Gold & Precious Metals

Record Low Volatility in Precious Metals and What it Means

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Posted by Jordan Roy Byrne - The Daily Gold

on Tuesday, 13 March 2018 06:39

Record-Low-Volatility-in-Precious-Metals02 opt1Usually the most naturally volatile of markets, Gold Stocks are showing  too are showing 14 - 25 year lows in long-term volatility in several indicators. It has been a tough time with the US Dollar rallying with the election of Donald Trump. Sooner or later extreme low volatility will change. Jordan estimates that will occur within the next 18-24 months. R. Zurrer for Money Talks

The past 18 months have been difficult for precious metals investors. If you had known Donald Trump would be elected and the US Dollar would soon begin a nearly 15% decline, you would have expected Gold to blow past its 2016 high. You would have been shocked to see the gold miners and junior gold stocks trading lower. Gold has fared okay but the gold stocks and Silver have lagged. As US equities have continued to power higher, precious metals have struggled to perform while volatility in the space has dwindled. Precious metals volatility has reached extremely low levels and this is a sign that a major move, while not necessarily imminent is surely on the horizon. 

We plot a weekly bar chart of Gold that includes a handful of volatility indicators such as the Gold Vix (GVZ), Average True Range (ATR) and several bollinger band widths (BBw). These indicators have touched major lows in recent months. The Gold Vix which began trading in 2010 recently touched its lowest level ever at 9. ATR recently touched its lowest level since 2007. The 40-week and 80-week BBw’s recently hit their lowest levels since 2005 while the 160-week BBw recently touched its lowest level since 2002.

Like Gold, Silver is showing significantly low levels of long-term volatility. Its ATR recently touched its lowest point since 2006. The BBw for three time frames (40 week, 80-week and 160-week) recently touched 14 year lows. 

Although the gold stocks are one of the most naturally volatile markets, they too are showing significantly low long-term volatility. Below we plot the NYSE Gold Miners Index, which is the parent index of GDX along with similar volatility indicators. The ATR indicator recently touched a 15 year low. Interestingly, both the 40-week and 80-week BBw’s recently hit some of the lowest points of the past 25 years. The 40-week BBw recently tied 2007 for the lowest point in the past 25 years while the 80-week BBw recently touched a 6-year low and its 3rd lowest point of the past 25 years. 



Gold & Precious Metals

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on Friday, 09 March 2018 14:57

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Gold & Precious Metals

Silver Investment: The Lowest Risk, Highest Return Potential vs. Stocks & Real Estate

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Posted by Steve St. Angelo - SRSRocco Report

on Monday, 05 March 2018 06:28

One thing I really respect about this analyst, Steve St. Angelo, is that he makes a very clear argument using graphics and fundamentals. One look at the first chart certainly tells you which of Real Estate, the Dow Jones or Silver is in the "low risk" position. A well written, strong argument - Robert Zurrer for Money Talks

While silver is completely off the radar to most investors, it will turn out to be one of the best investments to own as the massive amount of leverage in the stock and real estate market evaporates.  Unfortunately, investors, today are no longer capable of recognizing when an asset displays a HIGH or LOW risk.  Thus, fundamental indicators are ignored as the investors continue the insane strategy of “Buying the Dip.”

A prudent investor is able to spot when an asset becomes a high risk and then has the sense to move his or her funds into one that is a lower risk.  However, the majority of investors do not follow this practice as they are caught by surprise when a Market Crash occurs… again and again and again.  Even worse, when investors are shown that the indicators are pointing to assets that are extremely risky, then ignore it and continue business as usual.

Today, complacency has turned investors’ brains into mush.  They are no longer able to discern RIGHT from WRONG.  So, when the market really starts to correction-crash, they will hold on to their stocks waiting for Wall Street’s next BUY THE DIP call.

