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Gold-futures

2024-08-28 - priceactiontds - daily update - goldGood Evening and I hope you are well. tl;dr Gold - The triangle broke above but bears sold it hard for a retest of the minor bull trend line at 2530. We are now in a nested wedge and the bigger but broader bull channel. Market is mostly moving sideways though. Expecting for the wedge to break tomorrow and it could go either way. gold comment: Globex session sold off for 24 points before EU opened. Market went mostly sideways afterwards but stayed below the 1h ema. I consider the triangle broken since we made a higher high again but it does not matter. Now its an ascending triangle and you trade them the same. Advice? Wait for the breakout and do not lose money in trading ranges unless you are super profitable trading them. current market cycle: trading range key levels: 2500 - 2570 bull case: Bulls bought the bull trend line and kept it above 2530, which is still max bullishness. No more reading into this trading range at the highs. BTFD is going strong, don’t look for shorts. Invalidation is below 2500. bear case: Bears trying but failing. Best they can hope for is the market to continue to go sideways until it’s more neutral. Invalidation is above 2570. short term: Neutral between 2530-2570, bullish above and bearish below. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —unchanged for many months. Will do on update next weekend. current swing trade : None trade of the day: Buying the double bottom bar 9 + 13 but only for a scalp. If you weren’t short during Globex, best not to trade afterwards.
COMEX_MINI:MGC1!
by priceactiontds
2024-08-22 - priceactiontds - daily update - goldGood Evening and I hope you are well. tl;dr Gold - Bears created a pullback but could not even touch 2500. It’s a little less bullish as of now because the bull trend line broke but market is still above 2500 and the daily 20ema so odds favor another the bulls. If bears create follow through below 2500, I turn bearish for 2450 or lower. comment: Neutral again at 2520 because we are right above the bull trend line from early August and near 2500, which is huge support for now. Odds favor the bulls to test the upper bear trend line around 2540 again. If bears manage to go into the weekend below 2500, this bull leg is most likely over again and we will test back to 2450 or lower. current market cycle: trading range key levels: 2500 - 2570 bull case: Bulls still see this above 2500 and inside a trading range at the highs. They are trading above the daily ema and the bull trend line is still valid. I do think the bears will not fight them for 2500 on the first try, so odds favor the bulls to stay inside the current expanding triangle and test back to the upper trend line around 2540. A weekly close above 2540 would be max bullish. Invalidation is below 2490. bear case: Bears finally produced more selling pressure and closed at the lows. Whenever bears printed consecutive bear bars above 2500 over the past 4 months, market was not able to hold above and sold off again. Bears expecting this time to be the same, despite the new ath. They want a reversal to 2400 and their target for tomorrow is a close below 2500. Invalidation is above 2550. short term: Neutral between 2500-2520, bullish above and bearish below. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —adjusted 2450 to 2500 current swing trade: None trade of the day: Selling below bar 8 was decent. Stop had to be above bar 3. Market held below the 1h ema and there was decent selling pressure before.
COMEX_MINI:MGC1!
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#202434 - priceactiontds - weekly update - goldGood Evening and I hope you are well. Quote from last week: comment: Easy analysis. We are 4 points above last weeks close. We are in a triangle and exactly at the midpoint, again. Market is as neutral as it gets. Don’t make this more complicated than it needs to be. Either buy low and sell high inside given range or wait for a breakout. comment: Bulls got a new ath but the highest monthly close so far was 2473 and there is no reason to expect a huge breakout above 2550 with follow through. If it happens, hopp along but odds favor the bears for another reversal like so many times in the last 4 months. No matter how you interpret the patterns on the chart, all favor a reversal and betting on a breakout after 4 months of trading range price action is a losing strategy in the long run. I am neutral and wait for bears to show strength but will join the bulls on a strong breakout above 2550. current market cycle: trading range for many months now and it’s probably coming to an end over the next weeks/months —unchanged key levels: 2400 - 2550 bull case: Bulls printed a new ath. They finally want their breakout above and much higher prices. All patterns are against them and the odds obviously also. I would not look for longs above 2500. If they could break above 2550 and any pullback would stay above 2530, their chances of another leg up would be decent. Invalidation is below 2550. bear case: Bears see the trading range since April and the nested bull wedge on lower time frames and want a reversal down to at least 2430 again. They absolutely need to close this month below 2500 or the breakout above could actually happen and market would have to find new resistance, which could be much much higher than 2550. As of now market is almost making only perfect two legged moves inside the trading range and bulls just had their second. Market favors a reversal if bears come around on Monday. Invalidation is above 2550. outlook last week: short term: Neutral around 2475. Will only scalp this on momentum inside the triangle but swing will have to wait for a bigger breakout above or below. Want to see 2500 to look for shorts again. → Last Sunday we traded 2473 and now we are at 2537. Neutral outlook. short term: Neutral until bears come around or strong break above 2550. If bears build good selling pressure, I want a retest of 2500 first and lower i look for 2470. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is moronic and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so don’t. —unchanged since May current swing trade: None. chart update: Removed the bear trend line.
