Italian bonds if referendum rocks market – sources

ECBbuilding
29-Nov (Reuters) — The European Central Bank is ready to temporarily step up purchases of Italian government bonds if the result of a crucial referendum on Sunday sharply drives up borrowing costs for the euro zone’s largest debtor, central bank sources told Reuters.

…The ECB could use its 80-billion-euro ($84.8 billion) monthly bond-buying program to counter any immediate, further spike in bond yields after the vote, smoothing market moves and supporting bonds, according to four euro zone central bank sources who asked not to be named.

[source]

Share
Posted in Central Banks, Monetary Policy, QE |

U.S. Q3 GDP revised up to 3.2%, above expectations of 3.0%, vs 2.9% advance.

Share
Posted in Economic Data |

Gold lower at 1182.00 (-12.94 ). Silver 16.45 (-0.246). Dollar higher. Euro lower. Stocks called better. U.S. 10-year 2.34% (+3 bps).

Share
Posted in Markets |

Holiday Special – Lucky Angel

This year put a lucky angel under your tree!

Coin & bezel pendant includes
18 inch 14-karat gold chain

Owning the famous French Angel gold coin has always been considered good luck.

Legend has it that an earlier version accompanied Napoleon in his quest to conquer Europe. He carried it in the long march to Russia and back until he finally misplaced it — the day before the Battle of Waterloo.

When the coin’s designer, Augustine Dupre, was sentenced to death, he held a gold Angel as he prayed for his life; it caught the eye of his guard, allowing him to ‘negotiate’ his escape from the guillotine.

A truly unique and memorable holiday gift option, this old world French Angel coin pendant comes with an 18-inch 14-karat rope chain.

Only 50 pendants available – $560.00 / each
Price includes insured delivery, display gift box, and ‘Lucky French Angel’ poem scrolled and bound.

Click here for (OFFER DETAILS) or call Marie Mitchell, 1-800-869-5115 Extension #106

 

Throughout history many a story
Tells of cures, success and glory
Brought on those who get to hold
A lucky Angel cast pure in gold

Napoleon held close this lucky charm
To protect him in battle and keep him from harm
Victorious he was to Russia and back
As he kept it close for every attack
It was quite some time before the coin was lost
But misplaced it was at no small cost
Waterloo followed the ensuing day
Napoleon was defeated and cast away

A similar story is often told
Of a guard’s favor that was luckily sold
At the cost of an Angel a man was saved
It was the coin’s designer Augustine Dupres

Others will say the Angel can heal
Can protect from harm its powers are real
So take this Angel and keep it close to your heart
And great luck will follow you and never depart

Share
Posted in all posts |

The Daily Market Report: Gold Firms as Dollar and Rates Retreat from Recent Highs


28-Nov (USAGOLD) — Gold rebounded modestly to start the week, buoyed by a rebound in bonds and the dollar overseas. Stocks came under pressure, led lower by European shares, as focus shifts to the Italian constitutional-reform referendum next week.

Italian PM Renzi has pledged to resign if the referendum is rejected by voters, which is exactly what the latest polls suggest is going to happen. Not that polling has been terribly accurate of late, but perhaps populist voters have been embolden by both the Brexit vote and the Trump election.

A defeat for Renzi will usher in a period of political uncertainty in Italy, but there are considerable concerns that such an outcome could empower anti-euro parties that could set the country on a path toward a vote to leave the EU. If the third largest economy in the EU eventually votes to leave, the experiment may be well and truly over.

Additionally, the FT reports that up to eight Italian banks will be at a heightened risk of failure if next week’s referendum fails. Given the inter-connectivity of the already fragile European banking system, contagion concerns are already escalating. That is putting banking shares across the EU under pressure.

The euro has moved within striking distance of the March 2015 low against the dollar at 1.0462. If this level gives way, the single currency would be plumbing 13-year lows and likely on its way to parity with the dollar.

Corresponding upward pressure on the greenback of that magnitude could derail the U.S. economic recovery. Concerns about the dollar’s uptrend are already considerable. At a minimum, European turmoil could throw a wrench into the Fed’s monetary “normalization” plans.

Share
Posted in Daily Market Report, Gold News, Gold Views |

Dallas Fed index rose to 10.2 in Nov, well above expectations of 3.0, vs -1.5 in Oct.

Share
Posted in Economic Data |

Fears mount of multiple bank failures if Renzi loses referendum

28-Nov (FT) — Up to eight of Italy’s troubled banks risk failing if prime minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market turbulence deters investors from recapitalising them, officials and senior bankers say.

Mr Renzi, who says he will quit if he loses the referendum, had championed a market solution to solve the problems of Italy’s €4tn banking system and avoid a vote-losing “resolution” of Italian banks under new EU rules.

Resolution, a new regulatory mechanism, restructures and, if necessary, winds up a bank by imposing losses on both equity and debt investors, particularly controversial in Italy, where millions of individual investors have bought bank bonds.