Regardless, if we can understand the fundamentals, then we would be foolish to keep most of our investment funds in Stock and Real Estate assets.  The following chart follows the KISS Principle – Keep It Simple Stupid:


You don’t need to be a highly-trained financial or technical analyst to spot the HIGH vs. LOW-RISK assets in the chart above.  Hell, you don’t even need to see the figures in the chart.  If we understand that all markets behave in cycles, then it’s common sense that asset prices will peak and decline.  We can plainly see that both Real Estate and Stocks asset values are near their top while the silver price is closer to its bottom.

Thus, assets that are near a top are HIGH RISK, and those near a bottom are LOW RISK.  It’s really that simple.

Now, if we look at each chart separately, we can easily spot which assets will be the BIG LOSERS in the future.  According to the St. Louis Federal Reserve data (FRED), the U.S. Median Home Sales Price of $324,550 is nearly $100,000 higher than the bubble in 2007:



Gold & Precious Metals

What Does February Stock Market Crash Mean for Gold?

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Posted by Arkadiusz Sieron, Ph.D.

on Friday, 02 March 2018 06:23

Amidst the hurricane of a plunging/soaring/plunging Stock Market Dr. Sieron reviews the facts of Gold's performance against the S&P 500, Oil, US Dollar & the Fed's inflation rate - Robert Zurrer for Money Talks

One month after the February stock market rout is an excellent time to step back and review all the facts – and their implications for the gold market. Here’s exactly what happened – and what it implies for your capital allocation.

  • After more than a year of continuously advancing, the S&P 500 fell nearly 10 percent in five days.
  • The sell-off was allegedly triggered by the surprisingly strong January jobs report, showing the acceleration in wage growth. That released fears of higher inflation, which could prompt the Fedto tighten its stance further. As President Trump rightly pointed out (on Twitter, of course):

    in the “old days,” when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down.

  • The stock market correction came on top of bond market tumble. The 10-year Treasury yield jumped from 2.72 percent on January 31 to 2.84 percent on February 2. Analysts claim that bond yields also spiked due to inflation concerns.
  • Gold didn’t offer a hedge against stock market turmoil. Instead, it shared with equities the fears against a more hawkish Fed and moved in tandem with stocks, as one can see in the chart below. The correlation between these two assets this year is about 0.6, which is pretty high.

Chart 1: Gold prices (yellow line, left axis, London P.M. Fix, in $) and S&P 500 Index (green line, right axis) from January 1, 2018 to February 28, 2018.


These are facts. But what do they imply for the future? Are they changing the economic outlook? Not really. First of all, fears of inflation are clearly exacerbated. Just look what happened to the oil prices in February. It doesn’t suggest that enormous inflation is coming. And it doesn’t bode well for bullion, given the strong correlation (almost 0.6 – see also the chart below) between the yellow and black gold in 2018.

Chart 2: Gold prices (yellow line, left axis, London P.M. Fix, in $) and oil prices (black line, right axis, WTI, in $) from January 1, 2018 to February 26, 2018.



Gold & Precious Metals

Here's What Gold is Waiting For

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Posted by Jordan Roy Byrne - The Daily Gold

on Wednesday, 28 February 2018 14:17

Jordan Roy-Bryne produces some of the best charts, today he's put together some very clear chart on the Treasury Bond market, its relationship to Gold and the Gold to Stocks ratio. Worth a look - Robert Zurrer for Money Talks

Gold was well bid during the equity correction but it could not breakout then and has retreated as equities have roared back. As a result, the Gold to stocks ratio has retraced most of its recent surge. Meanwhile, the US Dollar has rebounded and the oversold and overhated bond market could be starting a rally. The recent rise in long-term bond yields which has benefitted Gold appears due for a pause or correction. Meanwhile, Gold could also correct and consolidate as it waits for a breakout in long-term bond yields which should in turn benefit Gold. 

As we noted in One Big, Potential Catalyst for Gold in 2018, Gold is no longer trading with bonds and therefore could benefit from a big breakdown in bonds. As the chart below shows, the bond market has experienced a major breakdown. In recent days, the 5-year, 10-year and 30-year bonds all touched multi-year lows. 



The breakdown in the bond market has helped Gold rally but why hasn’t Gold reached the corresponding multi-year highs?



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