Gold & Commodities Archives - Page 58 of 76

February 27, 2013

Falling commodities: Bearish for stocks

Dow Jones-UBS Commodity Index is testing primary support at 136. Breach would signal a decline to the 2012 low at 126. The peak below zero on 63-day Twiggs Momentum already warns of a primary down-trend. Recovery above 140 is unlikely but would suggest that a bottom is forming.

US Dollar Index

A fall in commodities would warn of slack global demand and a bearish outlook for stocks.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

February 27, 2013

Gold retreats

Spot gold is consolidating after retreating below $1600/ounce on the hourly chart. Breach of short-term support at $1590 would warn of a down-swing to test medium-term support at $1550 — and primary support at $1500.

Spot Gold On the monthly chart we can see that breach of $1500 would signal a primary down-trend. A 63-day Twiggs Momentum fall below -10% would also suggest a primary down-trend, while reversal above zero would suggest further ranging between $1500 and $1800.

Silver is also headed for a test of primary support — at $26/ounce — but 63-day Twiggs Momentum respect of -10% would continue the long-term bullish divergence, suggesting a new up-trend.
Spot Gold

I am not yet convinced that gold is headed for a primary down-trend. We may be in a low-inflation/deflationary environment right now but how long will it take for central bank expansionary policies to overcome this? Watch out for bear traps. Respect of primary support around $1500 could present a buying opportunity.

Crude Oil

Jeremy Grantham (GMO) reminds us, in a recent BBC interview, not to underestimate the importance of crude oil. Crude represents roughly half of the cost (extraction, shipping, etc.) of other major commodities traded, but crude oil itself also represents half of the value of all commodities traded. When crude prices rise they do serious harm to the global economy.

Brent Crude retreated below support at $117/barrel, on concerns over the global economy. Expect medium-term support at $90/barrel for Nymex and $112/barrel for Brent crude (the green line) but only failure of primary support at $84 and $106 would signal a primary down-trend. Falling crude would be a bearish sign for gold: demand for gold increases when crude rises.

US Dollar Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 20, 2013

Commodities down

Dow Jones-UBS Commodity Index is headed for a test of primary support at 136. Breach would signal a decline to the 2012 low at 126. The peak below zero on 63-day Twiggs Momentum already warns of a primary down-trend. Recovery above 144 is unlikely but would suggest a rally to 152.

US Dollar Index

A fall in commodities would warn of slack global demand and a bearish outlook for stocks.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 20, 2013

Gold falls sharply

Gold is headed for another test of primary support at $1525 after breaking support at $1625. Breach of $1525 would signal a primary down-trend. 63-Day Twiggs Momentum breakout below -10% would strengthen the signal, while reversal above zero would suggest further ranging between $1500 and $1800.

Spot Gold

Brent Crude remains above $117/barrel, signaling a primary up-trend. Recovery of Nymex WTI above $99/barrel would confirm. Narrow consolidation below the resistance level is a bullish sign.

US Dollar Index

* Target calculation: 116 + ( 116 – 106 ) = 126

The gold-oil ratio is falling. Decline below 10 is a long-term buying signal for gold. In recent years fluctuations have been a lot narrower and a fall below 12 may be sufficient.
Spot Gold

I am not yet convinced that gold is headed for a primary down-trend. Watch out for bear traps. Respect of primary support around $1500 seems as likely — and would present a buying opportunity.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 13, 2013

Commodities declining

63-day Twiggs Momentum is forming another peak below zero, warning of further downside on the Dow Jones-UBS Commodity Index. Reversal below -5% would strengthen the bear signal. Failure of support at 136 would warn of another test of the 2012 low at 126. Recovery above 144 is unlikely but would suggest a rally to 152.

US Dollar Index

* Target calculation: 150 + ( 150 – 125 ) = 175

Rising commodities — other than gold and oil where other factors need to be considered — would suggest a recovering global economy and further gains for stocks in the year ahead. A fall in commodities, however, would warn of slack global demand and a more bearish outlook for stocks.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 13, 2013

Gold weakens while crude rises

Gold is undergoing a correction on the weekly chart. Breach of support at 1625 would indicate another test of primary support at $1525. Retreat of 63-day Twiggs Momentum below zero warns of a primary down-trend. Recovery above $1700 per ounce, however, would indicate that the correction is over.

