Daily Close | Forex, Metals, Oil, Agriculture September 25, 2020



In the case of coffee, there are still many bearish traders who view present fundamental news as negative for coffee prices. This was following a 10-20% move up in prices due to stellar Chinese demand and weather issues with their (CORN) crop from three typhoons and flooding rains. Here is a little fun from a conversation from two hypothetical coffee traders Seriously, an enormous oversupply can set off a chain reaction of irrationality. But I do believe the weather fundamentals will become relevant again in the price movement of coffee.
Coffee trees need regular rains for their bloom in October-December (their later spring and early summer). Grain prices (JJG) took it on the chin because of the upcoming US harvest pressure and dry weather. Other markets beaten up like wheat (WEAT), natural gas (BOIL), and others will be greatly affected by winter weather and the developing La Nina. Cocoa prices (NIB) have soared on the recent dry weather in West Africa but more so from political problems in the Ivory Coast.
In the matter of Arabica coffee, the market logistics are quite different. Can you imagine armadas of coffee laden tankers headed for the major roasters? An interesting full article I wrote about El Nino, La Nina, and coffee can be found here.


Source: Author via Tradingview In part, these declines have been fueled by rallies in the U.S. Dollar Index (which has gained by 2.8% since the beginning of September). It has guided the Yen higher on renewed Chinese economic strength but it hasn’t done anything to whet real appetites for the dollar or dollar-denominated assets. I which will offset any weakness in equity markets thanks to a rising dollar. A Trump victory should send the euro into a real tailspin which could breach the March low if things get disorderly.


From April through July, the Crescat Precious Metals SMA Composite delivered a 142.2% net return versus 96.1% for our benchmark Philadelphia Gold and Silver Index. ), ρn and Vn are the mass concentration and market value of the nth component in the list, respectively, and V Au is the market value of gold. The set-up of artificially low rates combined with ballooning fiscal deficits, extreme monetary dilution, and inflated risky assets creates, in our view, a veritable utopia for gold and silver.
Meanwhile, in our analysis, gold mining stocks are still highly undervalued today and setting up to diverge to the upside like historical analogs in 1930-32, 1973-74, and 2000-02. We believe gold and silver stocks are poised to move significantly higher in the months and years ahead. Since the preproduction capital cost to put Kiena is low, the internal rate of return of the project is just over 100% at $1,532 per ounce of gold. If these trends continue, the impact could be substantial for commodities that are priced in U.S. dollars (for example, gold, silver, and oil).
We capitalized overall on that environment via our short positions, even though our long gold positions underperformed at that time. The stock market at large has been selling off and remains extremely over-valued, unlike gold stocks. This number rose in the low teens starting in the mid-1970s (or right after the Nixon Shock ended Bretton-Woods and closed the gold window).
He is also the author of the 2015 book, The Coming Renewal of Gold’s Secular Bull Market which is available for free. Between 1981 and 2013, the mine produced a total of 1.75 million ounces of gold at an average grade of 4.5g/t. Source: Bloomberg Real yields surged higher on the week, dragging gold lower… (Source: Wesdome Gold) In May 2020, Wesdome released the results of a preliminary economic assessment (PEA), which showed pretty good key financial figures. (Source: Wesdome Gold) Kiena currently has a mineral resource of almost 1.6 million ounces, but half of that is in the inferred category.
(Source: Wesdome Gold) The next step for Kiena is a prefeasibility study and Wesdome plans to drill a total of 85,000m at the property in 2020.
(Source: Wesdome Gold) Kiena is a past-producing mine which was put under care and maintenance in 2013. Source: Bloomberg The last time silver saw such a drop, it screamed higher… Iron ore (right) has been increasing since the very end of 2015 but is still off highs are 2010-2012. Copper (left) declined from the end of 2018 until the lockdowns; it has since rebounded but is relatively tame.


