Vince Lanci: The Gold And Silver Selloff Finally Arrives | Arcadia Economics

➡ Vince Lanci discusses market dynamics, focusing on precious metals like gold and silver on Arcadia Economics. He notes that while these metals are currently overbought, it doesn’t mean they’ll be sold off immediately, but there’s less interest in buying more. He also mentions a shift in fund allocations from metals to energy. Lastly, he warns that the market could be in for a rough week due to these changes.

The bottom graph is one I want you to look at here. CTA’s are as long as they get. Doesn’t mean they’re going to sell. But it means they don’t have an appetite for buying more right now. Welcome to the morning markets and metals with Vince Lancy, where each day he brings you the precious metals and financial news to get you ready for your day. And now, here’s Vince.

Good morning. I’m Vince, and this is the morning meeting. Today’s conversation, we’re going to look at changes in market dynamics. And investigate if a bank cried uncle a couple of weeks ago. And how it’s going to affect the markets now. Then we’ll look at some news as well. But first, let’s take a look at the markets. Right. The dollar is up 17 at 100, 628. Ten year yields are 465, up three basis points.

The S and P 500 is up 27 handles at 49. 93. After a rough week, the VIX is 1832, down 38 basis points. Gold, out of nowhere, I might add, is 23. 42, down $49. And on its lows of the evening, silver is down over 4% at 27. 46, down 120. Copper is up 15 basis points. That’s 448. WTI is down fifty five cents. At eighty two point two nine.

Natural gas is 175. Bitcoin is up almost 1000. At 65 and change. Ethereum is 3200. Platinum palladium are both down 2% and 1%, respectively, at 1006 and 924. Grains are net down. Soybean is down two cent at 1148. And wheat is down a little bit. So basically, the grains are flat with soybean down a couple cents. But you could see the big outlier in markets last night is precious metals.

And were going to address that to prepare you for what could be a rough week. We discussed this over the weekend, and, well, its not something we want to be right about, but sometimes you got to deal with the bad news. Okay, so the title is tactical warning. At least my title is tactical warning. Someone cried uncle now. Well, okay. So what happened was we should just get right into it.

Right? Okay, so today in premium, we have geopolitical analysis from BoA, RBC and TS Lombard. I’m particularly enamored with the T’s Lombard analysis. We’ll give you a preview of that later on. And we’re going to talk about something called price to perfection, which is the cried uncle thing is the same thing, believe it or not. All right. There’s the front page. All these stories are related to today.

Well, not all. Of them. This is the Founders podcast we did called is gold headed for a rug pull. Now, I’m going to send that to premium later this morning. But I put it out on Friday, I think Friday, yeah, because I was worried about a down move, but not the end of the market. And then on Sunday, we had a conversation about the gold market. And the title says it all, who is buying if the gold funds are now selling? And that’s right, the gold funds are now selling.

Very early in the game, but they are now selling. So let’s get to what I’m talking about. Here’s the premium. Here’s Ts, Lombard, RBC, MUFG and Boa. Nice little geopolitical stuff, something to read to catch up. Okay, crying uncle and the market being possibly overbought are the same thing in this conversation, believe it or not. All right, so here’s the running commentary. These are the notes that I wrote to myself.

War debt, inflation and rate cut potential are all known quantities, although we know that the rate cut potential has receded recently. Second point, the bullion banks, JP Morgan, Goldman Sachs, UBS, Citibank, Boa all outdid each other, raising targets very similarly to how they do on stocks they play catch up with. These are not bag holding price target raises. They raised them at the end of the year. That’s marketing.

And then they raised them in March after the rally. And I do not believe that was bag holding. I believe that was them playing catch up with a big buyer that they are, they did not have a handle on. Okay, number three, every bullion bank, I think I just said that. Right. Every bullion bank has not only raised their end of year targets, excuse my spelling, but raised their targets again since March, predicated on buying.

They have no control of nor heads up on if it’s coming as to play, as they play catch up to market forces, the editor is going to be fired from this organization. That would be me. All right, so here’s where the cryuncle think happens. First, let’s start with this chart. The two rectangles are squares. That’s December 3, when I’m pretty sure the bank of international settlements was called upon to alleviate the rally stress.