Spot Gold

Crude oil, however, is rising, with Brent Crude breaking resistance at $117/barrel to signal a primary up-trend. Twiggs Momentum rising above zero already suggests an up-trend. Recovery of Nymex WTI above $99/barrel would confirm.

US Dollar Index

* Target calculation: 116 + ( 116 – 106 ) = 126

Normally gold and crude move together. A divergence would be highlighted by the gold-oil ratio (below). A decline to 10 is normally taken as buying signal, but in recent years fluctuations have been a lot narrower — between 12 and 18.
Spot Gold

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 7, 2013

Gold and commodities rising

Gold is forming a base between $1650 and $1700/ounce on the daily chart. Upward breakout would offer an initial target of $1750/ounce. Oscillation of 63-day Twiggs Momentum close to the zero line indicates consolidation but beware of a peak below zero — or reversal below $1650 on the spot chart — which would warn of another down-swing.

Spot Gold

* Target calculation: 1700 + ( 1700 – 1650 ) = 1750

Silver displays a similar long-term pattern to gold, albeit with a sharper spike in 2011. Bullish divergence on 63-day Twiggs Momentum suggests an up-trend. Breakout above $35/ounce ($1800 in the case of gold) would signal a long-term advance.

Silver

Brent and Nymex crude both threaten an upward breakout from their recent consolidation — which would signal a primary advance to their 2012 highs.

Crude Oil

Commodity prices are also improving, with Dow Jones-UBS Commodity index displaying a bullish divergence on 63-day Twiggs Momentum. Breakout above 150 would complete an inverted head and shoulders reversal with a target of 175. Rising commodities — other than gold and oil where other factors need to be considered — would suggest a recovering global economy and further gains for stocks in the year ahead.

US Dollar Index

* Target calculation: 150 + ( 150 – 125 ) = 175

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 28, 2013

Is gold really undervalued?

I agree with James Turk that gold is a currency. It does not generate income and is simply a store of value. Demand for gold will rise in times of uncertainty and when fiat currencies, against which it is traded, are being debased by central bank balance sheet expansion. Now central banks have been printing money since the global financial crisis in 2008, so why is gold not soaring into the stratosphere as Turk predicts?

Spot Gold

The answer lies with global deleveraging. Central banks are attempting to counter the strong deflationary effect of private sector debt repayment. The inflationary effect of their activities is largely offset by deflationary forces emanating from the GFC. If we compare the performance of gold to the CRB and DJ-UBS Commodity Indices it is clear that most commodities have not risen in tandem with gold and there is little evidence of inflation.

US Dollar Index

Copper recovered after the GFC but also seems to have hit a ceiling.

US Dollar Index

Only Brent Crude shows similar price escalation to gold. Nymex WTI Crude is far more subdued.

US Dollar Index

Without strong inflation, gold is unlikely to continue its meteoric rise. More so if there is a down-turn in crude oil and copper. Watch closely.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 25, 2013

A new Gold Standard is being born | Telegraph Blogs

Ambrose Evans-Pritchard writes:

The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project. Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century. They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen…….

It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 24, 2013

Gold and commodities find support

A look at the long-term (monthly) chart shows gold undergoing a correction before encountering support at $1650/ounce. Recovery above $1700 would re-test resistance at $1800, the higher trough suggesting resumption of the primary up-trend. Breakout above $1800 would confirm. A 63-day Twiggs Momentum trough close to the zero line would strengthen the signal, while reversal below zero would suggest that the 5-year bull-trend is over and a test of primary support at $1500 likely.

Spot Gold

Commodity Prices are a good predictor of stock market performance. Dow Jones-UBS Commodity Index retreated from 150 but support around 140 would indicate another attempt at a breakout — and recovery above 144 would strengthen the signal. Rising Twiggs Momentum suggests a primary up-trend but only breakout above 152 would confirm.

US Dollar Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.