Weekly: Silver's Fundamental Future
Banks on: Oil, Copper, and Restaurant Costs
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SECTIONS
Market Summary
Technicals
Podcasts
Calendar
Charts
Premium divider
Precious
Research
1. Market Summary
The week started out promising for stocks. Nasdaq rallied hard likely from hopes of a short hiking cycle quickly followed by a new QE cycle. From midweek onward, stocks took it on the chin broadly. Fed speakers continued to pour water on those hopes about rates. Visions of Paul Volcker are continuously being conjured by both the MSM and the Fed speakers themselves.
Meanwhile, a generation of stock traders has been conditioned to believe the Fed will bail them out all the time. The Fed is trying to retrain these optimists to know the Fed means business with their tough talk. We don’t know if they actually do however.
Next week: The headlines will focus on whether inflation numbers hit or miss. Economists expect a 1.1% m/m increase in US prices due largely to commodity jumps after the Ukraine war started. The market is expecting the annual rate of inflation to hit a massive 8.5%. That will be the week’s focus unless some new event happens.
'Defensive' stocks hugely outperformed 'Cyclicals'.
Majors all trod water around key technical levels
Small Caps and Nasdaq were the week's biggest losers.
Sectors:
Tech and long duration did poorly 2, 3
Defensive stocks benefited- 4
Energy stocks did well despite ( because of? 1) price drops- 5
Financials recovered as the yield curve un-inverted- 1
Commodities:
Natural Gas continues to strengthen from worries that historic lows in storage plus increased demand for LNG to Europe will cause problems. This, after the weather fears seem to have subsided.
Gold and Silver rose on the week despite a strong dollar. Gold continues to defy gravity even in light of Oil retracing a large chunk of its Ukraine War premium.
Palladium soared as the London Platinum & Palladium Market has suspended both Russian refineries from its good delivery list. (your EV just got more expensive)
Oil dropped for a second week in a row, holding above the pre-invasion levels still though.
WTI settled below $100: The recessionary demand destruction narrative gains momentum as China’s lockdown affects up to 25% of their economy.
Bonds:
Dollar took out the FOMC spike highs and is trading back at its highest against its fiat peers since July 2020
Bonds were sold hard with the long-end drastically underperforming (led by a 33bp rise in 10Y Yields)
2s30s and 2s10s uninverted this week. But at a higher back end. Inflation is being normalized a little.
Euro bonds started to diverge greatly among partner nations ( Buy Germany, Sell Italy), suggesting a brewing economic crisis. This type of behavior shows up when economic coalition fragments, like during Grexit. The Ukrainian war is now chronically spreading.
Crypto: Musk Does Doge Again
In spite of Miami’s Bitcoin Conference (or perhaps because of it), crypto had a rough week
On Monday, Elon Musk announced he had taken a 9.2% stake in Twitter. This no doubt is why Doge bucked the weekly trend. The last of the fomo kids bought Doge in anticipation of a Twitter payment inclusion. The next day that was given back. See chart above
GoldFix Friday WatchList:
Complete Watchlist Here
2. Technical Analysis
Report Excerpts Courtesy MoorAnalytics.com
GoldFix Note: Do not attempt to use price levels without symbol explanations or context. Moor sends 2 reports daily on each commodity they cover. The attached are non-actionable summaries.
