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February 24, 2016

#Gold - Short-term triangle formation- Expect Big #Volatility

As the attached gold spot chart shows, a short-term triangle formation has been formed.

The RSI (Relative Strength Index) is falling. The Relative Strength Index compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.


The MACD (lower chart) is flattening out. With the expiration of the March gold futures contract coming up, we just might witness huge volatility in the gold price.

February 16, 2016

"Goldman Channels FDR's `Nothing to Fear' With Sell #Gold Call "

Goldman says it's time to bet against gold as bullion's rally to the highest level in a year isn't justified

Photographer: Jack Guez/AFP via Getty Images

Goldman Channels FDR's `Nothing to Fear' With Sell Gold Call

Ranjeetha Pakiam

Jasmine Ng

February 15, 2016 — 7:10 PM PST Updated on February 15, 2016 — 9:14 PM PST

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·         New fears, like past fears, are not justified, Goldman says

·         Bullion is seen dropping to $1,000 in 12 months, bank saysShare on Facebook

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Goldman Sachs Group Inc. says it's time to bet against gold as bullion's rally to the highest level in a year isn't justified, backing the bearish call with a comment from a former U.S. leader in a report that was issued, appropriately enough, on Presidents' Day. Prices tumbled.

Gold will slump back to $1,100 an ounce in three months and $1,000 an ounce in 12 months, analysts including Jeffrey Currie and Max Layton wrote in the report that was dated Feb. 15 and received on Tuesday. It was headlined with a remark from former President Franklin D. Roosevelt.

There's "nothing to fear but fear itself," the analysts entitled the seven-page note, channeling comments from Roosevelt's 1933 inauguration when the U.S. economy was being ravaged by the Great Depression. "It's time to sell the fear barometer," the bank said, and recommended shorting gold.

Gold jumped to highest since February 2015 last week as sinking equity markets, weaker oil prices, and diminished bets for higher U.S. borrowing costs spurred haven demand. Prices were further boosted by the spread of negative interest rates and concerns about a crisis in Europe's banks. Goldman said it still expected rates to rise, putting the odds of U.S. recession at just 15 to 20 percent, and rejected the notion that a re-run of the crisis was likely.

'Not Justified'

"We believe that these new fears, like past fears, are not justified," the analysts wrote, saying that financial markets had overreacted. "Systemic risks stemming from the collapse in oil and commodity prices are extremely small."

Gold for immediate delivery sank as much as 1.5 percent to $1,191.02 an ounce and traded at $1,193.52 at 1:09 p.m. in Singapore. It's down from $1,263.48 on Feb. 11, the highest price since February 2015. Goldman's targets for bullion are the same as those given by the bank in a note last week, when it said that U.S. rates will still rise.


February 11, 2016

#RioTinto Swings to Annual Loss, slashes Dividend

Rio Tinto swung to an annual loss and scrapped its progressive dividend policy, citing a worsening global economy and a sharp downturn in commodity prices.

Rio Tinto follows major rivals in acting on its dividend to protect profits.
Swiss mining and trading giant Glencore in September scrapped its dividend
and raised US$2.5 billion in a share issue as part of a plan to rein in
net debt. Then, in December, Anglo American said it would suspend
dividend payouts as it outlined plans for a sweeping restructuring that
would include cutting 85,000 jobs—more than half its workforce—and selling mines.
Vale SA more recently said it may too cut its payout, and many analysts project BHP Billiton Ltd. could slash its dividend by as much as half when it reports half-year earnings on Feb. 23.
Rio Tinto’s about-turn on its dividend policy is a surprise. Mr. Walsh,
who stepped up as chief executive three years ago in the aftermath of
massive write-downs against Rio Tinto’s operations, in 2014 said the
miner’s so-called progressive dividend was a key commitment that he
aimed to maintain.
On Thursday, he defended the scrapping of that policy as a “prudent” move.
“I don’t think anybody predicted what is happening in the world economy today,” he said.
 Read the article online on the @WSJ here here: Rio Tinto Swings to Annual Loss, Alters Dividend Policy

The MasterMetals Blog


World #Gold Council: Gold Demand Trends Full Year 2015

Gold demand in the fourth quarter increased 4% year-on-year to a 10-quarter high of 1,117.7t. Full year demand was virtually unchanged, down just a fraction (-14t) to 4,212t. Weakness in the first half of the year was cancelled out by strength in the second half. Fourth quarter growth was driven by central banks (+33t) and investment (+25t), offset by a marginal contraction in jewellery (-6t) and continued declines in technology (-6t). Supply remained constrained: annual mine production increased by the slowest rate since 2008 (+1%) and recycling dropped to multi-year lows. Total supply declined 4% to 4,258t – the lowest since 2009.