COMEX_MINI:MGC1!
by priceactiontds
2024-08-14 - priceactiontds - daily update - goldGood Evening and I hope you are well. tl;dr Gold - Insane price action tbh. Technically lower lows and lower highs but 40 points down and then 30 points up is also something special. I do think the 2519 highs can hold but it’s only reasonable to be neutral while the market oscillates that hard around 2500. comment: Neutral after today but market is still contracting. Lower highs and higher lows means market is undecided and the triangle is big enough for another 5-10 days inside it. Bears have a reasonable argument that the 2519 high can hold and we are in the upper third of the triangle, shorts are favored. current market cycle: trading range (triangle on the daily chart) key levels: 2400 - 2536 bull case: Bulls prevented the climactic sell off for 40 points and retraced most of it. They need a higher high above 2510 to retest 2520. 1h 20ema is completely flat. Not more magic to it right now. Invalidation is below 2490. bear case: Bears are statistically favored for shorts in the upper third of the trading range. That’s about it for now. They need a 1h close below 2490 to test 2480 again and then hope for follow through down. Invalidation is above 2522. short term: Neutral. Bullish above 2510 and bearish below 2480 but just for scalps. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —adjusted 2450 to 2500 current swing trade: None trade of the day: Selling 2510 was good for many days now and continues to be so.
COMEX_MINI:MGC1!
by priceactiontds
2024-08-08 - priceactiontds - daily update - goldGood Evening and I hope you are well. comment: Not much to add after what I wrote in the tl;dr section. So see below. current market cycle: trading range key levels: 2400 - 2500 bull case: Bulls have many patterns going for them right now. Biggest is the triangle on the daily chart which held and odds favor the bulls to retest up to 2510ish. I’d be surprised if we get there but that’s only my personal bias talking. Bulls closed above all ema and above the current trading range. They have all the arguments to trade higher yet the 1h chart today looks pretty weak to me, despite the 1.3% gain. Alternating bull/bear bars on the 1h chart do not scream bullish market. Whenever market is giving mixed signals, I just do not trade it. It’s just not worth my energy. Invalidation is below 2450. bear case: Bears kept the market two sided but it still went up 46 points. Bears see this as a marginally higher high to Tuesday and want to reverse from here. They need to keep it below 2475 or bulls will probably buy the momentum for 2500. Bears do not have that many arguments since bulls closed above all ema and reversed from the bull trend line on the daily chart. Invalidation is above 2475. short term: Neutral around 2465, bullish above 2475 for 2500 and bearish below 2450. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —adjusted 2450 to 2500 current swing trade: none trade of the day: Same argument for not taking the long as in dax. Buying high in a trading range is a bad buy and market went only 6 points higher than Tuesday. Long since Globex open would have been perfect, as it was a perfect double bottom with Wednesday but not my timezone.
COMEX_MINI:MGC1!
by priceactiontds
#202432 - priceactiontds - weekly update - goldGood Evening and I hope you are well. Quote from last week: bear case: Bears made another amazing trade selling above 2440 and since this was the third time, they are confident they can push the market lower to at least 2300 again. The selling was strong enough for a second leg and right now a measured move would bring us exactly to 2300. Coincidences huh. Every time someone tells you technical analysis does not work, just nod and make money. It’s not worth the discussion. comment: Clear rejection above 2500 again but the bear bar from Friday has a big tail below, because bulls bought the daily 20ema. It’s mid’ish of the triangle so the worst place to trade. I do think it’s more reasonable to expect more downside than a break above the ath but I won’t take my chances. I wait for market to show me. Both sides have reasonable arguments to retest the highs again or finally giving up on 2500. Volume saw a huge increase again, which could mean that we are coming to an end of this range between 2300 and 2500, over the next weeks to months. current market cycle: trading range for many months now and it’s probably coming to an end over the next weeks/months key levels: 2300 - 2536 bull case: Bulls showed weakness during the week before but somehow managed to turn the market around this week on bad looking daily bars. Unusual to say the least. I do think every time the patterns looks bad, it’s more due to the other side stepping aside than one being particularly strong. Anyhow, Market retested the ath again and printed a lower high 14 points lower. It’s the 5th time the bulls tried and failed. Do they get more or will they give up now? I don’t know. I thought the drop that started 2 weeks ago from the ath was decent enough to bring us to 2300 again but they failed at a higher low. So we are in a triangle and in the middle of it. Market is neutral between 2450 - 2490. Invalidation is below 2290. bear case: Not much to add because market is neutral. Bears need follow through on Monday to test the bull trend line below at around 2425. There is not much more to read out of this at the moment. Things change when bulls get a strong close above 2536 or bears print lower lows below 2390 again. Invalidation is above 2536. outlook last week: short term: Full bear mode continues as long as the bear channel holds. Look for shorts near the top and take profits at new lows. → Last Sunday we traded 2381 and now we are at 2469. The bear channel broke on Tuesday and my invalidation was on point but my outlook was not. Always know your risk and start every trade from a risk point of view and now from a profit point of view. You will most likely never hit 90% winners consistently so get used to losers and don’t let them influence you in a bad way. short term: Neutral 2450 - 2490. Will only scalp this on momentum inside the triangle but swing will have to wait for a bigger breakout above or below. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is moronic and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so don’t. —unchanged since May current swing trade: None. chart update: Removed bearish pattern and added the triangle we are in
COMEX_MINI:MGC1!