This was during the Sunday night move. This was two Fridays ago when the iranian attack started. And when this happened, you had a market run up again in smaller but similar fashion. And I’m pretty sure, almost positive the bank of international settlements stepped in again. Now, the first thing is, when does the bis or any other bullion bank step in? They step in when the markets getting ahead of itself too hard and too fast, theyre like a market maker that slows down volatility.

Now, the more conspiratorial of us, which I can be, is they keep a lid on it and drive it down. Now, this is that evening. Im sorry. Yeah, that evening, the market rallied. That day, the market rallied, opened up, gapped higher, filled the gap, kept going. And then the selling came in an orderly fashion, keeping a lid on it. And then the market went some way, then we re rally.

And I said, okay, this is kind of healthy. Well, but since then, since then, I was like, okay, a little bit of a SmackDown, but we’re still okay. But since then, macro appetite for adding to longs has diminished evidence. The bottom graph is one I want you to look at here. CTA’s are as long as they get, doesn’t mean they’re going to sell, but it means they don’t have an appetite for buying more right now.

Second, this is CTA breakdown. Now, CTA’s, again, are not driving this market right now, but they are a little bit of a canary in a coal mine on the left hand side, it’s a little smaller than I’d like it to be. On the left hand side. For the last month, you’ve seen precious metals, money coming in hand over fist. Right. And energy you saw coming in to cover shorts, but not getting long.

Well, this past two week breakdown from March 13, actually, month breakdown from March 13 to April 12, you saw it’s a little bit small. Let me see if I can make it bigger for you. That’s the wrong way. You saw precious metals go from $26 billion to $30 billion. That’s a healthy increase. But energy went from 27 billion to 36 billion. The allocations between funds are going from metals to energy.

So some of the loans are selling in gold and buying in oil. It’s not the end of the world, but this is how it happens. This is, I think, more important. This is a Goldman Sachs CTA analysis frame I’m using. All we care about for these pictures are the stars. Metals star, that’s at peak length. Metals, copper at peak length doesn’t mean it can’t stay there, but it means that you’re susceptible to bearish news.

Metals, silver almost at peak length. Okay, so youre looking at metals markets that are very overbought. For example, in the soft markets are sugar is very short, cotton is very, et cetera, et cetera, except for coffee, which is a nutzel market right now. All right, so that’s that. The second point, options are now being sold by macro longs back to bullion banks. Now I won’t get into the details here because it’s just very wonky, but put it this way.

Last week in this most recent CFTC report, the macro funds sold this rally. They sold calls, they hedged gamma, they sold futures. As I said in that other headline, they were selling into strength. They were taking profits. Who was buying then? Well this tells you the buying was, believe it or not, bullion banks. A bullion bank or more a bank in general, maybe another fund, but probably a bullion bank based on the CFTC data was covering shorts into strength.

Someone cried uncle on that day. Now here’s the aftermath of that. Gold is making new highs and the options are not making new highs. The second, the bottom line, that’s volatility. The top line, that’s the market price that tells you that someone is selling calls as the market rallies. Historically when this happens, this is very near and dear to my heart. When the market makes new highs and the options do not, that’s because the smartest money in this instance is selling their options out.

And whos buying the options back? Well its the people who sold it to them. So probably the boy banks. This is a sign of toppiness. You can make the argue that volatility is getting cheap. You might want to buy it again. Thats right. I would wait for the market to sell off. Thats my opinion. Next point. This is big. Who has been driving this market? Well theres been buying coming out of China, not just retail, not just central bank.

Theres been speculative buying from Shanghai thats been spilling over into the US. Futures buying Shanghai futures exchange China for the first time and theyre very powerful when they do this is clamping down. So call it capital controls, call it margin raises. But there are adjusting margin ratios and price limits for some contracts on futures. Thats the first thing. The second thing is theyre adjusting transaction fees for gold futures and other contracts.

