Daily Close | Forex, Metals, Oil, Agriculture August 24, 2020



Export demand is the primary demand for US Cotton so poor weekly sales means weak overall demand. Export demand for US Cotton has been poor for the last few weeks but was improved last week. Spring Wheat was developing under good growing conditions in both the US and Canada. While short-covering has played a role post-USDA, the focus is shifting to the weather impact, especially on the Soybeans. The hot and dry weather extends north into Oklahoma and western Kansas.
About half of the Argentine Wheat belt is too dry.


The US dollar is grossly oversold against high beta currencies like the euro, sterling, Australian, New Zealand and Canadian dollars. Low oil prices may severely impede to meet the purchase target for energy products in terms of dollar value. Source: Bloomberg Source: Bloomberg Source: Bloomberg The Dollar ended higher on the day, whipsawed once again today around the European close… USD/JPY perked up a little but the dollar’s greatest strength was against other major currencies.
In May 2020, Arconic closed a 700-million-dollar senior note offering, and expanded its credit facility; further indicating trust in the company by debt issuers. Katsenelson spends the bulk of his column space talking about problems with the dollar. An increase in margins can improve profitability for each dollar of sales. Dollar outflows will be looking for homes. Over the past few years, the chipmaker has successfully adapted its technology for the Artificial Intelligence market, creating a new multi-billion-dollar business.
Investors are exposed to foreign exchange (Brazilian Real) and liquidity risks.


Gold futures trading, Silver futures, and most importantly – how to invest in Gold Bullion, or Gold Futures for the long term. Despite the recent run-up in gold prices, we believe gold remains attractively valued – one might even say cheap – in the context of historically low real interest rates. Source: Bloomberg And gold appears to be shrugging off the renewed pressure lower (a positive for gold) in real yields… Warren Buffett’s recent purchase of Barrick Gold has brought much needed awareness to gold miners.
(Video length 00:07:20) Inflation Expectation using Inflation-Protected Securities Gold Investing 2020, How to invest in Gold is covered in this 3rd video from Pablo Lucena. So far, we have looked at gold and gold miners, so what about the juniors? If gold dips decisively below this support level, we could be looking at more downside for gold. However, given the favorable fundamental backdrop for gold I expect prices to continue to move higher in the intermediate and longer term despite short-term market gyrations.
Gold, silver, miners/GSMs are likely to move substantially higher in the intermediate and longer term due to global easing by central banks and other favorable fundamental factors. If you believe that the bull market in gold is real and here to stay, then there is no better place to capitalize than junior resource stocks. This will positively impact the share prices of major miners, and continue to educate investors about the many ways to gain exposure to gold.
(We refer to real rather than nominal yield because gold prices have historically tended to rise with U.S.
Meanwhile, the median was 1.76 million ounces at an average grade of 2.20 grams per tonne gold. However, I believe silver will likely move higher from here, as it essentially moves in tandem with gold. At current valuations, however, there is some cushion against this view, with the real-yield-adjusted gold price at the lower end of its range for the last 15 years. The key risk is that real interest rates rise, making gold relatively less attractive. When it comes to Skeena’s resource of 4.63 million at 6.05 grams per tonne gold, its size and grades dwarf that of past acquisitions.
Conversely, when Treasury real yields fall, gold prices would tend to climb. The second was following the financial crisis, when investors became enamored with gold and how it had gone up every year for the preceding decade. With positive price targets from Bank of America and Goldman Sachs, and gold’s recent pop above $2,000, the public is starting to take note.