by priceactiontds
2024-07-30 - priceactiontds - daily update - goldGood Evening and I hope you are well. comment: Gold had a huge bull day and my line in the sand for bears was 2436. Market now broke above it 2 times and the buying into US close was strong enough for a second leg which could bring us above 2480 again. Still a trading range on the daily chart and anything above 2300 is good for the bulls. Probably another try at printing 2500 over the next days. current market cycle: trading range key levels: 2300 - 2500 bull case: Bulls want a new ath and all the stops too close above it. 2500 would be a nice round number to reach. After that I don’t have anything for the bulls. It’s a trading range since April and such big trading ranges happen before the final flag and this one here is probably it. I would not bet on another strong bull trend above 2500. Above was written last week and is valid as ever. Bulls do not want to drop below the 1h 20ema again or the chop continues. They want the momentum continuing and another strong break above 2460 for the second leg up. Invalidation is below 2440. bear case: Bears tried to keep it below 2440 but market made higher lows and on the strong buying at bar 13, they stepped aside enough to let the market rip into US close. I don’t think many bears want to battle between 2450 and 2480, so I expect this becoming a quick move up before they see value in shorting again. Below 2440 I am wrong and bears showing strength again. Invalidation is above 2460. short term: Bullish af again. Want to see a proper channel form, that we can grind to 2480 or 2500. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —adjusted 2450 to 2500 current swing trade: None trade of the day: Tricky. Bar 10 was strong enough to expect more upside but the pullback afterwards on bar 11+12 was deep enough to trap many traders out. Bar 13 was the long to be in while it formed but tricky in any case.
COMEX_MINI:MGC1!Long
by priceactiontds
#202431 - priceactiontds - weekly update - gold futuresGood Evening and I hope you are well. Quote from last week: bear case: Bears made another amazing trade selling above 2440 and since this was the third time, they are confident they can push the market lower to at least 2300 again. The selling was strong enough for a second leg and right now a measured move would bring us exactly to 2300. Coincidences huh. Every time someone tells you technical analysis does not work, just nod and make money. It’s not worth the discussion. comment: Bears got their second leg down and the buying has been lackluster at best. Leaning heavily bearish until bulls trade strongly above the daily 20ema again. It’s a tight channel down and already much stronger than the previous sell offs from > 2400. As long as the channel holds, I’m full bear. No deeper analysis needed. current market cycle: trading range on the daily chart but small bear trend inside, which could bring us to 2300. key levels: 2300 - 2488 bull case: Bulls are very weak. The pullbacks they printed so far were doji’s and inside bars. Until they can print a big bull bar closing on it’s high, they have no reasonable arguments for a reversal. 2300 is much more likely than a strong breakout above the bear channel. Expecting more buyers to step in around 2300/2310. Invalidation is below 2290. bear case: Increased volume on the sell off and every rip is sold. Play the channel as long as it holds, bears have every argument on their side. The odds that we break below 2300 this time are decent, since market now tried 3 times to hit 2500 and market will only try one thing so many times until it does the opposite. Invalidation is above 2436. outlook last week: “ short term: Full bear mode if we close below 2360 over the next 1-2 days. At least down to 2300 but decent chance we drop lower this time and start a new bear trend.” → Last Sunday we traded 2399 and now we are at 2381. Low of the week was 2352, outlook was good for 47. short term: Full bear mode continues as long as the bear channel holds. Look for shorts near the top and take profits at new lows. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is moronic and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so don’t. —unchanged since May current swing trade: None. Will short on weakness on Monday. chart update: Added bear channel.
COMEX_MINI:MGC1!Short
by priceactiontds
2024-07-16 - priceactiontds - daily update - goldGood Evening and I hope you are well. comment: In my weekly post I expected a pullback to the bull trend line and that bulls would buy it again. That happened and then some. Very strong buying and market is right under prev ath 2477.1. It’s strong enough to expect more upside and we can probably print 2500 tomorrow. Where are the bears? Gone and waiting for bulls to start profit taking. You will see consecutive big bear bars and know when they appear. Will be a decent tripple top to short. current market cycle: trading range key levels: 2300 - 2500 bull case: Bulls want a new ath and all the stops too close above it. 2500 would be a nice round number to reach. After that I don’t have anything for the bulls. It’s a trading range since April and such big trading ranges happen before the final flag and this one here is probably it. I would not bet on another strong bull trend above 2500. Invalidation is below 2400. bear case: Bears stepping aside enough and letting the higher high happen. They will probably wait for the bulls to begin the profit taking before shorting aggressively. Since the highest monthly close is from May and below 2350, I don’t have much arguments for the bulls until they close a month above that price. Invalidation is above 2510. short term: Bullish af. Don’t look for shorts. Go long on strong momentum and see how high this can go. 15m 20ema is my stop on any long as long as it holds. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —adjusted 2450 to 2500 current swing trade: None trade of the day: Long anything around the 1h 20ema.
