Gold – FX – Dow – 8 November 2019

GOLD: Gold vs US Dollar, Euro and GBP

Gold/USD live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1458 (1514)

Gold/USD LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↑) ↓ (↑)
% Risk
Weight
81 (87) 55 (63) 20 (65)
Allocation 100% (100%)

Gold reserves and asset re-allocation for insurance purpose.

The near 4% price drop, which was the every day trend during the past week, is entirely within expectation bounderies and accompanied by a sharp drop in ST risk weight. Technically the price could drop closer to 1400 without losing touch with the primary uptrend that started over a year ago. Because Hourly appears to keep pressure in the very short term, both ST Daily and Weekly are already at a point of divergence vis a vis the LT risk weight, which points towards this market finding strong support. It is the combination of a large LT price cushion and divergence that calls for staying fully invested and as we said last week, this is a good time to allocate a larger percentage of the assets at risk to Gold (and Silver). No change.

Last week: Gold/USD clearly has the advantage of much fundamental support such as a weaker dollar, low interest rates and building of inflationary pressure. The technical picture is developing as we expect with the weekly risk weight turning up at the 60% level based on Friday's close. This is an indication that energy is building for another upside release that could take out the August high fairly soon.
This is a good time to increase allocation to Gold (and silver) within a traditional asset mix portfolio. No Change and maintaining full Gold investment allocation.


Gold/EUR live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1324(1356)

Gold/EUR LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
Weight
85 (87) 48 (54) 32 (57)
Allocation 100% (100%)
Gold/Euro as one expects shows a very similar technical picture, and also has a USD/Euro element affecting ST Gold Euro price variations. No Change due price cushion and rapidly developing bullish risk weight to price divergence.

Gold vs Euro is still showing longer term downtrend pressure and little price change, but the overall pattern is very much in favor of Gold. Chart behavior indicates Gold may have ended the correction that started early September. Euro denominated asset portfolio's should consider a higher allocation to Gold to increase protection and insurance against price erosion in other asset classes that show high risk-weight. No Change.

Last week: The correction that commenced 3 Sept seems to have ended on 20 October with a firmly established ST uptrend that has somne way to go yet with MT risk weight now at a more neutral level expecting that to turn up and follow the market to new intermediate highs. No Change


Gold/GBP live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1141 (1170)

Gold/GBP LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
Weight
75 (78) 18 (25) 25 (40)
Allocation 100% (100%)
Sterling looks quite weak versus Gold at this level with bullish price divergence entering in the Daily time frame. Gold/Sterling still sits 25% above the late 2018 market low at 900 and poised to turn back up strongly again and relatively soon given the more deeply oversold risk weight in ST and MT time frames. No Change

Last week: Gold vs GBP has dropped a little more percentage wise since the Sept 4 high and due to a strong pound sterling the past few weeks. Technically this Gold/GBP pair looks strong medium term, so no change in maintaining a full investment allocation. Sterling denominated portfolio's should consider increasing the allocation to Precious metals by between 5 and 10%


SILVER: Silver vs US Dollar, Euro, GBP and Gold/Silver ratio

Silver/USD live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 16.76 (18.08)

Silver/USD LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↑) ↓ (↑)
% Risk
Weight
63 (68) 47 (55) 18 (67)
Allocation 100% (100%)
Silver as always takes a bigger hit when the market turns down. All that is happening is building massive energy to scream into the sky with rocket speed. We have seen as big drop since August which typically takes out weaker hands. With ST and MT getting into oversold risk weight levels and LT Monthly at a more neutral balanced level we feel comfortable staying fully invested.

Last week: Silver is showing very similar risk weight patterns as Gold and waiting to show more medium strength. No change in full investment allocation.


Silver/EUR live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 15.23 (16.19)

Silver/EUR LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
Weight
68 (72) 45 (53) 22 (57)
Allocation 100% (100%)
Silver against Euro shows an identical technical status as ag USD, so again No change.

Last week: Silver versus Euro similarly has every potential to reach the 2016 high within the next 3-6 months. Price to risk weight is in favour of price turning up before year end. No change to full investment allocation


Silver/GBP live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 13.11 (13.99)

Silver/GBP LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
Weight
60 (63) 25 (35) 22 (55)
Allocation 100% (100%)
Sterling has shown more strength against silver and as a result Silver is more oversold in terms of risk weight. We expect Silver to move up quicker against GBP in coming weeks, i.e GBP weakening relatively more or strengthening less in general against most other financial instruments.

Last week: As GBP is likely to enter a period of more volatility coming into the Dec general elections. 2 months ago Silver was stronger against GBP than against any of the other major currencies and appears to be building a strong technical base for a similar move and taking out the Sept 4 high at 16.20. This does require some patience and No Change to full allocation in a GBP denominated investment portfolio


Gold/Silver Ratio live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 86.67 (83.42)

GOLD/SILVER Ratio LT-M MT-W ST-D
Trend ↑ (↓) ↑ (↓) ↑ (↓)
% Risk
Weight
46 (41) 46 (40) 75 (30)
Allocation 50/50 AU/AG (50/50 AU/AG)
The ratio is not causing any kind of concern at this elevated level. It will seek equilibrium again, as it always has in history, which is more likely to materialize well below the 60 Silver to one Gold level. No Change.

