Commodity Pile On is Coming
What will banks be telling their clients to buy now? Commodities and monetary metals, 100% guaranteed.
We own commodities, and we rent more during times like this with January 1 as our end of season signal.
JPM is bullish commodities due to inventory drawdowns
Gold has inflows now
Market Rundown
Good morning. The Jobs number came out as expected and this was too much for the market to handle, having gotten too optimistic these past few days.
The dollar is up 85. Bonds are very weak. Stocks are down between 1.2 and 2.2% right now. Gold is down $20. Silver is down 40 cents. Oil is unchanged after being up 50 cents prior. Grains are soft with Wheat the weakest down 1.8% Crypto is mixed. - 8:50a.m.
Data:
Unemployment Rate 3.7%, Exp. 3.7%
Average Hourly Earnings 0.6% M/M, Exp. 0.3%, Last 0.5%
Average Hourly Earnings 5.1% Y/Y, Exp. 4.6%, Last 5.6%
Comment: We don’t worry about gold speculatively as long as it is above $1785. We’re not bullish again until it gets over $1819 as far as trading is concerned. As far as long term holding, there will only be more and more people buying for long term holds now given the world and financial situation.
Today is completely expected behavior for markets that have gotten way ahead of themselves. As far as Gold goes, the buying will continue by CTAs if we rally. The buying by banks will continue if we drop. But until we move and stabilize $15 up or down from $1800, expect the gravitational pull to now increase at 1800. Silver will have massive buying into strength by the momentum guys. The downside buying/selling isn’t as obvious to us.
Commodity Stockpiles Remain Critically Low
Tradeable commodity stocks remain critically low, and the abundance of available inventories in leading commodity consumer and importer China remains sizeable. Inclusive of exchange, visible commercial inventories, and strategic stockpiles, China currently holds an estimated 96% (+2% MOM) of global copper inventories, 66% (+1% MOM) of global aluminum, 69% of corn, 54% of wheat, 31% of soybeans (+1% MOM) and 22% of crude oil, according to our sources. Chinese SRB holdings alone account for 92% of global copper inventories and 33% of global aluminum inventories, each up 2% MOM.
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Big Commodity Push is now here
What will banks be telling their clients to buy now? Commodities and monetary metals, 100% guaranteed. Which means, Silver has a lot of upside speculative potential now due to it being in both categories. Flows are now positive into Gold again (at bottom). It also means the same banks will carefully be selling into the strength.
Weekly Flows: $31.1bn to cash, $59mn to gold, $2.4bn from bonds, $14.1bn from equities (largest in 3 months)
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All the sellside research banks are aggressively pushing commodities from every different perspective. Fundamental, inflation, volatility, recovery etc. That means there will be money flowing into them for rest of year. Not a license to be recklessly bullish. But a license to be bullish nonetheless. JPM is all over the fundamental angle now ( at bottom), which was the Goldman angle last month. We own commodities, but we rent more during times like this with January 1 as our end of season signal.
Remember one thing about Buy Season. Always buy the rumor and sell the news on things like this. And if you are a subscriber, GoldFix told you the rumor in October like professionals get. We give you professional insight whenever we can. Now when the MSM tells you to buy, you know what the pros will do.
By January, everyone will know of it, and the news will not necessarily be bullish. Remember what they did to Bitcoin last year.