Vince Lanci: Gold Was Being Bought Silver Was Being Sold | Arcadia Economics
Summary
Transcript
Gold buying went to the market. Silver was being sold. Welcome to the Daily gold and silver fix with Vince Lancey, where each morning he brings you the precious metals news and insights to get you ready for your day. And now, here’s Vince. Good morning, I’m Vince. Let’s get going. The dollar is down 21 at 1374. Ten year bond yields are flat ish at 420 24. The s and p is up four handles at 587.
The VIX is up 33. Basis points 14 seven. Gold is down 384. It was down $8 last night and it was also unchanged. So we’re in between that area trading 20 31 74. Silver is at 22 51, down $0. 43. That’s almost 2%. We’ll touch on that. Platinum eight eightyat eleven. Palladium 962 down $9. Copper is down 3. 8 cents at 381. Crude is down forty five cents.
Seventy six thirty eight. Natural gas is trading 173 up $0. 09. So that’s 5%. 5% is noise in natural gas. When you have a one handle, that’s a trader talking to you. Bitcoin is down 1. 3% 51 58. And ethereum is down 1. 99% at 351. However, ethereum has been overperforming relative to bitcoin in the last day or two. Grains are down between 50 and 90 basis points.
Soybeans and corn. Corn looks to be the weakest. What do we have today? Okay, today’s quote. Apple has explored the idea of developing wearable devices, including a fitness ring, smart glasses, and AirPods with cameras. Pretty cool. Next quote. There are real worries in the region that the recent strength in US CPI, reinforced by ongoing resilience in the economy, will mean a fed that can only barely cut this year, leading to significantly less of.
That’s a global head at Nat west. Okay, John Briggs. And we have a full write up on his opinion on the markets now. And I think it’s actually pretty significant. Today’s chart, you see before you a chart of CTA activity a month ago and today you can look at that chart, you can get a lot out of it. But the first thing that you’ll notice is that speculators have reduced their commodity positioning significantly and the markets are still buoyant.
Which markets am I referring to specifically? Oil and gold. Those two markets seem to be holding up well, and obviously cocoa is in the stratosphere. We’ve been talking, people been talking about that Friday’s activity, precious metals, gold buying went to the market. Silver was being sold. And if you remember, on Thursday. If you listen, on Thursday I said that it looks like the buying is done in gold because there wasn’t a spike.
Well there was a spike on Friday which meant the buying wasn’t done until Friday. It got done. It was a week long buy order and you can assume that they’re done unless they return. So if the market sells off a little bit and you see that pattern reemerge, you know that this buyer is more than five days now. We’ve talked about that significantly this weekend in our posts and gold’s current buyer is a monster and why they want the gold.
So you can check into that there. Back to the other markets. Oil had a big move lower, but it’s still range bound. Us equities are very strong naturally. Bonds were very strong on Friday. Dollar was stable and crypto was stable if slightly softer. I think this week’s data, it’s backloaded. PCE is going to be what everyone cares about on Thursday. Right. But we already really kind of know what that should be.
You can infer it from CPI and PPI and it comes in to be about 0. 3 is what everyone’s expecting. But I think if you do the math, it comes out to be zero point 43. At least Goldman has done the math. It’s a big week though. GDP comes out on Wednesday, PCE comes out on Thursday. And on Friday you’ve got PMI, new home sales Monday. Normally that’s important.
Tuesday, durable goods orders, normally that’s not important. But these things I think are all. It’s a busy week. Plus there’s a lot of Fed talkers this week. That’s because whatever’s coming out, they want to make sure they’re on staff to massage it. News notable headlines probably the most important headline or the most red headline coming out at the end of the week last week was this. Warren Buffett has warned Berkshire Hathaway shareholders that his sprawling 905,000,000,000 conglomerate has virtually no possibility of eye popping performance in the years ahead, laying bare the challenges that will confront his successors.
He throws water on everything and he’s throwing water on this again. Second quote that I think is pretty significant. The AI chip battle that Nvidia has dominated is already shifting to a new front, one that will be much larger but also more competitive. Doesn’t mean anything today, but it does mean something. And then, as I mentioned, Apple had explored the idea of developing new wearable devices, AirPods with cameras.
That’s just. Sorry, but that’s just, that’s, forget about that TikTok. At least our hands will be free. We’ll have to hold our phones anymore. All right, so geopolitics, I’m not going to read all these to you, but I’m going to give them to you in a sort of combined way. In the Middle east, people are shooting each other’s drones down. Netanyahu said they’re working on a hostage deal, but at the same time they’re not going to do one.
That last part is basically my opinion. Ukrainian President Zelensky wants more money and he’s pushing for a peace summit. And the UK is pushing more aggressively for the US to be more aggressive with its own confiscation of us sanctioned funds. So the UK is looking for us to piss off the Russians even more, which may not be a bad idea. Who knows these days? Russia’s deputy foreign minister said contact with the US over nuclear weapons in space has proven to be unproductive.
It’s a headline. Metals markets commentary and charts. Well, the comment is this before I get into the actual charts. In March, the RRP will likely run empty, closing out a source of liquidity used to finance the incessant treasury issuance needed to finance this fiscal dominance that everyone is talking about. When that happens, in combination with the BTFP closing its doors, assuming that it will, I see no reason to think that it won’t.
