Daily Close | Forex, Metals, Oil, Agriculture August 11, 2020



General Comments: Cotton closed a little higher on short-covering before the USDA reports on Wednesday. Export demand for US Cotton has been poor for the last few weeks.


Whereas the threat of negative rates looms for other major currencies (see: New Zealand Dollar), the Canadian Dollar is not haunted by this threat at present time. In 2013, central banks began a bearish campaign to scare investors out of the gold market, suppress the price of gold, and keep the US dollar strong. The underlying gold futures had reached new highs in several different major currencies over the past year, and they finally broke through in U.S. dollar terms.
The original use of gold was as a form of monetary exchange and store of value, just as the U.S. dollar is used today. Gold’s unprecedented rise is driven to a great extent by the bearish sentiment surrounding the U.S. dollar. Weakness in the U.S. dollar against a range of currencies is also supporting gold prices. Historically, there have been periods when the correlation between gold and the U.S. dollar was significantly negative. When the U.S. dollar decreases, market participants look to other asset classes as alternative stores of value.
Peter went off into one of his classic tirades about how the US dollar is doomed because of how much money the central bank is printing. The spike in silver seems to be in part a bet on that driving the dollar even lower. Source: Bloomberg The dollar ended marginally higher after another roller-coaster today… Yet bonds were the primary driver of dollar gains. During the NY session, dollar bulls were in control. Gross profit on a dollar basis was $647 million, down 80% Y/Y.
The bottom line is the blue states are going to be deep in the red, and reliant on a multi-trillion-dollar bailout from the federal government. Euro-area economies such as Germany, France and Italy, along with Norway and Japan, are closest to their pre-pandemic readings, with Spain falling behind slightly.


The price of gold and precious metals was manipulated and price discovery was distorted. Incredibly, silver could keep rallying to fresh highs even if gold dips to one of my lower support zones. Now, gold and silver are rising to find their true value as determined by supply and demand. One, most silver analysts and dealers would publish tons of material promising a new bull market, silver going to the moon, etc. The manipulators were able to bring the price of gold from the $1,900 high in September 2011 to a low of about $1,050.
That’s why we published a new, 50-page long Ultimate Guide on Gold & Silver that you can download here. This is a pretty hefty price especially when we’re looking at gold just a couple of months ago trading at $1,450. The probabilities are turning against buying the high even though gold is now trading above the monthly level of $2,071, which has been activated as support. All of that is great news for both gold and silver.
I’m a buyer of high carat (22 and 24) gold jewelry here, and at $1950.Gold bars, coins, and ETFs can be bought at $1850 and $1800. With many government bonds paying investors a negative return, the fact that gold is a financial asset that offers no income has become increasingly irrelevant. This break lower was a positive catalyst for gold to make new highs in the last week of July. Simply put, the main reason Indians have been able to accumulate so much gold is because of their focus on jewelry.
All during the long silver bear market of 2011-2020, whenever there was a price blip, two things were predictable.
A Biden win in the US election would likely see enormous spending on clean energy, and that’s good news for silver price enthusiasts. Lynch hired a gold mine research authority to look into the structure of trading for mining shares. It’s not as emotionally taxing to hold jewelry as it is to hold other investments in gold. After the epic blow-off top in 2011, the price of silver was in a downward trend for many years. But the price of silver does not normally skyrocket like that. But during the initial shock of COVID-19, the price of silver fellow below .


