rss

Hu Xijin of China Financial Times lobs some warnings to the US way

US closes China’s Houston consulate

The US announced today the closing of China’s Houston consulate.  Now China Global Times is lobbing some warning the US way.
US closes China's Houston consulate

The warm and fuzzy feelings between US and China are not all that warm and fuzzy needless to say.  It is hard to see things getting better.

Silver continues its surge and tests November 2013 highs

Moved above the $23 level for the 1st time since 2013.

The price of silver is trading up around $1.16 or 5.42% at $22.46. That is off the days high of $23.02. At the high the price was testing the November 1, 2013 high price of $23.08 (see weekly chart below). Since the week of June 19. The price of silver has moved from a low of $16.95 to the high today of $23.08.  That equates to a 35.8% gain. For the year the price has moved up from the closing level of $17.85. The year to date gain. The gain to the high today is equal to 29.2%.
Moved above the $23 level for the 1st time since 2013.
Drilling to the hourly chart, the last 4 days has seen the price move up 21.7% from the low to high with the last 2 days really extending quickly to the upside. However with the high price testing that 2013 swing high, there may be some rotation back to the downside as traders ring the cash register.

Silver on the daily chart shows a 21.7% increase over the last 4 trading days

European indices end the session lower on the day

German DAX, -0.54%, UK’s FTSE 100 -0.96%

The major European indices are ending the day lower. The provisional closes are showing:

  • German DAX, -0.54%
  • France’s CAC, -1.28%
  • UK’s FTSE 100, -0.96%
  • Spain’s Ibex, -1.42%
  • Italy’s FTSE MIB, -0.74%
The 10 year yields showed meaningful moves to the downside. Italian yields fell the most at -5.7 basis points. German yields declined by -3.3 basis points
European yields are lowerIn other markets as London/European traders look to exit:
  • spot gold continues its move to the upside with a gain of $19.60 or 1.07% at $1861.50. Sobers doing even better with a $1.09 gain or 5.13% to $22.39.
  • WTI crude oil futures for September delivery are down $0.57 or -1.36% at $41.35. Inventory data confirmed the private data with a build of 4.892M barrels. The expectations was for a -2.2M draw.
In the US stock market the major indices are mixed:
  • S&P index is up 4.9 points or 0.15% at 3262.69
  • NASDAQ index is down -1 point or -0.1% at 10679.30
  • Dow industrial average is up 82 points or 0.31% at 26923.
In the forex market, the EUR is the strongest while the JPY is the weakest of the majors. The US dollar is down vs. all the major currencies with the exception of the JPY. It is near unchanged vs. the GBP and has recovered losses of around 90 basis points at the London morning session lows.

US crude oil inventories +4.892M vs -2.200M estimate

DOE oil inventory data for the week of July 17, 2020

  • Crude oil inventory showed a build of 4.892M vs. a draw of -2.2M estimate
  • Gasoline inventory  showed a draw of -1.802M vs expectations of -1.5M
  • Distillates inventory build of 1.074M vs expectations of 0.5M
  • Cushing OK crude inventory build of 1.375M vs last week’s build of 0.949M
  • Crude oil implied demand 16342 vs. 17673 last week
  • Gasoline implied demand 9029.7 vs. 9248.4 last week
  • Distillates implied demand 4661.6 vs. 5023.7 last week
NOTE….the private data last night surprised with a 7.544 million barrels build in inventories. That helped to push the price of crude oil lower on the day.

The price of the September contract just prior to the release was trading at $41.38. The price is currently trading at $41.47

Silver offers a bargain

Silver vs gold

The precious metals silver and gold continue to have a strong fundamental bias. Low interest rates, extra stimulus expected, and risk positive markets on vaccine hopes are all keeping gold and silver supported.
Silver has more obvious upside than gold
If you look at silver you can see that the current price is less than half of what the record high has been (at around $50). This means that silver has plenty of more room to go higher. Goldman Sachs see’s a ‘near perfect environment for silver’ and Citi is ‘very positive’ noting the steady investment demand.
Silver benefits from both safe haven bids and its demand as an industrial metal being used for mobile phones and solar panels. Furthermore, Bloomberg notes that inflows in silver backed ETF’s are now running at well over 1000 tons a month
Where will buyers re-enter?
Firstly, look at the 4 hour chart and the breakout of the ascending weekly trend line. Any return to $19.20 should find buyers.
Silver vs gold
Secondly look for a Monthly close above the trend line marked. Some longer term buyers will enter at market or a slight pullback to $19.20 if we get a close above $19.20 at the end of the month. Definitely one area to watch. I took profit at 20.30 yesterday on my longs from the same trend line break and I am looking at potential re-entry levels.
silver