Gold
TECHNICALLY BASED MARKET ANALYSIS AND ACTIONABLE TRADING SUGGESTIONS Moor Analytics produces technically based market analysis and actionable trading suggestions. These are sent to clients twice daily, pre-open and post close, and range from intra-day to multi-week trading suggestions. www.mooranalytics.com
Energy
Bitcoin
Go to MoorAnalytics.com for 2 weeks Gold, Oil, and Bitcoin reports free
3. GoldFix and Bitcoin Podcasts
GoldFix Broadcasts HERE
Bitcoin Podcasts HERE
4. Calendar
Some upcoming key data releases and market events
MONDAY, APRIL 11
11 am NY Fed median 1-year expected inflation March -- 6.0%
11 am NY Fed median 3-year expected inflation March -- 3.8%
12:40 pm Chicago Fed President Charles Evans speaks
TUESDAY, APRIL 12
6 am NFIB small-business index March 95.5 95.7
8:30 am Consumer price index (monthly) March 1.1% 0.8%
8:30 am Core CPI (monthly) March 0.5% 0.5%
8:30 am CPI (year-over-year) March 8.4% 7.9%
8:30 am Core CPI (year-over-year)) March 6.6% 6.4%
12:10 pm Fed Gov. Lael Brainard speaks at WSJ event
2 pm Federal budget deficit March -- -$660 billion
6:45 pm Richmond Fed Fed President Tom Barkin speaks to Money Marketeers
WEDNESDAY, APRIL 13
8:30 am Producer price index final demand March 1.1% 0.8%
THURSDAY, APRIL 14
8:30 am Initial jobless claims April 9 170,000 166,000
8:30 am Continuing jobless claims April 2 -- 1.52 million
8:30 am Retail sales March 0.5% 0.3%
8:30 am Retail sales excluding motor vehicles March 0.8% 0.2%
8:30 am Real retail sales March -- -0.5%
8:30 am Import price index March 2.3%% 1.4%
10 am UMich consumer sentiment index (preliminary) April 59.0 59.4
10 am UMich 5-year inflation expectations (preliminary) April -- 3.0%
10 am Business inventories Feb. 1.3% 1.3%
3:50 pm Cleveland Fed President Loretta Mester speaks on jobs
6 pm Philadelphia Fed President Patrick Harker speaks
FRIDAY, APRIL 15
8:30 am Empire state manufacturing index April 1.2 -11.8
9:15 am Industrial production index March 0.4% 0.5%
9:15 am Capacity utilization March 77.8% 77.6%
Main Source: MarketWatch
5. Charts
Dollar Index
TLT Bond ETF
Gold
Silver
Oil
Charts by GoldFix using TradingView.com
6. Excerpt: Future Silver Fundamentals
Nickel to Copper to Silver
This week we saw a report on Copper calling for a shortfall by Goldman and shared it with premium subscribers. This type of report is historically code for a short squeeze is on their radar if the opportunity presents itself. Many years of watching that bank operate has given us a pretty good feel of their path to profitability in commodities. If history holds true, if Copper gets its Nickel moment, Silver will be next. And all these events start with a real fundamental story that is accepted by bank clients.
Here, below, is Silver’s story starting to slowly emerge. We’re not calling for a squeeze in either Copper or Silver.. now. But we are saying that when fundamentals dictate ( they do), the investor public is aware of the opportunity (inflation has made them acutely aware), and a Bank has made some good calls in other commodities (Oil) then the pieces start to come together for a massive play….
Demand:
Demand headwinds have been gradually tailing off, and silver usage in solar panels is set to increase further as more photovoltaic (PV) is installed
Photovoltaic (PV) is among the sectors requiring more silver going forward and Silver is key in Crystaline(c-Si) silicon panels
The auto industry is another sector that will likely boost silver usage in the coming years as more EVs (electric vehicles) are being put on the road.
We assume that average silver loadings per EV will increase silver usage by over 50% per car compared to internal combustion engines
Supply:
Silver production should remain subdued and is unlikely to return to the levels since a decade ago.
Like in Oil output growth has been influenced downward by the low silver prices in the past decade, which pushed miners to cut capex.
More at bottom…7. Research
1- Bloomberg on Oil: War gains almost entirely given back
Oil headed for a back-to-back weekly retreat on plans for massive stockpile releases, a demandsapping virus outbreak in top importer China and a hawkish turn from the U.S. Federal Reserve.
2- Goldman on Copper: They are describing a textbook short squeeze play if opportunity presents.
Copper is sleepwalking towards stock depletion. In the past 6 months, we have become increasingly concerned of a stockout episode in the copper market as forward fundamentals have tightened
3- JPM on Commodity Futures Outflows: Not bearish for commodities, bearish for exchanges
Commodities open interest plunges into quarter end, as heightened volatility prompts contract outflows Amid roughly doubling in the BCOM realized volatility over the past two months,
4- CS on Restaurant Costs
On average, the cost of a restaurant meal is ~2.4x that of a meal prepared at home from grocery store ingredients, with burgers & steaks having the narrowest gaps.
More at bottom…