COMEX_MINI:MGC1!Long
by priceactiontds
#202429 - priceactiontds - weekly update - goldGood Evening and I hope you are well. Quote from last week: comment: Bulls got the breakout above and 2 good looking bull bars above the daily 20ema. Above 2407 we can expect bears to give up and a retest of 2460 or higher. Market is amazingly symmetrical. 3 tries to drop below 2300 and we are probably seeing the 3rd try at printing above 2477 over the next days. It’s a big trading range and I will long this above 2407 for 2460+ and will short this above 2460, once market turns around again. Maybe bulls can print a higher high or maybe they don’t, it does not matter since you wait for the clear reversal before shorting again. comment: Bears tried to bring it below the daily 20ema and failed again. Bulls got another smaller higher high which was also a perfect breakout, retest and long again. So bulls are in full control but they are also not very strong or the market would not pull back each time after 1-2 good looking bull bars. Same reasoning as last week. Can bulls print a higher high or will this become a right shoulder? Probably the latter. Bulls are at 2 good resistance lines and buying above 2400 has not been profitable for more than 2 days in this market ever. current market cycle: trading range until 2300 or 2407 is broken. If bulls break above, trading range is expanded again up to 2480 key levels: 2300 - 2480 bull case: Bulls keeping it inside the bull wedge and channel and as long as we stay in them, it’s bullish af. Bulls are mostly buying dips and not highs, otherwise market would print more consecutive bull bars. Targets for the bulls are obvious, retesting 2477 or making a higher high. Invalidation is below 2370. bear case: Bears only need 2 consecutive bear bars to reverse the market to below 2350 again. They are selling new highs inside the channel/wedge and so far it was profitable at least for scalps. They want this leg up to become the right shoulder and finally break the neckline on the next leg down and get below 2300. Invalidation is above 2510. outlook last week: “short term: Neutral until break above 2407. Bullish above” → Last Sunday we traded 2397 and now we are at 2420. 23 points higher… I mean… That’s pretty neutral to me since we also traded 30 points lower during the week. short term: Bearish for a pullback at least to the lower bull trend line again where I expect bulls to buy it again. No opinion after that. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is moronic and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so don’t. —unchanged current swing trade: Went long but cut it early. It’s not bullish enough to buy up here. Will only look for shorts once we break the bull trend line. Chart update: Adjusted the bull wedge and added bull channel with last recent highs but just minor things. Trading range price action and patterns are weak at best.
COMEX_MINI:MGC1!Short
by priceactiontds
#202427 - priceactiontds - weekly update - gold futuresGood Evening and I hope you are well. Quote from last week: bull case: Bulls see the green support line and want to keep it support and keep the market above 2300/2320. They stalled the market long enough that not enough bears want to push their luck, selling the lows here. They also managed to print 2 bars above the daily ema, which makes the market more neutral. comment: Keeping this very short bc the tl;dr almost covered it all. Trading range and a descending triangle. Huge support 2300 and until either that or the upper triangle bear line is broken, it’s as neutral as it gets. Buy low, sell high and scalp. 55/45 imo that bears get a breakout below but do you really want to bet on those odds? I don’t. current market cycle: trading range until 2300 or 2385 is broken. key levels: 2300 - 2385 / below 2300 comes 2270 in play bull case: Bulls keeping it above support but can not print consecutive daily closes above the daily 20ema. Will probably see a breakout over the next 1-2 weeks. Invalidation is below 2300. bear case: Bears need a strong break below 2300, that’s it. Invalidation is above 2385. outlook last week: “short term: Play the triangle if the support holds. ” → Last Sunday we traded 2331 and now we are at 2339. Triangle held. Good outlook. short term: Neutral. Play the triangle. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2500. This could hold for some time. Bear in my still thinks this rally is moronic and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so don’t. —unchanged current swing trade: None and won’t enter. Just scalps for me. Chart update: Made the support more obvious.
COMEX_MINI:MGC1!
by priceactiontds
2024-06-27 - priceactiontds - daily update - goldGood Evening and I hope you are well. gold comment: Daily ema at 2346 and we closed 2339. Bulls can’t close above it and bears can’t break below 2300. Today was strong enough for bulls to try and get a second leg. Measured move is up to 2375ish. current market cycle: trading range key levels: 2300 - 2360 bull case: Bulls first target tomorrow is to stay above the 1h ema and then break above 2350. 2350 is big resistance until broken. If they manage to break it, high probability we see 2360+. Invalidation is below 2300. bear case: Need a break below 2300. No better arguments for their case. Bears kinda tried down to 2304 but market stalled so long down there, that bears just gave up before EU open and market just melted higher. Was this a buy vacuum produced by bears stepping aside, rather than strong bulls buying? Will find out tomorrow. Invalidation is above 2350. short term: Odds favor the bulls for a second leg up but 2350 is big resistance until broken. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2450. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. current swing trade: None trade of the day: Long anything after bar 6 broke above the range and the 1h 20ema.
