Oil Copper, Silver strong as UN refutes China claim

Overnight

  • Stocks and Commodities rose on expectations of global stimulus
  • Japan's Abe will affect a $200BB stimulus package starting Tuesday
  • Silver continues to diverge from Gold in overnight trading
  • GBP strengthened likely on new PM uncertainty fading
  • Global Stocks strengthened to negate almost all Brexit losses
  • Technicals at bottom
  • UN: CHINA HAS NO RIGHTS TO SOUTH SEA RESOURCES- brace yourselves, war games are coming. OIL up 2%
  • Merkel admits terrorists came in with refugees
  • BERNANKE AND ABE TO MEET AGAIN SOON- BBERG
  • ITALIAN BANKING CRISIS NOT ABATING- eu has to sweeten deal for uk to stay, pick up italian tab?

The Magic of Abe and his assistant Ben Bernanke

- chart Bloomberg

Recap

Asia is ground Zero for the Next Global money Printing

The Nikkei rose another 2.5% as of this writing on the certainty that more stimulus will be injected into Japan's economy. PM Abe will release the details of the upcoming package which will include QE measures adding an approximately $200BB to the economy. Stocks were up globally on what are expectations of more stimulus to follow on the heels of Japan's latest efforts.The GBP is moderately stronger as well on Theresa May replacing David Cameron as PM Wednesday. Yesterday's recap discussed these drivers as well. Silver-Gold diverge, more QE coming. Industrial commodities were up across the board  bolstered by the UN decision to prohibit China from accessing South Sea resources.

- chart kitco.com

Commodities

Silver, Copper and Oil are bid currently, at a tolerable level to Central Planners we imagine. Oil is likely stronger on the UN announcement that South Sea resources are off limits to Chinese exploration. When Copper and Silver are bid we look at other newly listed products in China. Rebar was up 5% last night confirming the industrial commodity demand bubble may be coming again. Comex Silver is up 0.12  at  $20.44 with a high of 20.595. Gold is down $3.00 at 1353. Copper is again leading metals, up almost 2% trading 218.80 on Comex. Oil is firmer as well after its most recent swoon from fundamentals kicking in.

 

 Gold- Silver Relationship has torn apart lately- 5 day chart with Gold in green

- for interactive chart click HERE

The Gold Silver Spread has Seasonality

July Performance for Gold and Silver over the last 30 years has been significantly different

  • Gold has had 13 up and 17 down Julys
  • Silver is 18 wins and 12 losses during that time

We wrote on this yesterday HERE

 Technicals

Gold  1356.10 sttl

  • TRP 1301.30
  • NTRL below 1380
  • BULLish above 1380
  • BEARish below TRP

Comment: We think the market has more risk down than up right now. Gold inability to stabilise over1380 warns for a pull back. This doesnt show signs of being a bull flag to us yet. Open interest says to lighten your longs, not to short the market.That said, we have a proprietary indicator used for volatility and it is giving us a warning in SPX. Last time it did this was 3 days before the Brexit moves.

Silver: 2036 sttl

  • TRP 1938.0
  • NTRL below 2049 sttle
  • BULLish trade above 2100 or sttle above 2049
  • BEARish below TRP

Comment: Silver's spike high past week seems to be a cap for now excepting the levels given just above. The divergance with Gold since early July has broken the ratio from a high of 80 to where it currentlystands at about 66 to 1. On a macro level everything said about Gold above applies here. One must also not ignore the increasing use of Silver industrially again in electronics. You cannot ignore what makes silver precious: its rarity and its conductivity

 

DISPUTED SOUTH SEA AREA

 

- photo Reuters

 

 

How The Fed Manipulates markets in their own words

 

Good Morning

 

Soren K.

sorenk@marketslant.com  

 

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