Today, I see a shift in risk allocation in the energy markets. O&G traders are building in a new risk premium for futures that are affecting intermediates. If this keeps up, inflationary pressures will build up for the reminder of 2015... and a formal FED rate hike may be avoided or mitigated for the most part.
As a result, treasuries are laying low for now, with bullion bankers trying to keep PMs also low as a second-class non-yielding asset class. Short contracts have picked up without any real deliveries in almost a month. Just fuel for the fire, when the next geopol event pops and investors (including sovereigns) call for their physical deliveries.
Whoa, slow down daabaadee....
Let's first take inventory of what's currently on the geopol platter:
-Yes, Greece & the EU
-AIIB deadline for applications
-NFP report this (Good) Friday -- a typical signal for the bullion bankers and their cronies to increase short position on little or no physical deliveries.
You know that cuts both ways. Joeponds, you sound like a trader with a fader mentailty. Good luck with the Bollinger Bands and your assumptions when trading double tops.
Joeponds, good luck with that. I hope you can get in at those levels now..doubt it. We shall see what silver physical deliveries are for next week. The Commercial net short position in silver now sits at 196.2 million troy ounces, up by about 45.2 million ounces. Deliveries need to pick up and keep up w/paper, otherwise certain transactional disclosures will need to be made and a mini run in pricing could ensue. GLTA
This article today on EXK is spot on.
Interesting thought, but unlikely...art least in the short-term. Free-cash flow is a challenge at the moment with the industry environment, and amping up El Cubo (especially for high grade metals) is a priority. Developing San Sebastian also awaits. If Silver can maintain 17-18 levels for at least two quarters in 2015, FCF will not be an issue as AISC will be favorable to increased production. Overall, forward-looking EXK is in a good position in a challenging industry. However with risks, also come rewards! GLTA
mbacpabanker, you missed my earlier point. It is not strictly about capital flows, it's also about #$%$et allocation. Just because the greenback is currently standing taller on a garbage heap than its counterparts, it doesn't mean the dollar is kicking #$%$, particularly from an #$%$et cl#$%$ perspective. Sure, FX and currency-to-currency comparisons are one perspective...but it is not the only one.
So much for "safe haven" dollar and no yield PMs! Yellen & Co. have to continue to debase the dollar a while longer in pace with other currencies. Regardless of how these talking heads are spinning it, the FED does not have a choice on the matter until certain CBs and geopolitical events play themselves out. The real danger is for the FED to pre-empt these moves, before the hand gets played.
Thanks News. Helpful info. This week should highlight some more central bank rate cuts. Pakistan just today followed Sweden's lead last week. I believe Hungary is next on Tuesday. That's over 15 central banks in 2015 alone cutting their rates. The 10-y. U.S. treasury is being set up to fall further -- I'm thinking in the 1.70's-1.80's range within the next six weeks. What will be interesting to see is how that plays with the the shorter-term treasuries (namely the 2-yr.). Regarding PM's, the high grade miners (especially junior miners) with decent AISC's are going to do well in 2015. JMHO and GLTA.
News, what are your thoughts on a long position carry over trade in USD/TWD now? I'm debating it at the moment, while holding on to PMs and also doing an arb play. The arbitrage play is taking a lot more time than I initially thought, but capital is locked in and monitoring is ongoing.
Update on 12:56 EST -- Silver further up to 16.87...and still climbing.
EXK should be in the 2.20's at this level. $17 is within sight. Lots of chatter on the European media that Greece does not intend to carry out its repayment covenants by month's end and Syriza led gov't is in talks with Moscow. When Greece does default and take Russian assistance, not only will they leave the EU, but NATO as well. JMHO
It's taking on water since yesterday and looks to be heading sub-1.90. I can see it hit 1.80's before the June FED meeting, but then again there are a lot of geopolitical land mines currently out there. Greece is a walking zombie at the moment waiting for the troika to cut its head off. Venezuela will have a regime change in 2015. The question then becomes who picks up the power vacuum, and what happens to the Orinoco oil and the former Dutch Shell refineries? Meanwhile the ruble remains under heavy pressure, and Putin's call for foreign capital injection falling on deaf ears. Just like Greece, Russia is on the tipping point regarding liquidity. Not being able to run payroll in those countries is a tall tale sign of serious trouble coming. GLTA
End of the 100 yr. London Gold Fix starting Friday. PM activity set to rocket.
News, I saw that. If the FED meeting today is perceived as dollar weakening, instead of dollar strong, then silver should be in the 17's again rather soon.