COMEX_MINI:MGC1!
by priceactiontds
Four Factors Driving Gold Prices Relative to Silver2600 years ago, the Anatolian Kingdom of Lydia minted the world’s first gold and silver coins. In doing so, the Lydian King Alyattes and his successor Croesus introduced the world’s first exchange rate: the gold-silver cross. Like any cross rate, the amount of silver that can be purchased with an ounce of gold is driven by both demand and supply-side factors, and the cross rate is anything other than stable. Sadly, we don’t have the time series of the gold-silver ratio dating back to ancient times, but we do have data going back to the launch of gold futures on December 31, 1974. Since the mid-1970s, one ounce of gold bought anywhere from 17 ounces to as many as 123 ounces of silver (Figure 1). Figure 1: The amount of silver an ounce of gold can buy has been highly variable In addition to the impact of monetary policy, which we have covered here, the gold-silver ratio appears to be governed by four other factors: Relative volatility and the silver beta Fabrication demand and technological change Gold’s use as a monetary asset Supply-side dynamics Relative volatility and beta To borrow an expression from the equity markets, silver is the high-beta version of gold. First, silver and gold prices usually have a strong positive correlation. Since 2004 the one-year rolling correlation of their daily price moves has hovered around +0.8 (Figure 2). Second, silver is more volatile than gold. As such, when gold prices move up, silver tends to move up more, thereby lowering the gold-silver price ratio. By contrast, during bear markets, the gold-silver ratio tends to rise. Figure 2: The correlation of gold and silver price changes has hugged +0.8 since 2004. For example, when gold and silver prices peaked in September 2011, one ounce of gold bought fewer than 32 ounces of silver (Figure 3). In the ensuing bear market, the ratio rose to as high as 124 ounces of silver per ounce of gold. The ratio snapped back to 64 in 2020 as gold and silver rallied early in the pandemic. In 2024, as both metals have rallied, silver has outperformed, rising 23% in the first five months of the year compared to 12% for the yellow metal. Figure 3: Positive correlation plus much higher volatility give silver a high beta to gold Fabrication Demand and the Impact of Technological Change What is curious is that while gold and silver have rallied thus far in 2024, gold broke to new record highs of nearly $2,500 per ounce whereas silver prices remain 40% below their twin 1980 and 2011 peaks despite having outperformed gold since 2020 (Figure 4). The reason may lie in technological advances. Figure 4: Gold has hit records in 2024 while silver is still 40% below its 1980 and 2011 record highs Even before the Lydians minted the first gold and silver coins around 600 BCE, both metals had been used to make jewellery: silver since around 2500 BCE and gold since 4500 BCE. Some things don’t change. Even today, the primary use of both metals is to make jewellery. Yet, thus far this century, silver has been buffeted by two sets of technological developments: the digital revolution and the energy transition. Both have impacted the relative gold-silver ratio. In 1999, photography used 267.7 million troy ounces of silver which accounted for 36.6% of that year’s total silver supply. By 2023 photography used only 23.2 million ounces of silver or about 2.3% of 2023’s total supply due to the rise of digital photography. Meanwhile, silver’s use in electronics and batteries grew from 90 million ounces to 227.4 million ounces or from 12.3% to 22.7% of silver’s total annual supply, partially offsetting the decline in traditional photography, which may partially explain why silver has struggled to hit new highs in recent years even as gold has set records. The good news for silver, however, is that it is finding new use in the energy transition. Over the past few years silver has seen strong growth coming from solar panels, which accounted for 20% of 2023 silver demand, up from essentially nothing in 1999 (Figure 5). Solar panels may explain in part why silver has recovered relative to gold since 2020. Figure 5: Battery and solar panel demand have grown as photography demand has shrunk If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By contrast, gold fabrication demand has shown itself to be immune from recent technological developments and is still overwhelmingly dominated by jewellery demand, with electronics, dental and other uses absorbing just 17% of annual gold mining supply (Figure 6). The differences in silver and gold fabrication demand underscores that gold is considered the purer of the two precious metals. Figure 6: Gold fabrication demand has remained little changed Gold and global monetary policy Indeed, central banks around the world treat gold as money while they largely ignore silver (Figure 7). They hold a combined 36,700 metric tons of gold, the equivalent of 1.2 billion troy ounces or 13 years of global mining output. Moreover, central banks have been net buyers of gold every year since the global financial crisis. Figure 7: Central banks have been net buyers of gold since the global financial crisis Central bank buying of gold since 2009 contrasts sharply with their tendency to be net sellers from 1982 to 2007. Central