But you may see Yellen’s Department of Treasury put Powell once again in their crosshairs, pressuring him to ease. Now translating that to English. This fiscal dominance that’s been propping up the market and as well been propping up the economy has been driven largely, obviously not by Powell, because he’s been raising rates. It’s been driven by the money creation on the treasury side for fiscal investment. Now we’ve been financing that fiscal investment with an increase in treasury issuance and that treasury issuance has relatively gone smoothly because we’ve had a big slush fund in the RRP, extra money, piggy bank money, if you will, and the banks have been using that to finance their purchases of bonds.
When that runs out in March, you’re going to have a liquidity crunch. Now, if it were to go full cycle, you’ll see stocks sell off, you’ll see bonds sell off, you’ll see yell and cry to pal to lower rates, and then you’ll figure out what’s going on. So some version of that will happen. Probably not as bad as last time because they actually looked like they were bickering publicly simultaneously around simultaneously.
You’re going to have the fears of a shutdown on the government and I don’t think they can kick it down the road anymore. Anyway, that’s the convergence. And it converges behaviorally with Yellen and Powell in a face off. Yellen says, ease. Pal says, no, CPI is too high, let’s say, right? Yellen says, QE. Pal says, I’m doing QT. Yellen says, back off of QT. Pal says, okay, I’ll think about it.
That’s kind of it. Gold below 2024, close below 2024, lookout, close above 2041, look up silver. Short, short. Cover, repeat cycle. That’s what’s going on. CTA short it. They cover their shorts and they repeat their cycle. It’s not good. Okay, for the short term, it’s not good for this time of year. I would be saying to you, this is great, the CTAs are shorting it. They’re going to get their asses kicked in a month.
They’re going to get their ass. I’m not saying that this time, not saying that they won’t, but I’m saying I am not positioning myself to assume that they will. Because of the time of year, there’s no fresh money coming in to invest. Oil is stable with a lot of selling stocks. Remind me of 2013 2015. Bitcoin eth rotation seems toppy. Short term bonds may begin to reflect RP ending and government shutdown fears, which is what I just alluded to at the bottom.
Before we do the charts, the real worries about the US CPI, this is actually very good. It’s written by a global head at Matt west. He went on a trip to Asia to search those regions and look at those markets. And he found that they were more concerned about the US policy than they were about theirs, which is a flip for him. Usually they’re less concerned about, they’re more focused on the US again, and they hadn’t been for a while.
So let’s take a look at the charts. Gold. This is what we had on Friday. I’ll put the lines up in a second. This is the buy order. This is me saying the buy order is probably done without a spike. And this is the spike coming the next day, right. You can’t be right on everything. And today the market is. I’ll make this a little bit bigger for you.
The market is stabilizing above here. So this is where I can’t get my numbers, below this area, look out below. It doesn’t mean we’re going lower, but if you’re buying it, you might be catching a knife right above this area. This market should run up to here. Okay, so this gold market, I’ll show you other markets. The parallel is doing this as everyone’s selling gold, gold’s going up.
Think about that, right? Western investors are selling gold, macro funds are selling gold, ctas are selling gold, everyone who’s a paper investor is liquidating gold and gold’s going up. Why is that? Well, that’s because there’s institutional buying. And that institutional buying is probably someone like a wealth fund. Silver, which doesn’t fit that pattern at all, is basically someone is selling silver to buy gold. You may say, well, that’s ridiculous.
Well, it isn’t ridiculous, it happens, I know it. But even if it’s not happening in a quid pro quo fashion, the market is doing that. The market is buying gold and the market is not buying silver. And so you’re going to see this, I would be very careful of silver. If the gold silver ratio gets to 92 and a half again, all right, platinum, platinum, I’m not going to cover those.
Copper. I was looking for copper to look like silver. It’s not. And that’s a little bit of a. Scratching my brain, a little itching my brain a little bit. Oil. Oil also had a rally trading sideways, but it seems less managed. This is more of an organic market, technically. It looks very cool. Right, you’re below this area here, probably want to get bullish above it, you want to get bearish below it, but right in this area here, maybe you don’t want to be bearish until you’re below here.
Natural gas, what I tell you, 5%, 10%, 5%, 10%, doesn’t matter. When a market is this regional and this spot sensitive, when the market is with a one handle, to quote Brin, I’ve lived this too. When the market’s a one handle, a 5% move is nothing, because that’s how the market works. Right, ethereum and bitcoin, see how bitcoin is bitcoin, you can look at this and say, oh, it’s kind of like oil, right? And you’d be right to say that.
And I’d say, yeah, could be right. It also could be this market is struggling to get higher even while the stock market is zooming. Right. So that’s why I’m a little bit cautious about bitcoin. I’m not bearish, I’m just saying be a little bit cautious. Anyway, I’m Vince. Those were the markets. Have a great day. Thanks for watching this morning’s gold and silver fix with Vince Lancey brought to you each day by Miles Franklin precious metals where this week only 2023 1oz.
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