Read the full report here: 

Gold Demand Trends Full Year 2015

February 10, 2016

UBS: More interest in #Gold now than for past 2 years, Viewed as thefinal financial market hedge

The main buyers of gold, at least until the break of its 200-day moving average at $1130 last Wednesday, were not traditional commodity players. Rather, it was the wider macro community

- US market participants friendly to gold, but are observers rather than active players  
- Gains led by non-traditional players
- More interest in gold now, and questions about it, than for the past 2 years
- Viewed as the final financial market hedge
- Vol no longer cheap, risk reversals up to 2.5 for calls, matching the 2011 high
- For now the runup looks overdone, but buy dips

I spent last week in the US, and the topic of conversation was gold, gold and more gold - from current clients, clients that haven't been active since the tail end of the bull run, clients of my FX/equity/rates colleagues, and potential clients. In other words, everyone wanted to talk about gold. I haven't seen such interest in years.

Why the interest? The short version

Gold is currently viewed as the final financial market hedge. US data is deteriorating and the Fed won't be raising rates any time soon; China is set to contract further; CNY devaluation will continue and encourage a move into gold; negative interest rates in Europe, Switzerland and Japan make gold relatively more attractive; real yields are falling; nominal yields remain low; gold positioning is light, gross shorts still relatively high.

Given all that, there's a lot of buyers, right? Wrong: many expressed the view that they'd prefer to wait, miss the early rally and buy into momentum later on.  

Why the hesitancy? The short version

Those who are hesitant to jump in argue that, technically, this is still a bear market for gold; that the US isn't going into recession, indeed raised rates in December, and the potential for a reversal of that hike is very low; that gold (ETF) buyers have become more fickle in recent years; that physical demand is tame; that there's no inflation and little potential for it; that gold couldn't hold onto any upside moves in 2015; that in a commodity bear market, the recent rally only makes gold look very expensive; that the gold/oil ratio is too high.

These are all reasonable arguments, but the factors pushing investors into gold are considerably stronger. The 2015 price bursts were predominantly rooted in positioning, with shorts very extended and net length at low-single-digit levels. The current rally hasn't been driven by short-covering, and in fact gross shorts still remain quite high,  13.9 moz as of Feb 2, down from a high of 19.2 moz in early December but very elevated compared to the  weekly average of 6.2 moz during 2009-2011. Also net long positioning at 8.9moz is far from frothy.

Who has been buying gold? Observe the changing trends

The main buyers of gold, at least until the break of its 200-day moving average at $1130 last Wednesday, were not traditional commodity players. Rather, it was the wider macro community, which has predominantly expressed its views through long-dated (6m+) options or GLD options. Traditional players became much more active upon the break of the 200 dma and the psychologically important $1150 level. Repeatedly in meetings last week we encountered would-be participants who were happy to miss out on the early stages of the rally and buy into momentum later on. ETF inflows have been very large, 3.4 moz year-to-date. To put this into context ETF holders were net sellers last year totalling 4.2 moz. Also worth noting here is that the ETF buying hasn't just been GLD led – the GLD has seen inflows of 1.96 moz and the rest has emanated from European contracts.  

On a much smaller scale, we've seen longer-term holders buying back calls as well as private banks buying physical gold and also returning interest in fully allocated, segregated gold - the ultimate safe-haven trade. None of these have been in tremendous size, but what matters is the trend change. Currently the gold market is littered with changing trends – factors on their own which would not raise must attention, but put them together and they add up to a considerable alteration in market  dynamics. That makes me sit up and pay attention.

Despite a contained rally in January, February's move looks excessive