banks’ accumulation of gold suggests that they want a hard asset to complement their foreign exchange reserves of dollars, euros, yen and other fiat currencies, a view that appears to have been reinforced by on-and-off quantitative easing since 2009 and increased use of financial sanctions. Central bank buying impacts gold prices directly, but only boosts silver prices indirectly via the gold market. The supply side of the equation Central bank gold buying reduces the amount of gold available to the public. Over the past decade, central bank buying has removed the equivalent of 8%-20% of new mining supply from the gold market each year (Figure 8) which may also explain why the gold-silver ratio rose significantly from 2011 to 2020 and why, even today, it remains at 2x its 2011 level. Figure 8: Net of central bank buying, gold supply has stagnated since 2003 Total gold supply net of official purchases has stagnated since 2003. Meanwhile, silver mining supply peaked in 2016 and gold mining supply peaked the next year (Figure 9). The fact that new supply is arriving on the market more slowly than in the past may be bullish for both gold and silver. Figure 9: Gold and silver respond negative to changes in each other’s mining supply. Our econometric analysis shows that gold and silver prices are negatively correlated with changes to one another’s mining supply. A 1% decrease in gold mining supply, on balance, boosted gold prices by 1.9% and silver by 3.0% from 1974 to 2023. A 1% decease in silver mining supply boosted the prices of the metals by 1.3%-1.6% (Figure 10). Secondary supply appears to respond to price rather than drive it. Higher prices incentivize more recycling, but recycled metal doesn’t appear to depress prices as it doesn’t bring any new metal onto the market. Figure 10: Secondary supply responds to price rather than drives it What connects the two markets is jewellery. Because gold is 70x as costlier than silver, when prices rise, demand for gold jewellery falls while silver’s jewellery demand is relatively unresponsive to price because it costs much less. Gold and silver can be seen as a sort of binary star system where the two stars orbit a common center of gravity or barycenter. Gold is the larger, more stable and more influential of the two, but it is by no means immune from silver’s pull. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By Erik Norland, Executive Director and Senior Economist, CME Group *CME Group futures are not suitable for all investors and involve the risk of loss. Copyright © 2023 CME Group Inc. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CME_MINI:ES1!Education
by CME_Group
4
#202424 - a weekly price action market recap and outlook - goldGood Day and I hope you are well. old futures Quote from last week: bear case: The smaller bull trend line was clearly broken and retested and the higher time frames also give more sell than buy signals. It’s a two-legged correction here to the ema and that is a perfect sell signal. They want follow through on Monday for target 2300. comment: This market behaved as I said it would. The high of 2406 was a bit higher than expected but overall read was perfect. We are in W3 which should lead a bit lower to around 2270ish before we get another sideways to up movement. If W4 stays below 2350, W5 should bring us to at least 2200. That is a 120 point move in Gold for you. Let’s see how it will play out. Small possibility that 2300 stays support and we move more sideways. Would reevaluate my take on this then. current market cycle: trading range until break below 2300 , which would confirm a bear trend, probably down to 2200. I favor the bears heavily here but leave room for 2300 being stronger support than I think it is. key levels: 2300 - 2400 / below 2300 comes 2270 in play bull case: Bulls continued in the expanding triangle and got their retest of 2400, just to be violently sold by the bears. Twitter and news salespeople want you to believe it was due to news that China won’t buy any more Gold. But how do they explain the W1 from 2477 down to 2334? That started 2 weeks ago. Only objective now for the bulls is to keep it above 2300, otherwise 2270 comes next. Invalidation is below 2300. bear case: My bear channel tells how you I feel about Gold. Now bears need to print lower lows and keep the pull-back for W4 mostly sideways and under 2350. I fully expect to hit 2200 over the next weeks and then we will find out how many people want to buy Gold again. Invalidation is above 2360. outlook last week: “Still preferring that second leg down to 2200. Bearish below 2340 and neutral 2340-2390.” → Last Sunday we traded 2345 and now we are at 2325. My target to the EMA was on point and good for about 30 points and my downward target to 2270 is still valid. Good outlook. short term: Bearish. Big bear surprise on Friday and I expect follow through. medium-long term: For now I think the most reasonable outlook I could give is a trading range 2200-2450. This could hold for some time. Bear in my still thinks this rally is dumb and we will see 2000 again this year but that’s as unreasonable of an outlook one could hold so DON’T. —unchanged current swing trade: Short from 2374. SL is 2406. Chart update: I like my new bear channel. I trade it and I made money so far with it. Hope you can make some too with it.