Now im not shown here. Theyve also limited the amount of position that you can have on futures as deliverable against the physical exchange. So Shanghai Gold Exchange, thats the physical exchange. Its like their spot market, thats their London market if you want to look at it that way. And the futures exchange is their Comex and theyre keeping them separate physically. And they’re also saying you can only accumulate so many futures for delivery on physical.

So they’re capping it. These are big drivers. They dampen chinese demand. Be careful. All this happened after someone cried uncle. Someone cried uncle. China raised the requirements, reduced cross asset trading, and the market is now weaker. Even though we had a great week last week, I’m going to give you a little bit of a technical overview. Now, this is a Bollinger band comment. Whenever you see these rectangles, I put these rectangles here.

This rectangle implies, this rectangle implies this will happen. And it did. Okay. This rectangle is different. This rectangle comes in on the way up from here to here to this yellow line. It stayed above it all the time. And when it didn’t, it went below. Now we’re below it five days in a row. Okay, that’s not good. That’s an implication that on the daily we’re going to pull back to possibly this red line.

Now on the daily, that means, and over the next five days, look for a pullback over the next five days. Now on the weekly, same concept. The market is well above the yellow line. It should pull back to the yellow line and hold. Okay, so the number, I had a number written down. The number, oh, there it is. This market is fine and should remain fine above 22 91.

If on this system, the next system I look at is below 22 91, I want the market to hold 2200 for different reasons. So any pullback that holds above 22 91 puts us on target for a new weekly high two weeks from now, but not this week. All right, so lines in the sand. There they are. There’s one other thing. Last week was turning to silver. See this chart? Highest.

This is the key for me. Highest weekly close for silver in over a decade, I think. Eleven years, that market should have attracted buying out of the gate and it did not. So if this market, if these markets, here’s my first line in the sand. Coming back to that. If this market does not close green on the day, then the macro players are no longer buying. Macro players, not players.

Silver should be bought today. And if theyre not on a day that they should be in, thats a warning bell. New high on the weakened silver is needed again to attract more buying a downtick in open interest with lower market. Thats a little bit of wonky stuff saying that. I think the macro funds are selling now. The macro funds are selling now. Go down at 22 91 and you’re okay.

And below 22 91, then you start looking to buy dips because nothing has changed fundamentally. Nothing has changed. It’s just overdone. We’ve had it good for a long period of time making sure that I’m still recording. All right, moving on to market news. Here’s another red flag for me. Market news. The first story. Gold’s rise to all time highs above 2400 announced this year, has captivated global markets.

Big deal. That’s a big deal because it’s a Bloomberg story and there’s nothing about it that’s bearish. Tesla has cut prices by nearly $2,000. That’s recessionary. Gold is going to go down in a recession, just not as much as stocks. The Federal Reserve bank is stuck in a mode of forecasting and public communication that looks increasingly limited. The Fed is telling you they’re data dependent and the data sucks.

So what’s their game plan? You can’t be data dependent. If the data is untrustworthy. That means you have to have a game plan. Look, if you tell me that you’re relying on the data and the data sucks, then I need to know what you’re going to do with the data. Because it’s like I’m looking at the data and data is doing this and you’re saying I’m data dependent.

I’m like, well, what are you doing with the data? What can you do with shit? And that’s what it is. Bitcoin heavy took effect on Friday. Et cetera, et cetera. Geopolitics, nothing new, but there’s plenty of stuff. Data on the week, nothing today. Hog semeic to my jewish brothers and sisters. And hopefully you’ll have a good holiday. Tuesday we have flash, Wednesday we have durable goods. Thursday is a big day, GDP, and Friday is another big day.

So back ended data. There’s the TS Lombard. Let’s get to the markets. I have no position on. I’m long miners. I’m not long or short gold specularly, but I did take delivery at about right here and significantly lower. But anyway, just keep in mind a pullback is not a bad thing. If you want this, this market will be higher come November because of the election and the Brics thing.

I think you should subscribe. If you’re not a premium subscriber, you should subscribe because this story here, I’m going to break this out for Premium. And I think it’s going to tell the tale that I’m trying to communicate here in a much bigger picture way. But tactically speaking, everyone be careful. I’m Vince. Have a great day. Thanks for watching this morning’s markets and metals update with Vince Lancey.

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