Vince Lanci Looks At Gold CTA Positioning Ahead of Election BRICS Meeting | Arcadia Economics

So what does it mean, right? Forgiving my spelling. Historically, it means a $20 drop in gold snowballs into a $100 drop in the last two weeks. Lately, as demonstrated in price action and our own analysis, these players, these CTA players, have been selling into buying underneath that is not letting the dips go deep or last long. We think that continues as the election and the BRICS summit approaches. Welcome to the Morning Markets and Metals with Vince Lancey. Where each morning, Vince brings you the financial and precious metals news to get you ready for your day.

And now, here’s Vince. Good morning, everyone. I’m Vince Lancey. Today, we look at the risk of too many bulls in gold and silver and OPEC oil capitulation. But first, let’s look at the markets. Dollar is down 19. I’m sorry, up 19. Wishful thinking. 101.32. 10 yield to 383. Up 3. SMB 500 is 56.30. Up 11. The VIX is 16.13. Down 13. Gold is 25.02. Down 9.70. That’s on almost the lows of the session. Silver holding up, relatively speaking, at 29.52. Down 7, almost 8 cents. Copper 4.16. Down 4 cents. Over almost 1%. 1%, give or take.

Gold silver holding its own, actually creeping lower despite metals being lower. WTI 73.51. Up 32. Down natural gas is 214. Down 3, almost 4 cents. Bitcoin is unchanged. Bit at 61.250. Had a nice day yesterday. Ethereum, 26.42. Tracking it up 12. Nothing special. Platinum, Palladium, 931 and 955, respectively. Palladium and Platinum, 931, 955, respectively. Down 19 and down 7. Palladium was $7 three minutes ago, so expect that to spill over. Palladium’s a thinner market, but it will have effect on other markets. Grains are all down. Soy is at 996. Down 9.

Corn is 382. Down a penny and wheat is off your screen. Down less than a penny at about 539, 540. Okay, moving on. Yesterday’s stories, yesterday’s top stories. We had an exclusive from Matt Riley on the Wall Street Journal’s real story of Nord Stream Sabotage and how it does not add up. According to him, a naval intelligence person, former naval intelligence and certified diver. The information doesn’t make sense. There’s no FOMO like Precious Metals FOMO that’s on the left and why gold can rise more 3000 and then some. There are other stories, but those are the ones that garnered the most attention.

All right. The main story is regarding the CTA length in gold. Before we get to that, I do want to do the market run down and we’re going to show you some chart love while we do that. All right. Yesterday, right? So we’re going to go through a market run down recap. Yesterday, after a brief fallback, the equities market regained momentum with both the US and your posting gains. The dollar dipped while US curve steepens, which is bullish how it happened yesterday. Gold remained flat and oil continued to decline. Overnight equities generally held a firmer footing last night with the exception of China where banks led, but the overall market appeared weighed down by supply in a quiet session.

A quick comment on yesterday’s behavior. Yesterday’s market behavior was a reversion. It wasn’t alarming and the markets with recovery later on yesterday confirmed this view. The S&P is now trading just 50 basis points below its all-time high. That’s one of the reasons they tolerate high gold price. Volumes remained thin yesterday with the S&P down 20% on volume and the SXXP, that’s a volume measure, down 40% compared to their 20-day averages, which is expected during peak holiday season. This is peak holiday season for the summer, between 4th of July and Labor Day.

You get the lull in volumes. In the lighter volume environment, the path of least resistance seems bullish right now, meaning the market will levitate with no news. There seems to be some captive buying in the stock market. Bullish is boring again is how we would call it. The market has also comfortably navigated this week’s main catalysts unscathed. BLS revisions, which is the big deal yesterday, it’s a big deal on how it was handled. The revisions themselves, but it was known it was coming for the most part. We’ll touch on that a little bit more later on.

The true pace of that, however, as judged by Goldman Sachs economist was better than expected, while consumer prints were better highlighted by strong price action from target on a beat and a raise. That was this week’s data thus far. The stock market itself, under the surface, hedge fund flows are leaning towards broadening out exposure and reducing large caps in favor of small caps. They’re selling tech and they’re buying smaller tech because they’re all anticipating a Fed easing. This suggests that even in the absence of broad-based risk-taking, general sentiment has turned more positive regarding under-owned pockets of the market, many of which have been hampered by the recent higher rate environment.

Mutual funds also compositions in their mega caps. It’s bullish as long as there’s no bearish news, meaning people are selling their big caps and they’re buying smaller stocks. The question is, are they selling one share of a $1,000 stock and buying one share of a $1 stock, or are they selling one share of a $1,000 stock and buying 1,000 shares of a $1 stock? That’s really the question. The bad news will make it worse for the stock market. It’s that simple. We’re in the middle of a rotation. By the way, that’s what Hartnett had said as well.

On deck for the rest of the week, PMIs will be watched closely today in both Europe and the US, but the main focus will remain on Powell’s speech Friday. The FOMC minutes yesterday hinted at easing policy in September as the market has already priced that in, but any comments suggesting graver concerns regarding the labor market will likely push the market towards a 50 basis cut. If Powell comes out saying, I’m worried about the labor market, then we’re going to assume a 50 basis point cut. If Powell does not say that, then you assume a 25 basis point cut, if at all.

