Why Goldmans Commodity Desk Thinks Silver Is About To Soar

Something significant on each commodity individually to go over today as developing over the weekend. Okay let’s start with the markets. There’s the silver weekly. The dollar is $100.66 down 45. The 10-year yield is $3.64 down a basis point. S&P 500 is $5.62 up 60 basis points up six tenths of a handle. The VIX is $17.11 stabilizing at higher 54. Gold is $25.80 that spot up $3.32 up about $8 overnight. Silver is $30.92 up 22 cents near its highs of the night I believe. Copper is catching up a little bit $4.23 up three and a half cents.

It was up a penny when I looked last. Gold silver creeping lower outside of that channel. WTI is down 10 cents at $69.43 natural gas $2.26 up two cents. Bitcoin touching $60,000 over the weekend and back to close to $57,000 the 58 gang. All right Ethereum $2,300. Palladium up seven at $10.76 and Platinum $9.93 down five. Grains are drum roll please. Grains are all down soy corn and wheat down one down two down eight. $10.22, $3.98, $5.89 respectively and there you have it wheat the strong the weakest in percentage terms as well as as well as pennies.

And there’s the weekly silver chart. I was doing a little work on that and that’ll factor into this conversation today. Here we are silver and gold today premium analysis short swap dealer stress news. Goldman’s commodity desk thinks silver is about to soar. The first part premium analysis we’re going to share some of that with you. That’s going to be based on the commitment of traders report that shows continued chronic and in moments acute stress by swap dealers on their short positions and why we think there’s a problem there. The news is actually a report that Goldman put out recommending to clients to buy call spreads and they give their reasons.

Now we were made aware of this from a zero hedge premium report and we’re going to quote from that report and then in the premium section at the bottom we’ll go through it in a little bit more but we’ll give you what you need to know to figure out what the heck is going on here. All right front page there’s the full length example. There’s the full length analysis of the swap dealers that are under stress. I have no hard evidence. I’m not predicting that. This is not about banks going under.

This is about swap dealers that are covering shorts at higher and higher levels and making less and less money and or losing money. John Paulson had an interview with CNBC. We have that there. That’s that’s a it’s an interview that’s based on the he differentiates between Harris and Trump along their tax implications and what it would mean for the market and here’s something we put out for founders last night about that silver report. We’ll discuss a little bit more of that here. Let’s get going. All right. This is excerpted from our Sunday commitment of trader discussion which I just showed you.

Sideways higher. This is an analysis of the commitment of traders report in conjunction with open interest and in conjunction with the market behavior itself. Sideways higher week with significant fun churning with long and short funds adding small but short swap dealers covered aggressively from multiple cohorts indicating producers and other swap dealers suggesting market making duties are secondary to market taking needs. In English shorts need to cover higher because longs keep adding and being patient even at higher levels. Second chart swap dealers act like they are closing shot with no options changes increasingly behaving as agency and not principal in both their future and most obviously their options daily activity likely passing through risk back to back into producers other clients and possibly supernational entities.

English when you have a business and businesses under stress as many of you have businesses you will pass through because you can’t be bothered with taking the risk. So I’ll put you in touch with a guy that can handle it. I’ll put you in touch with a guy I can handle that and that’s what agency is versus B versus a principal agency means they’re intermediating the order a customer wants to buy from them they sell to them and they immediately buy from someone else not for profits just to honor the business but they’re not taking risk they’re taking less and less risk.

