Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (161157)	8/11/2020 7:48:39 AM
From: Horgad	Respond to of 217774

IMHO Gold is likely to be very trade-able over the next 6-9 months. Buy the dips on the vaccine announcements (like the Russian one this morning). And sell the spikes on the stimulus announcements. Or if you are braver, simply accumulate on the dips.

To: carranza2 who wrote (161157)	8/11/2020 10:22:48 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217774

Re <<Looks like no massive rally. Bludgeoning instead.>> Message 32874495 looks that way. If so, instead of missing a paper gold rally, I only have to endure a physical gold respite, and should I must guess, I guess either shallow / deep but of short duration (weeks instead of months, and certainly not years), primarily because the dollar must be trashed even as the stock market’s underpinnings (~20 shares?) be tested by electioneering. As re to DRD, am slightly net negative, by a smidgeon, as I had on Friday been compelled to add to shorting of calls. Even so the entire basket of DRD related deployment (all call and put options indicated are short positions) suffering, but only not as much as would have. The premiums earlier were extremely rich when most positions initiated. At least half should blow up in counter-parties faces, but I shall likely be put some more DRD which is fine, I hope. Going forward, wait for August 21st option expiration and see. DRD can crater through 12.5 on the downside, and if so, we are fortunate for all-in opportunity. Test of faith. My silver wagering was always premised on the truth that it is more volatile than gold, on the up as well as downside. Sold GLD, closed TSLA put, and bought SLV puts on Friday Closed silver and gold option positions on Friday ... and yesterday (Monday) ... and sold excess / naked DRD calls on Friday, obviously not enough. The market for DRD options shall not likely afford me an exit before expiration, and so I am dependent on exercise of earlier shorted puts August 21st. I actually need DRD to wobble else uncomfortably exposed

To: carranza2 who wrote (161157)	8/11/2020 6:36:02 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217774

Re <<Looks like ... Ouch>> Noted TSLA doing 5:1 split. Looks like long rates may rise even as short rates remain tame, because the is what the FED wants, and has expended very little ammunition to get the crowds moving. Looks like TLT hit a top (20-yrs rate at bottom, rebound between now and whenever, then go bid-less 2032) and can be shorted to lessen the pain of gold backfilling finance.yahoo.com Looks like gold has little underpinning as mobs run for the hills, as supports crack then go asunder. Gold can go to the 16xxs. If should be so, then silver gets nailed. The rest of the equity may follow. Watching AAPL finance.yahoo.com for signs of trade war damaging All might participate in sling-shot post election. Dangerous gaming. Just as well the physical was not marked up. bloomberg.com Gold Heads for Biggest Drop in Seven Years on Rising U.S. Yields Justina Vasquez August 11, 2020, 7:34 AM PDT The rally that pushed gold to record heights above $2,000 an ounce has come to an abrupt halt, with the haven metal heading for the biggest drop in seven years after bond yields spiked higher. Treasuries and European bond yields climbed, cutting into the negative real rates that had supported the metal. The 10-year Treasury yield jumped the most since June ahead of an expected flood of government and corporate debt issuance. U.S. producer prices increased faster than expected. “Today real rates clearly moved higher and that’s clearly what moved gold lower,” Michael Widmer, head of metals research at Bank of America Merrill Lynch, said by phone from London. “You had stronger PPI data out and I think when that data came out the market had another look at rates and expectations.” Exchange-traded fund investors also took a breather, seeing back-to-back outflows for the first time since June. On Friday, State Street Corp.’s SPDR Gold Shares, the largest gold-backed ETF, saw its biggest outflow since March. Meanwhile, a Bloomberg Intelligence gauge of senior gold miners dropped the most intraday since March, down as much as 6.3%. Stocks rallied, as investors in risk assets took some comfort from the U.S. president’s comment on potential tax cuts, strong Chinese economic data and falling hospitalizations in California and New York. Adding to positive market sentiment is a Covid-19 vaccine that Russian President Vladimir Putin said the country has cleared for use, and it hopes to begin mass inoculation soon. Globally, coronavirus infections breached 20 million cases, after doubling in six weeks. It took six months to reach 10 million. Spot gold fell 5.5% to $1,915.23 an ounce at 2:46 p.m. in New York, heading for the biggest drop since April 2013. Earlier, the price broke below the $1,921 level that had stood as the record for almost nine years. Futures for December delivery slid 4.6% to settle at $1,946.30 on the Comex in New York, the largest decline for a most-active contract since mid-March. “It’s quite abrupt and brutal, but the price increase before was even more abrupt and brutal,” Carsten Fritsch, a commodity analyst at Commerzbank AG, said by phone. “The trigger could be the sharp rise in bond yields, which caused some profit-taking and then that cascaded. When people start to take profits, more will follow, and so we see this acceleration of price declines today.” Spot silver dropped as much as 15% to $24.7534, and was heading for the biggest decline since October 2008. Whither gold? “I think the underlying, fundamental, positive reasons for gold haven’t gone away,” Tom Fitzpatrick, a Citigroup Inc. technical strategist, said by phone. “Once the momentum in this lags, we’ll probably consolidate for a while, but we still think we might find ourselves back up at $2,400 by the end of the year.” BofA’s Widmer says the gold rally has only hit a pause, and reiterated the bank’s $3,000 an ounce 18-month target. “Financial repression is not gone and I think dollar debasement is not gone either,” Widmer said. “Implicitly and explicitly, central banks are backstopping governments at the moment, and I think that’s really the bullish firmness behind that $3,000 per ounce call.” — With assistance by Eddie Spence Before it's here, it's on the Bloomberg Terminal. LEARN MORE Sent from my iPad

