sentiment

Update: Silver is having a bad day.

Will it be meaningful?

Last week I noted the price action in gold and silver. The patterns were mostly similar, but the technical indicators and oscillators suggested different outlooks for each precious metal. I asked if silver's relative strength bode well for gold, or if gold's relative weakness bode ill for silver.

After today, it seems gold's bearish tilt is weighing on silver. Click on the link below for a chart and additional commentary.

Commodities Essential. UPDATE 4 December 2012

 

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What are hedge funds telling us?

Is hedge fund positioning a forward looking indicator ... or, rather, a contrarian indicator? Bullish bets proved to be a good contrarian indicator for crude prices this year. A case could also be made to bet against the increased long interest of speculators in silver. But it probably makes more sense to bet against long interest in crude oil. And perhaps it also makes better sense to bet against the specs in copper ... 

Commodities Essential. 17 August 2012

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The political economy deserves a precious medal.

I recently mentioned the potential for a major crisis of confidence ... sparked by seizures, scandals and distrust in the financial system ... that would counteract (and even overwhelm) the reflationary trade to some degree. That, of course, assumes something will happen beyond the control of politicians and get the snowball rolling. While possible, I suppose that was a pretty big assumption.

Many actions taken by policymakers to influence the economy are readily apparent, e.g. quantitative easing, fiscal stimulus, new legislation, etc. But there are items that go largely unseen that are hugely critical in controlling the political economy.

Commodities Essential. 10 August 2012

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Ceteris paribus, the ECB will do whatever it takes.

Certainly, much of the Eurozone crisis expectations have been priced in to risk assets like commodities. But two things, I think, will keep risk-taking under pressure:

  1. Intensification in the revolving door of Eurozone economic contraction, rising European Sovereign debt costs, and financial system pressure.
  2. A realization that the US and China cannot hold up global growth and market sentiment while the Eurozone figures out what "whatever it takes" means.

Bullish? Go ahead and get long, if you believe, ceteris paribus, Draghi & Co. will finally give the system the solution to this crisis that it's been waiting for all along.

Commodities Essential. 26 July 2012

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Crisis in confidence or a downturn in commodities – which comes first: chicken or egg?

In the last few weeks I've been watching for signs that investor confidence is at risk of capitulating to dreadful global fundamentals. Once investors capitulate to the reality of horrid fundamentals, markets will finally crack. I think a crisis in confidence, or at least a real taste of one, is around the corner. That said ... let's run through my general thinking on individual commodities: 

Commodities Essential. 20 July 2012

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