Occidental Petroleum is not the only oil company forced to write down its oil and gas assets due to lower commodity prices. The oil trading portfolio is designed to take advantage of short-term long/short oil trades in the market. A review of the long-term plans, sustainable capex and production reveals that the company is already geared towards a low to moderate oil price scenario. During a historical crash in crude oil prices, adjusted loss was $994 million as against $486 million and $1.14 billion adjusted earnings in Q1 2020 and Q1 2019 respectively.
The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). During Q2 2020, COP faced the double whammy of nearly 50% decline in average realized crude oil price and 24% lower production. Realized oil prices in 2Q ’20 were $22.17 per barrel compared to $58.91 per barrel in 2Q ’19. Longer term, I see strong lower support around $12.25, assuming a bearish oil price, but it is not likely now.
Given the problems of oil and gas exploration these numbers are surprisingly good for the company which makes systems to plot hydrocarbon reservoirs. The Houston-based Occidental Petroleum surprised the market with massive writedowns of its assets, wiping out over 40% of their value in response to oil prices collapse. The debt is a problematic matter for Occidental Petroleum, especially with lower oil prices that reduced the asset’s values considerably for sale.
We saw much higher US oil production in July and in-line with company comments about returning shut-in production. Oil prices will probably hover within a tight range for the next few years with low demand. Source: ConocoPhillips Q2 2020 Conference Call Crude oil prices are hovering around the $40/bbl level. Hence, the best answer is to trade short term the stock and take advantage of the oil related volatility.
Given the relatively stable oil price, the overall situation in the Russian industry can be expected to improve. This is extremely crucial because in the medium-term, COP can sustain capex and maintain production at under $40/bbl crude oil. The key is understanding that COP benefits from a stable and not just a rising oil price environment. In the current low oil demand scenario, this shields against higher volatility in the mid and downstream segments, especially refineries. In fact, COP has already rationalized its capex to guard against wild unfavorable swings in crude oil.

United States

The Treasury’s and Fed’s ongoing record debt issuance and monetization campaign is likely to necessitate continued deeply negative real interest rates. The fund achieves this investment objective by investing in the portfolio of the US and foreign equity, debt, and money market securities. UBS Global Wealth Management’s Charles Day told his wealthy clients to “avoid” chasing parts of the equity market pushed up into a speculative frenzy by day traders.
The real danger is that the Fed will provide life support via bond purchases to companies that would otherwise default and finish in bankruptcy court.
The portfolio manager invests primarily in the US and foreign equity and debt securities which are undervalued in the market. Earlier in the day, Evercore’s founder and senior chairman Roger Altman warned there’s a big disconnect between the stock market and the US economy. In the US, even during the economic boom of 2015-2018, the federal government added at least $1 trillion to the debt each year. When, and that is if, the market wakes up from its Fed-induced twilight period, a readjustment to reality could start the next decline in stocks.
The smallest: a thin 0.1% peak-to-trough decline for a broad measure of investment-grade US bonds via the Vanguard Total Bond Market ETF (NASDAQ:BND). One problem is President Trump passed a payroll tax cut for the last 4 months of the year for those earning less than $100,000. The presumptive Democratic presidential nominee to face Donald Trump has described her as a “fearless fighter for the little guy, and one of the country’s finest public servants.”
President Trump issued 4 executive orders which at first glance saved the day, but actually, according to some analysts, may not have. Although we would urge that more appealing trading set-ups could present itself if one is just a bit more patient. When she was picked as California’s state assembly speaker, she became the first black woman in the US to lead a state legislature. “These football players are very young, strong people, and physically, I mean they’re physically in extraordinary shape,” Mr Trump said during a radio interview on Tuesday.
Several Fed officials indicated their concern over that developing situation during the past week, when they also indicated they expect to continue the measures they’ve launched well into 2021. This summer the US has kept up a record daily number of flights and operations over and near the contested South China Sea. the US Treasury Department expects to add $5-$6 trillion to the debt this calendar year.
In the US onshore, Occidental expects to operate one rig in the Permian Basin this year and no rig in the Rocky Mountains. The Treasury via SPVs with the connivance of the Fed has prepared the apparatus to keep inefficient corporations on life support.


Further SCMP cites that “The sources said Beijing had ordered pilots and naval officers to exercise restraint in the increasingly frequent stand-offs with US planes and warships.” As we reported previously, a Beijing-based think tank counted .


Here is the latest on the global pandemic.The number of European Union citizens working in the U.K. shrank to the lowest since 2015 as the hospitality industry buckled.