The natural gas market has remained more resilient than the oil market thanks to the somewhat resilient commercial and residential demand for natural gas. As SBR generates revenues that depend on the value of its produced oil and gas, it is highly sensitive to the underlying prices of oil and gas. If the pandemic lasts for years, it will severely affect the energy market and will certainly take its toll on the oil and gas prices. Due to the sell-off of the entire energy sector, Sabine Royalty Trust (SBR), a 9%-yielding oil and gas trust, has become interesting.
In the second quarter, the average realized prices of oil and gas of SBR plunged 20% and 36%, respectively, over the prior year’s quarter. Moreover, technological progress may make it possible to significantly extend the lifetime of the oil and gas wells of the trust. Moreover, as mentioned above, SBR has grown its production of oil and gas at a tremendous pace this year. However, SBR grew its oil production by 26% and its gas production by 37%.
Sabine Royalty Trust is an oil and gas trust that was founded in 1982. It has royalty and mineral interests in producing properties and proved oil and gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas. Think of crude oil prices collapse in the WTI futures contract on the NYMEX during the height of the Pandemic that drove the April contract into negative price territory. SBR is currently facing a strong headwind, namely the coronavirus crisis, which has caused a sharp decline in the global demand for oil products.
Nevertheless, the price of natural gas has been negatively affected by the pandemic. As a result, the price of oil has remained under pressure over the last nine months. Within that “chemical companies” exposure is substantial exposure to autos, non-residential construction, oil/gas, and so on, so there’s really no escaping the cyclicality of the business. Then it was ’s turn, which three weeks ago broke down below $40 Brent Crude for the first time since May.

United States

Through three rounds of quantitative easing, followed by further efforts to keep the economy growing, the US stock market reached and then continued to hit new historic highs. After the peak in metals setup near August 7, 2020, the US stock market continued to rally a bit higher, then rotated lower on September 3, 2020. With its focus on high yields, SPHD seems well positioned to benefit from the Fed’s current lower for longer interest rate environment.
Essentially, Fed President Charles Evans is telling us that an upcoming raise in interest rates would still leave U.S. markets at “accommodative” levels. Mnuchin and the Treasury can still sell record levels of long-dated U.S. debt at record high prices and the auctions not tail badly. Yet, with the Fed likely to keep interest rates lower for longer, investors have few attractive places to park their cash and earn reasonable returns. Investors continued to “trust” and wanted the Fed to continue to support asset markets, but now required this “trust” to be reconfirmed if questions arose.
The Transportation Index, which typically leads the US stock market by 2 to 4+months, has been unusually aligned with the S&P 500 over the past 8+ months.
Source: Fund Website If China and the US severed diplomatic relations and engaged in a real “hot” war, it’s not clear if US investors in REMX would actually benefit. UBS also looked for stocks with strong free cash flow and dividends and strong 2020 earnings estimates. In this case, the US government might force domestic investors to sell out of Chinese holdings. Foreign central banks are still holding their purchases in trust with the Fed in New York, reloading for the next round of currency defense.
Currently, the US stock market has rolled into a sideways/topping pattern. This is a standard high point for this data series.The percentage of Nasdaq stocks above their respective 50-day EMAs is now declining sharply. Despite a recent correction, it s clear that the US stock markets have recovered from the lows of March. Let’s start with the Nasdaq: The percentage of stocks about the 200-day EMA hit a high of 60% at the beginning of August.
The US, the EU, Australia, and Japan have all had major government initiatives to support production domestically or in other countries outside of China. Fed leadership under Fed Chairs Janet Yellen and Jerome Powell followed-up on the policy and the US economy continued to grow up till February 2020. Based on Crescat’s estimates, the US twin deficit is on track to reach over 25% of nominal GDP which should soon be the worst level ever reported.
A common risk cited by Wall Street analysts is the competition for used vehicle inventory, but Carmax seems to always get its cars.


But by February 2022, one hopes, the pandemic will finally be over and everybody will be in the mood for a good old normal-ish Winter Olympics in Beijing.


Nordic 1 only has capacity of 10,000 kg per year, while Aurora River, the other EU GMP certified facility, has capacity of 28,000 kg per year. Incyte is now studying the potential of retifanlimab monotherapy through three registration-directed studies in MSI-high endometrial cancer, Merkel cell carcinoma and anal cancer. However, looking ahead, attention will be placed on the upcoming round of negotiations before the de-facto October 15th deadline at the EU Summit.