[source]

Share
Posted in Europe |

An interest rate hike won’t be entirely painless, analyst Peter Boockvar says

28-Nov (CNBC) — Even though President-elect Donald Trump’s policies should position the economy for growth, raising interest rates may not have the positive effect many investors are hoping for, analyst Peter Boockvar said Monday.

Though Boockvar, chief market analyst at The Lindsey Group, said he is bullish on Trump’s potential policies, he told CNBC’s “Squawk Box” he was concerned about interest rates being “artificially suppressed” for so many years.

“We have to get from here to there, there being a better economic story, but this rise in interest rates I don’t think is necessarily painless,” he said.

[source]

Share
Posted in Central Banks, Economy, Monetary Policy |

Gold climbs as dollar and U.S. bond yields retreat

28-Nov (Reuters) — Gold prices rose more than 1 percent on Monday, recovering from their lowest levels since February as the dollar and long-dated U.S. Treasury bond yields retreated from recent highs.

Spot gold was up 0.5 percent at $1,191.26 an ounce by 1311 GMT, after climbing as high as $1,197.54 earlier in the session. U.S. gold futures were up 0.9 percent at $1,188.60 an ounce.

…”If oil prices collapse or stay low then inflation won’t pick up as much and there would be less of an incentive to raise U.S. rates rapidly and the dollar would not be as strong, which would be supportive for gold,” ING head of commodity strategy Hamza Khan said.

[source]

Share
Posted in Gold News, Gold Views |

Gold prices advance after hitting 9-month low as dollar declines


28-Nov (MarketWatch) — Gold futures sprang higher Monday, with a pullback in the U.S. dollar helping the precious metal regain strength after hitting its lowest since February.

…Gold prices on Monday “are attempting a recovery after touching a nine-month low in Friday’s trade. The move is accompanied by a parallel decline in the U.S. dollar and U.S. front-end yields as implied in 2-year Treasury futures,” said Ilya Spivak, senior currency strategist at DailyFX, in a blog post Monday.

“This hints at moderation in the Fed rate hike outlook as the catalyst behind the returning appeal of anti-fiat and non-interest-bearing assets, including the yellow metal,” he said.

[source]

Share
Posted in Gold News, Gold Views |

Morning Snapshot

28-Nov (USAGOLD) — Gold is modestly higher as the dollar and shares came under further pressure overseas. The greenback is on the mend intraday, which has trimmed gold’s gains.

The U.S. economic calendar is light today, with just the Dallas Fed index out later this morning. Focus will be on tomorrow’s second look at Q3 GDP (median expectations 3.0%) and Friday’s jobs report (median expectations +177k NFP).

Share
Posted in Gold News, Gold Views, Snapshot |

Gold higher at 1188.90 (+5.02). Silver 16.64 (+0.094). Dollar rebounds. Euro fades. Stocks called lower. U.S. 10-year 2.32% (-4 bps).

Share
Posted in Markets |

There will be a proper rally in the gold and silver markets . . .

Market Slant/SorenK/11-15-2016

Gold and Silver are as they were; a diversification of monetary risk. There will be a proper rally. It will be slow and orderly. We personally do not want volatility to the upside. Let it sleep and slowly climb without funds piling in it prematurely.

“Precious metals will enjoy the rally they are owed. Inflation is already here in all but name.”

MK note:  Every once in awhile you run into a piece of analysis that, well, just makes good common sense.  The linked above is one of them.  If you crave a post-election analysis that digs below the surface (and I haven’t seen much in the way of that so far), this is it.  It is billed as “a collaborative piece between several Traders and Bankers.”

Share
Posted in all posts, Author, MK |

Why Donald Trump’s tenure will be good for gold

Economic Times/Chirag Mehta/11-26-2016

“Until we go past the rate hike in December, gold prices are likely to remain under pressure. Post the Fed rate hike, gold prices may come under bid as markets try to ascertain the extent of further rate hikes and realize that the Fed may stay behind the curve to keep real rates negative for a much longer time.”

MK note:  It’s the part about the Fed keeping real rates negative that resonates – politically and economically.  I think the Fed would be hard-pressed to get in the way of anything that produces even a whiff of real economic recovery.  Especially after all the discussion about the central banks having run out of ammunition over the past couple of years.

Share
Posted in all posts, Author, MK |

Raising an eyebrow. . .

The most famous quote uttered in advance of the 2008 financial crash came from Citigroup’s CEO, Chuck Prince, and was reported in the July 9, 2007 edition of the Financial Times:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

So, it is that I raised an eyebrow when I read the following quote in this morning’s Financial Times  from Blue Marble’s Vinny Catalano (under an opinion piece headlined Trump’s Bull Run):

“On a technical basis, the music is playing, there are no negative signals and people are dancing.  It’s career suicide if you are not in the market.

Share
Posted in all posts, Author, MK |