Daily Close | Forex, Metals, Oil, Agriculture March 05, 2021



less Wheat markets were lower but held the trading range for one more day. Ideas are that forecasts for rain in the Great Plains will help injured Winter Wheat.


Gold’s thrashing had nothing to do with fundamentals, it was driven by cascading momentum selling in gold futures and gold-ETF shares. The extreme leverage inherent in gold futures gives these guys outsized influence over gold prices. The relentless and sometimes-heavy gold selling since early January had nothing to do with gold’s strong fundamentals. On that early-January Friday when $1,900 gold failed, gold’s 3.5% plummeting leveraged 19x forced brutal 2/3rds losses on traders long at maximum margins!
As gold was still up near $1,915 then, that meant each 100-ounce contract controlled $191,500 worth of gold. But because of the extreme risks inherent in amplifying gold’s price action, heavy gold-futures selling often cascades. Speculators’ herd futures dumping kicked off gold’s selloff. Had the snowballing gold-futures selling by these hyper-leveraged traders not flared, gold would likely be back over $2,000 by now. Indeed it soon started marching higher in a strong uptrend, carrying gold up 9.8% by early January.
Running extreme leverage, they are forced to sell or face imminent ruin when gold is falling. That was pure technical selling, which accelerated after gold’s psychologically-heavy $1,900 level failed overnight. Gold’s three prior corrections during this secular bull had averaged 14.3% losses over 4.1 months. So the odds swung around to favor gold’s next bull upleg getting underway. On Friday, January 8th, gold was blitzed with extreme gold-futures selling.
That healthy selloff was in line with this bull’s precedent, leaving gold sufficiently oversold. Last summer, gold rocketed 40.0% higher out of last March’s COVID-19-lockdown-spawned stock panic. Then gold rallies sharply from the selloff nadir, resuming its next bull-market upleg. The lower gold fell, the more these traders either had to or wanted to sell. Then their ongoing dumping exacerbated gold’s losses, forming a powerful vicious circle. Investors should be rushing to diversify their stock-heavy portfolios in gold, especially as rising yields threaten to slay stocks’ There-Is-No-Alternative rationalization.


Meanwhile, natural gas appears to be trading around the same prices seen throughout most of 2017 and 2018. Oil prices, for example, are precisely at the same price they were in at the beginning of January 2020. Opec restricted output to keep prices up, now over $65/bbl. Gasoline prices have returned to their summer of 2019 levels. That is because many commodities, like oil, are positively correlated to the index.

United States

BofA Merrill says to sit out the US corporate bond market because the Fed will have to deal with rising interest rates (which reduce bond prices.) Wall Street sees Broadcom growing revenue by 12% for the current fiscal year—more than twice the growth rate for last year. Investing.com Follow Google parent Alphabet (NASDAQ:GOOGL) is proving to be a winning bet this year after being a laggard in 2020. Google parent Alphabet (NASDAQ:GOOGL) is proving to be a winning bet this year after being a laggard in 2020.
increased by just 1.3% at the end of last year, which is well below where the Fed would like inflation to be. It’s a labor market that is improving but not far and fast enough to cause the Fed to veer away from an accommodative stance. Precisely because of the Fed’s manipulation of bond prices, the interest expense on that $27 trillion National debt was just $522 billion in 2020. Over the past year, the Fed’s total balance sheet and Treasuries held have skyrocketed an absurd 82.5% and 95.8% to a mind-blowing $7,590b and $4,845b!
His market analysis can also be read in most major financial publications, including the Wall Street Journal. Although I agree with Powell that the unemployment rate is hugely understated, I disagree strongly with the Fed’s approach to deal with it. Google stock is up more than 17% this year while the benchmark NASDAQ Index has gained just over 1%. I discussed Powell’s adjusted unemployment rate on March 2, in How Did the Fed Conclude the Real Unemployment Rate Was 10% in January?
The Fed’s printing presses are spinning like crazy, with it monetizing a colossal $120b per month of US Treasuries and mortgage-backed securities.
less Fed Chair Jerome Powell proposed a methodology that factored in labor force declines due to Covid. Additionally, Michael has worked at an investment advisory firm where he helped create ETFs and UITs that were sold throughout Wall Street. He has been quoted in a variety of financial news publications, such as CNBC, the Wall Street Journal, and the New York Post. The Wall Street Journal comments Better Job Market Not Nearly Good Enough for the Fed.
Research from our team of in-house analysts has been quoted by The Wall Street Journal, Bloomberg, MarketWatch, USA Today, Kitco, Reuters, US News & World Report, CNBC, and more. If the Fed is watching these numbers carefully, so must investors. Wall Street is also eyeing several Covid-19 updates.