I think the dark horse is that Powell’s going to say we’re close to our target in inflation, and we’re going to let it float a little bit higher, justifiably, once we hit our target, and that will be the bullish thing coming out of the market. Anyway, that’s what we think. Back to the main event. All right. Citibank made some comments about CTAs in all markets yesterday. No one else really is talking about this, but CTAs are max long, both gold and silver, with the first sell level in gold minus 5% away at 2435 in GCZ4.

That’s December futures contract, but in silver, the precious metal is trading right on top of its sell level this morning at 3017. That’s yesterday’s comment, and that’s, again, December futures. What they’re saying is that CTAs are too long. It’s a crowded trade, and they’re probably going to start selling about $100 lower now. We’ll talk about what I think in a second. In silver, they could start selling now, and they should start selling now, considering where copper is, considering where gold is, but they’re not. So that’s a little bit weird, and it says to me that there’s buying in silver coming out of the macro side.

All right. So what does it mean? Forgiving my spelling. Historically, it means it’s $20 drop in gold snowballs into a $100 drop in the last two weeks. But lately, as demonstrated in price action in our own analysis, these players, these are buying underneath, and it’s not letting the dips go deep or last long. We think that continues as the election and the BRICS summit approaches. So there will be dips. They should be bought. They won’t be allowed to breathe too much. We have a full analysis on this, and we’ll be posting it tomorrow.

Topics in the upcoming report include CTA behavior, we refer to them as wildebeest, cell season, very significant between now and Halloween, technically between Labor Day and Halloween. But it’s coming, and it’s important, and it is the single largest reason to sell gold and silver, even if it’s only for a two-month period. It should mean the market goes lower. But we have a game plan to that effect. We have a commentary on oil as well, and then we go into city’s gold and silver analysis and results a little bit more. The next thing included at the bottom, we have a report from ING on oil weakness.

Oil continues to come under pressure, and it is looking increasingly likely that OPEC Plus will have to delay its plans of gradually increasing supply. Otherwise, expect further price weakness. All right. OPEC needs to delay its increase in supply because the market is really getting ahead of itself. If OPEC delays its increase in supply, that will firm up the market as less supply will be coming on the market. I think there’s a chance that they will do it anyway, and the oil market will continue to sell off. I guess putting it in trader terms is the oil market has sold off too much relative to this supply coming online.

And to think, and I think the ING report is good, to think that OPEC will definitely cut back on pumping more. We’re not going to put more on the market. I think it might be an error. I think they’re going to pump more. That’s it. That continues at the bottom. Market news. Yesterday’s market news. I touched on this in the air rundown. The BLS has been almost methodically, it’s not random, has been under reporting, has been over reporting the job payrolls for the better part of the year, if not the whole year. Zero Edge has been commenting on that, and they’ve been all over that earlier.

And that happens from time to time, but not every month. Every payroll is too high, is too high, is too high, is too high. And then they do another renewal, new renewal, rebalancing, we’ll call it annually. And that rebalancing, which the market anticipated, but still it was revised the whole year, was revised down by an additional 818,000. If that’s not bad enough, and showing political bias at the BLS level, at best, or complete incompetence at worst, they actually muffed releasing the data. It was supposed to come out at 10am, it came out a half hour late.

That’s completely unprofessional. It’s like a lot of things, but let’s just say it’s like a seatbelt that doesn’t work when you’re in a car accident. That’s not how government works. They’re supposed to at least provide what they say they’re going to provide. Put it this way, that report had been in the works for months, and probably intensely for weeks. So it’s not like they were surprised by it. You knew it was coming. And on top of it being delayed by a half hour, when you called, hey, where’s the report? Most people, 99% of the people, got sent to a voicemail and some got sent to online, you got sent to a message.

But three banks, maybe more, actually got the data given to them early. So it’s complete incompetence to give it to a couple banks and not everyone. So picture the office there, whatever the reason, the data is not coming out on time. And people are calling up saying, hey, what’s going on? And assuming that people on the desk answering the phone are not politically or bank biased, they start to give the data out to people. And someone else on the desk says, no, no, we can’t do that. So they’re completely unprepared for anything.

It’s like FEMA not being ready for a hurricane. And our government is just not ready for a hurricane. It’s really pathetic. Anyway, you can read the rest of the news there. Data on deck, Jackson Hole still premium. There’s the ING report. I’m Vince. Have a great day. The Austrian men in Austria go figure. Fortunately, these beautiful coins are only $3 and 10 cents over spot. Well, we still do have silver under the $30 level, which it obviously eclipsed earlier this year. And on the gold side, this week’s special is one ounce gold Kuberance for only $60 over spot.

And again, you can place it ordered by calling 833-326-4653 or emailing us at Arcadia at milesfrankton.com. Happy to answer any questions you have and get you set up with whatever you need. So call us at 833-326-4653. And as always, thanks for watching. Please note that this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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