COMEX_MINI:MGC1!Short
by priceactiontds
a daily price action after hour update - goldGood evening and i hope you are well. For gold i updated my weekly chart and bears proved me very wrong. Here my quote from the weekly outlook: short term: slightly bullish to top of triangle, invalid below 2030 Obviously they did break below big time and now bulls are doing everything they can to keep this above 2000. bull case: Bulls have to keep this above 2000 or bears will take over and push this to 1950. Since we are in a big trading range for a long time, odds favor the bulls for a short term bounce, probably to around 2020/2023 where market decides what’s it gonna be next. bear case: Bears broke out of the triangle and closed the bullish gap, now they need follow through. If they are strong, they should be able to keep it below 2030 and then sell to their first target 1990 and then 1950. short term: bearish - expecting some smaller bounce before more down medium-long term: odds for the bears risen significantly today. if they can get follow through, we will form a proper bear channel soon from which we can calculate new lower targets below 1900. still neutral until follow through trade of the day: short below the CPI bear spike for bet on follow through
COMEX_MINI:MGC1!Short
by priceactiontds
Gold Continues its Impressive Rally, Surpassing $2,060In a remarkable display of strength, gold has extended its winning streak for the fifth consecutive day, with its price surging above the $2,060 mark. This impressive rally indicates a growing investor interest in the precious metal and highlights its role as a safe haven asset in uncertain times. The surge in gold prices has been fueled by a combination of factors. Firstly, geopolitical tensions and concerns over global economic stability have driven investors towards the safe haven appeal of gold. With escalating trade tensions and geopolitical conflicts, investors are seeking the stability and security offered by this precious metal. Furthermore, the upcoming release of jobs data has also contributed to the upward movement in gold prices. Investors are closely monitoring the economic data, as it could provide insights into the health of the global economy and potentially influence monetary policy decisions. The current rally in gold prices showcases its resilience and its ability to act as a hedge against market uncertainties. As investors navigate through volatile times, gold continues to be a go-to asset for preserving wealth and diversifying portfolios. Analysts and market experts are closely watching the trajectory of gold prices, as it could provide valuable insights into market sentiment and the overall health of the global economy. As the demand for gold remains strong, it is expected to maintain its upward momentum in the near future. In conclusion, gold's impressive rally, surpassing the $2,060 mark, demonstrates its status as a sought-after asset in times of uncertainty. With the release of jobs data looming, investors will be closely observing gold prices for further guidance. As the global economy continues to face challenges, gold's appeal as a safe haven investment is likely to remain strong.
COMEX:GC1!
by FomTord
1
Myth-busting: top 6 misconceptions about commoditiesWisdomTree has long-standing expertise in commodities, and this asset class constitutes a core part of our business. We aim to debunk several myths that surround commodity investing1. Myth 1: Commodities are only a tactical instrument Some believe that commodities trade in a range and do not outperform over the long term. Furthermore, they think commodities only outperform in an ‘up’ phase of a commodity ‘super-cycle’. Physical commodities are the fundamental building blocks of our society. Therefore, it is no surprise that their price movements largely explain inflation and tend to at least match inflation over the long term. Furthermore, commodity investors most often invest in futures contracts, not physical commodities. Futures contracts have been designed as hedging tools to allow commodity producers and miners to hedge their production forward, making their businesses sustainable and allowing them to invest because they are insulated from the commodity prices’ short-term volatility. Producers are willing to pay for this hedge, just as they would pay for insurance. Therefore, investors who provide this hedge by buying futures contracts receive an insurance premium that allows them to beat inflation over the long term. This ‘insurance’ is a permanent feature of commodity futures and doesn’t fall away through economic cycles. Thus, commodity futures are suitable for consideration as a strategic investment, not just tactical investments. Commodities futures provide a positive risk premium, driven by their intrinsic link to inflation and embedded ‘insurance premium’. While upward phases of commodities’ super-cycle are historically advantageous for commodity investors, future-based broad commodity investments can deliver a risk premium in any part of a super-cycle. Myth 2: Losses are guaranteed when commodities are in contango Contango (negative roll yield) and backwardation (positive roll yield)2 are used to describe the state of the futures curve. It describes the relative position of the current spot price and the futures contract price. Drivers of roll yield include storage costs, financing costs, and convenience yield. Backwardation is often associated with demand strength when people are willing to pay more for immediate delivery than lock into a contract for later delivery at a cheaper price. Some believe that, because contango is the opposite state of backwardation, losses are guaranteed as a corollary. The fact that Keynes’ theory is called ‘normal backwardation’ has caused some terminology confusion. However, what is described by Keynes is that futures contracts are generally priced at a discount to the expected spot price at expiry. It has nothing to do with the current spot price. In other words, the curve can be in contango, and the future price can still be at a discount to the expected spot price at maturity, that is, be in normal backwardation as well. Using a numerical example, let’s say that WTI Crude Oil is worth $50 today. The market expects WTI Oil to trade at $55 in a month (expected spot price) because of storage and other costs. Keynes’ theory hypothesis is that the 1-month futures contract will be priced at a discount to $55, let’s say $54, to incentivise speculators to provide the hedge to producers. In this situation, the curve is in contango ($54>$50), and