To: carranza2 who wrote (161157)	8/12/2020 8:28:23 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217774

If the FED wishes for a steeper yield curve, and it does, by twisting or encouraged-market action, then nothing untrustworthy in the at-times trusted gold-treasuries pairing, per actions of TLT+GLD yesterday bloomberg.com Gold and U.S. Treasuries Can’t Both Be Trusted A sharp reversal in these assets at the same time muddles the economic outlook. Brian Chappatta August 12, 2020, 3:00 AM PDT Gold rush. Photographer: David Gray/AFP/Getty Images Nothing gets Wall Street fired up quite like a sharp reversal in prevailing trends across markets. So the excitement in the air was palpable on Tuesday, with the price of gold tumbling by the most since 2013, yields on 30-year Treasuries jumping by the most in more than two months and industries like banks, energy and automobiles powering stocks higher instead of technology companies. The initial impetus for selling everything that was once in favor, and buying previously unloved assets, seemed to be Russia’s announcement that it registered its first coronavirus vaccine (though there’s reason to be skeptical of it) and President Donald Trump’s comments that he’s “seriously” considering a capital gains tax cut. A No-Go for Gold Vaccine optimism and risk-on tone send prices down the most since 2013 Source: Bloomberg Another interesting piece of news came later, when a core measure of prices paid to U.S. producers accelerated in July for the first time in six months. The producer-price index excluding food and energy jumped by 0.5% from the previous month, the biggest increase since 2018 and easily topping estimates for a 0.1% gain. All together, it signals unexpected price pressure and raises the stakes for Wednesday’s release of July’s consumer price index data, which is projected to show a decline in year-over-year core inflation for the fifth consecutive month. Traders have been fixated on what comes next for inflation as they wrap their heads around the lasting effects of the coronavirus crisis and the ensuing response by policy makers around the world. In the U.S., the fear of a deflationary period has given way to expectations for a sustained pickup in price growth, given the flood of fiscal stimulus and signals from the Federal Reserve that it would tolerate — and perhaps even encourage — an overshoot of its 2% inflation target. Given this context, Tuesday’s selloff in gold and U.S. Treasuries is puzzling. Yes, both are classically considered “havens” and are prone to decline during bouts of “risk-on” trading. And it’s true that the Treasury Department is embarking on record-sized auctions of longer-dated securities this week, pressuring the U.S. government bond market. But why would positive economic news and a strong PPI number spark a decline in assets like gold and Treasury Inflation Protected Securities, which are used as inflation hedges? My hunch is there’s a “buy the rumor, sell the news” element at play now that there’s actual evidence of prices stabilizing so soon after the worst of the downturn. Still, if you believe that the Fed has the power to bend financial markets to its will, these moves can’t be trusted. As my Bloomberg Opinion colleague Tim Duy wrote this week, the Fed can always just expand its asset purchases to target the long-end of the yield curve to offset any additional issuance, which would depress term premiums and push investors into riskier assets. Given how much uncertainty remains about the economic recovery, and with inflation nowhere near the central bank’s desired level, it seems far too premature to wager that the Fed will even think about pumping the brakes on its easing measures. Chair Jerome Powell has signaled time and again that he’d keep his foot on the gas until America was far past the pandemic. Back from the Abyss Long bond yields increased by the most in months Source: Bloomberg If that’s the case, then why did gold plunge by more than 5%? The easy answer is that based on relative-strength index analysis, it was hugely overbought and is just now coming back to a more reasonable level. Yet the reasons behind its rally remain firmly in place. If the Fed will use all of its tools to keep benchmark Treasury yields near record lows while encouraging inflation to run hotter than before, then policy makers have all but guaranteed negative real yields for years to come. In a world in which the Fed unabashedly suppresses the U.S. yield curve, negative real yields could be interpreted as markets betting on a reflated American economy through higher prices for inflation-linked securities. Now, it’s always been hard to ascertain a “fair value” for an ounce of gold. Tuesday’s decline was “quite abrupt and brutal, but the price increase before was even more abrupt and brutal,” Carsten Fritsch, a commodity analyst at Commerzbank AG, told Bloomberg News’s Justina Vasquez. Meanwhile, the Fed probably won’t provide explicit guidance for where it wants longer-dated Treasury yields, leaving traders mostly content to play the ranges of the past few months. Analysts at TD Securities, for their part, said on Tuesday that they would double down on long positions in 10-year notes. Precise levels aside, I’m skeptical that a tandem selloff in gold and Treasuries will gain much momentum. While I’d argue that the Fed is comfortable with Tuesday’s increase in long-term U.S. yields to the extent that it reflects the better-than-expected producer price data, it seems likely that if rates continue to climb, at some point either financial markets will revolt, as they did in early June, or the central bank will step in and buy. While gold is a more fickle investment and has more room to tumble after its recent surge, sub-zero real yields should provide something of a floor and keep pensions and private-wealth managers open to owning it. But most of all, it boils down to inflation and currency strength. If America’s dalliance with helicopter money causes persistent price growth to take hold and the dollar to weaken, then gold should set records. If this period of ultra-easy policy is yet another head-fake and the global economy recovers in fits and starts, then Treasuries should continue to be well-bid, both by private investors and the Fed. Whichever scenario wins out, these price swings are more likely to be flashes in the pan than something more permanent. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.net To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net Sent from my iPad