Now this chart here which is probably the most interesting to look at from that perspective this chart the gold line our blava he’s a founding member and I talk about things that he creates the charts that mirror them he’s a trader and anyway a valued founding member. All right so here we go the gold line is the gold price the red and blue lines are open interest cycles right so it’s a little bit mixed up there if you’re not familiar with it but the thick green lines they are green right no they think they’re blue the thick lines the thick arrows will say mark the bottoms and turning points for the gold market and you could see those are higher highs higher lows I should say right and the reason that they’re marked there is because they coincide with turnarounds and open interest now it’s easy I want to just caution you a bottoming and open interest is not necessarily a bottoming in the market so when the open interest goes up the market should go up yeah that happens a lot and it’s happened that way for years uh but just that’s not what we’re saying here what we’re saying here is that when the open interest bottoms the market bottoms generally speaking that’s how it works but we’re noticing that the open interest is bottoming at higher levels which indicates people that are long have deep pockets and they’re not selling they’re not scared they’re in the money and they might actually be bigger than the swap dealers that they’re dealing with all right more on that at the bottom okay there’s more charts and it’s going to be basically a very wonky tighter version of the analysis that we did over the weekend now this one I think is far more interesting well not necessarily interesting but far more top of mind okay zero hedge premium notes that Goldman’s derivative sales trading desk writes in its latest weekly note there has been a huge influx of interest in precious metal and miners ETFs this week and bank and the bank’s desks think SLV upside is one of the best trades on the board and they give four reasons for that beyond the trade itself and we’ll discuss that also later on and I do believe that Chris Marcus has something planned on that as well if not we’ll ask him to okay so there’s the chart by zero I just this is like from their their premium their premium report we’re not showing the actual report itself just this chart so this is their version of the the Goldman chart and you see this spike here that’s a huge influx in SLV call line indicative of someone who thinks the market’s going up now there are good reasons for that I didn’t mean to do that well there you’re seeing you’re not supposed to show you that yet bear with me all right so why this matters and how to implement it according to them continues at the bottom all right simply put the last time that we had this kind of a spike in in options activity was in mid to late march you can look at the chart and see what happened all right moving on sloppy segue there we are moving on to the data on deck big week FOMC interest rate decision is this week uh that’s on Wednesday so the markets are starting to discount believe it or not they’re starting to discount a 50 basis point cut again so the hope is creeping back into the market so anything less than a 50 basis point cut will probably be bearish for stocks which could be bearish for uh golden commodities silver one of the reasons that Goldman likes silver is because of the fed cuts and Bloomberg noted in a story I’m not sure about a month ago that if the fed cuts gold will go up with silver will go up more that’s it all right stay with us and we’re going to show you a little bit more of that all right uh let’s take a look at silver in all the ways that we want to all right so this chart if you’re a technician MACD has just turned up so this is the beginning of a run up possibly the middle definitely not the end so if we get above here this shouldn’t be a problem okay that’s that’s the first thing that’s the first chart second chart on the daily chart in silver unless the market closes unless the market closes under 20 I’m sorry 30 spot 19 30.19 right or trades under 29.95 during the day uh the market will not go sideways it should go higher rather rapidly for the next three to five days next chart weekly well what else can you say except this is a bull flag and it’s a choppy bull flag it’s hard to identify but it looks like we’ve broken out of most of the measures of the bull flag and you can draw a trend line here I don’t draw trend lines and wicks but uh it’s certainly not a bad idea I think we’ve broken the uh the bull flag and the only thing that matters now is the top here like I think this I don’t think this line matters uh last chart let’s go with a clean regular daily intraday chart uh loop of my magic Bollinger Band system and the Magic Bollinger Band system says today for the rest of the day if we get above 3105 if we get above 3105 and close an hourly uh it would close on an hourly basis above 3105 the market will have no problem taking out this eye and it will go 20 to 40 cents higher I hate saying these things but that’s what this says I’m not trading it similar to what happened here all right I’m Vince have a great day thanks for watching this morning’s markets and metals with Vince lancey brought to you each day by miles franklin precious metals who we encourage you to contact for your next gold or silver order and miles franklin brings us a gold and silver special each week and if you’ve been looking for a pullback in the rally to purchase gold and silver this week’s deals include one ounce silver fill harmonics from the Austrian men and Austria good figure fortunately these beautiful coins are only three dollars and ten cents over spot while we still do have silver under the thirty dollar level of which it obviously equips earlier this year and on the gold side this week’s special is one ounce gold cougarance for only sixty dollars over spot and again you can place an order by calling 833-326-4653 or emailing us at arcadia at miles franklin.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 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