Natural gas prices are volatile as are those of oil and natural gas liquids. More information on the relationship between crude oil and volatility can be found in our quarterly crude oil forecast above. With valuations still completely disconnected with oil market fundamentals, we think investors should be positioned to take advantage of the oil bull market. Eclipsing this barrier of resistance, combined with a sustained decline by the VIX Index, might hint at potential for crude oil prices to embark on another leg higher.
Crude oil prices are trading modestly higher to start the week as the commodity aims to extend its advance. Thus wage costs do not determine oil or food prices in the short run, but do heavily influence the price of haircuts and restaurant meals. Technical resistance facing crude oil price action stands out around the $43.00-price level and month-to-date highs. Whether justified or not, we don’t want to get into the ethical argument of whether one should invest in oil and gas companies.
This makes sense in that after expiry, the front month contract becomes the spot natural gas commodity and therefore whatever differential remains between the two will be arbitraged away. The VIX Index, or fear-gauge, reflects expected S&P 500 volatility over the next 30-days, and the gauge tends to hold an inverse relationship with risk assets like crude oil. Likewise, as with stocks, the direction of crude oil is generally tied to risk appetite, economic activity, and prospects for global GDP growth.
The price of oil has gained ground for the last three consecutive weeks and the move seems to largely mirror the tumble lower by the VIX. David Brhel, Daniel He, Georgi Popov December 2019 Blog Attacks and outages could add to the longer-term geopolitical risk premium in oil prices. According to Rystad Energy, we will be looking at a total of 61 cases vs. the last oil price crash of 70 in 2016. In turn, this could correspond with bearish headwinds for oil prices.
If oil can break out above this level I suspect we can move into a higher trading range of around $45 – $55 for now.
The figure of $30 billion is similar to the amount of debt owed by US oil production and exploration companies that have recently declared bankruptcy. Q2 earnings calls in early August brought some badly-needed confidence to an industry wracked by months of uncertainty from low oil demand in the wake of the coronavirus pandemic. I believe that natural gas is fundamentally set to continue rallying over the next few quarters and that there is still time to jump on the trend.
Permian Basin oil rigs dropped by one to 128 rigs in the week ending August 19, marking an 11-year low, according to data from Enverus.

United States

Much of the recovery is likely assisted by lower interest rates, resulting in much lower mortgage rates, from the Fed’s intervention. Virus cases continually increasing in the US could be a significant factor that could play a role going ahead, especially if the economy is forced to shut down again. We can see Nasdaq futures hitting new ATHs once again as big tech continues to lead major market averages higher. (Fed slows corporate debt purchases to trickle) Given this trend, it therefore appears unlikely that the Fed is going to eliminate price discovery in the bond market.
So it isn’t surprising that stock prices are going through the roof, sending markets soaring and the Nasdaq to new all-time highs. Considering that the Fed has no plans to raise interest rates for the next year, Powell’s outlook should not be very market moving. While this support is considered temporary, the Fed’s purchases in recent months suggest that the increased liquidity in this sector will be high.
The low Fed rates encourage investors looking for more ROI to take on more risk than they would otherwise be willing to. He then said the US economy was humming along at high levels before the coronavirus pandemic. As you can see from the top table above, every single analyst thinks the Fed won’t raise rates from the July meeting which just passed to Q4 2022. Americans said the biggest roadblocks to saving for retirement were: While the Fed keeps inflating stock markets, the “trickle-down” effect has yet to occur.
The number of mortgage applications has grown, and the housing sector’s activity is picking up, most recently resulting in record-high average prices of homes in the US. The lower Fed rates are reflected in the yield of corporate bonds. There have been pockets of optimism in the real estate sector, pointing to a recovery in the US economy. UBS estimated that approximately 75,000 U.S. stores will close if the market share of online purchases rises from the current level of 16% to 25%.
Mr Trump said other votes will be “harvested” by people going door-to-door to collect ballots that voters have not submitted.
Unprecedented Fed stimulus, expectations for a V-shaped recovery, as well as other factors are enabling a great deal of capital to flood the global financial system. He has been quoted in a variety of financial news publications, such as CNBC, the Wall Street Journal, and the New York Post. Via SchiffGold.com, The Nasdaq and S&P500 made new all-time highs last week. The more pain there is on Main Street, the more gain there is on Wall Street.” So to say, ‘Oh look, the stock market is booming.


EU carbon dioxide allowance prices have held up at above Eur25.00/mt in August, after easing back from a 14-year high of over Eur30.00/mt in July. While not 100% correlated, passenger car sales in the European Union are forecasted to drop by 25% according to the European Automobile Manufacturers’ Association. Boris Johnson has suspended an air bridge agreement with Spain and reimposed quarantine measures on tourists re-entering Britain from the European country.