the expected risk premium is still positive at $1. So, a curve in contango and a positive risk premium can coexist. While the shape of the curve has an impact on the performance, it is not a good predictor of future performance. Myth 3: Commodities are riskier and more volatile than equities. There is a common perception that commodities are riskier than equities. Equities and commodities are similar asset classes statistically. Their historic returns and volatility are quite close. Historically, commodities have exhibited higher volatility than equities in 42% of the 3Y periods since 1960. However, in a larger number of periods (58%) equities have shown higher volatility. More importantly, the two assets’ distributions differ from a normal distribution with a significantly higher skew. But commodities have the advantage. They exhibit a positive skew (a tendency for higher-than-expected positive returns), when equities are known for their negative skew (their tendency to surprise on the downside). Commodities have exhibited lower volatility than equities in 58% of the time rolling 3-year periods we studied and benefit from positive skew. Myth 4: Commodities stopped being an effective diversifier after the 2008 Global Financial Crisis presented a structural break in commodity price relationships Markets are becoming more and more efficient. With those changes, assets have become more correlated. It is clear that commodities have been more correlated to equities in the last 10-20 years than before. However, this is true of most asset pairs as well. US equities are more correlated to global equities. Equities are more correlated to high yield bonds. In a globalised world where correlations are more elevated, commodities still stand out for their lower level of correlation. Note, commodities have continued to provide a cushion against equity and other asset crises in recent periods. For example, in 2022, commodities rose 16%, while US equities3 fell 18% and bonds4 fell 16%. While 2008 marked an all-time high for the correlation between equities and commodities, their correlation has always oscillated. There have been earlier spikes of similar magnitude in the 1960s and 1980s. In 2020, we saw a similar spike in correlation, but correlations have more than halved since in 2023. Commodity vs equity correlation tends to oscillate and has remained within normal historical ranges. Myth 5: Inflation linked bonds are better than commodities at inflation-hedging Some assets are often considered good inflation hedges, such as inflation-linked bonds (TIPS) or real estate. However, it is surprising that more people don’t recognise the superior inflation-hedging properties of commodities. The beta to inflation (US Consumer Price Index (CPI)) of inflation-linked bonds and real estate, historically, is significantly lower than that of commodities (2.45): US TIPS (0), US Equity Real Estate Sector (1), House Prices (0.4). Furthermore, while broad commodities’ average monthly performance tends to increase when the CPI increases, this is not the case for other assets. The performance of TIPS appears to be relatively unrelated to the level of CPI. The performance of real estate, being equities or real assets, seems to worsen when the CPI increases. Real estate suffers from the fact that, while rental incomes are linked to inflation (rents are part of the CPI basket, for example), the capital values themselves are not, and yet have a larger impact on the asset's price. Similarly, inflation-linked bonds are linked to inflation, but their price is also tied to real yields changes (through a duration multiplier) which tends to dilute the relationship to inflation itself. Historically, commodities have been a better hedge to inflation than TIPS or real estate assets. Myth 6: Futures are the best way to access gold for institutional investors Futures markets tend to be extremely liquid and offer very low transaction costs. Therefore, investors assume that, if they can, it is always the most efficient way to implement a trade. However, futures markets respond to their own constraints where banks tend to provide most of the hedging. Recently, banks have suffered from increasing regulation and operating costs that they have translated into their pricing of futures contracts, leading to significant tracking differences with the physical asset. Sometimes futures contracts are the only way to access a commodity, but for precious metals this is not the case. For gold, this cost has, historically, represented 0.9%6 per year on average compared to owning gold bullion. Physically backed exchange-traded commodities (ETCs) have many advantages: limited operational burden, reduced tracking difference, cheap and liquid. It is clear that commodities are a frequently misunderstood asset class, and many misconceptions remain today. For a fuller description of the fundamentals of commodity investing, please see The Case for Investing in Broad Commodities. Sources 1 These myths were all addressed in The Case for Investing in Broad Commodities, November 2021, which takes a deep dive into commodity investing. This blog summarises and updates data addressing several of the ‘misconceptions’ listed in the piece. 2 For more information on contango and backwardation, see our educational ETPedia hub (specifically the ‘Costs and Performance’ tab). 3 S&P 500 TR. 4 Bloomberg GlobalAgg Index (government, corporate and securitised bonds, multicurrency across developed and emerging markets). 5 Source: WisdomTree, Bloomberg, S&P, Kenneth French Data Library. From January 1960 to July 2023. Calculations are based on monthly returns in USD. Broad commodities (Bloomberg commodity total return index) data started in Jan 1960. US TIPS (Bloomberg US Treasury Inflation-linked total return bond index – Series L index) data started in March 1997. US Equity Real Estate (S&P 500 Real Estate sector total return index) data started in October 2001. US House Price (S&P Corelogic Case-Schiller US National Home Price seasonally adjusted index) data started in January 1987. Historical performance is not an indication of future performance and any investments may go down in value 6 Source: WisdomTree, Bloomberg. From 4 June 2007 to 31 July 2023. The Performance of the physical Gold was observed at 1.30 PM Eastern Time to match the BCOM sub-index calculation time. You cannot invest in an Index. Historical performance is not an indication of future performance and any investments may go down in value. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
CBOT:AW1!
by aneekaguptaWTE
1