Last week: Even though Silver always appears to have more manipulative properties than Gold meaning another correction in the direction of 90 cannot be excluded, the current risk weight scenario across time frames favours further weakness of the ratio. The technical space looks like the 75 ratio level is on the cards before we reach 90. And ot is way to long term equilibrium which could take a few years. No Change


FX: EUR/USD, USD/CHF, GBP/USD, USD Index, GBP/EUR, Bitcoin

EUR/USD FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1.1015 (1.1160)

EUR/USD LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↑) ↓ (↑)
% Risk
Weight
12 (16) 55 (55) 10 (82)
Allocation 100% (100%)
The dollar strengthened across the board all of last week in line with a buoyant US stock market. It appears to take a few more mon ths to tango away from the October low and finally confirm the USD low established in Jan 2017. No change to remain fully risk averse and keeping long dollar exposure covered.

Last week: Euro/USD technically is still showing momentum to reach and take out the June high at 1.14. No change to keep long dollar transaction exposures fully covered. This applies to companies with dollar receivables and investment portfolio's with a large element of USD risk. Increased risk of a weaker US stock market also increases the currency risk. European based investment in US dollar based equities would reduce overall market risk by reducing the USD risk in this scenario. No Change


USD/CHF FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 0.9965 (0.9847)

USD/CHF LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↓) ↑ (↓)
% Risk
Weight
54 (50) 66 (60) 75 (35)
Allocation 100% (100%)
Dollar strength rather adds to risk awareness and this market eventually turning south again after holding a historically narrow range for 4 years. No Change

Last week: USD/CHF starts to look a little weaker technically that it has done for at least a year and is now stepping into a similar and longer potential dollar weakness scenario. It looks like only heavy intervention or manipulation from sovereign related influencers can stop this market from turning south. No Change


Cable GBP/USD FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1.2760 (1.2925)

GBP/USD (Cable) LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
Weight
40 (42) 84 (85) 25 (82)
Allocation 100% (100%)
Bullish risk weight divergence emerging between Short Term Daily and Medium Term Weekly is a call for a weaker USD again versus Sterling, hence no Change in keeping Dollar receivables covered forward.

Last week: Cable turned back up last week following general USdollar pressure. This market starts to look a bit heavier but the risk weight uptrend is still in force to maintaining a fully hedged long dollar transaction exposure. No Change


USdollar Index Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 98.40 (97.12)

USD Index LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↓) ↑ (↓)
% Risk
Weight
82 (75) 28 (25) 90 (12)
Allocation 100% (100%)
The one percent rally of the Dollar Index last week is NOT a change of trend. Quitre bthe opposite with ST risk weight rather overbought and showing bearish divergence versus MT. We can easily find many reasons for a temporary strong dollar, but the Greenback simply does not look strong at all technically. No Change.

Last week: All time frames still show bearishness with the LT looking very bearish indeed. ST looks a little stretched and may pause within the next few weeks before resuming the down trend and falling in line with the LT risk weight trend direction. NO change keeping long dollar exposures covered.


GBP/EUR FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 1.1588 (1.1578)

GBP/EUR LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
Weight
60 (58) 90 (90) 60 (75)
Allocation 60% (60%)
Sterling is holding its own but looks potentially vulnerable in MT and LT time frames. So, we happily stay with a smaller forward cover of Sterling payables.

Last week: We reduce our Short Sterling cover from 80% to 60%. Reason is that ST has turned down and Weekly MT is in overbought territory. The type of pause or correction that may develop much reduces the risk of a lighter GBP position


BTC Bitcoin Price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 8773 (9226)

BITCOIN BTC/USD LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↑) ↓ (↓)
% Risk
Weight
52 (54) 33 (25) 18 (62)
Allocation 0% (0%)
The Bitcoin price picture is developing for a more volatile MT term price range. Long term support is at 4350 with a mild LT up-slope. If that breaks, the 2018 low is support and likely to give way. If 4350 does not break we may find ourselves in a new era of financial reality and position ourselves accordingly with minimum risk. No change.

Last week: BTC actually looks a little bullish again with resistance at the connecting downtrend line since the Dec 2017n high. That resistance comes in at 12640. We do not participate in Bitcoin due to this market not offering the trust that investors require in the way market liquidity transpires. So, No change due to high risk at any level. For speculators this is the perfect market to learn the ropes, but stay small and do NOT ever leverage

Remaining 'opening up' gap still to fill at 2828. We exclude weekend action to determine opening gaps as major players are not participating in size.
If this market is poised to turn from extremely overbought (Dec 2017) to completely oversold, it doesn't appear to be finished.


INDEX: US30, S&P500, Brent crude oil

Dow Jones Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 27681 (27347)

US30 (Dow Jones) LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
Weight
91 (87) 87 (80) 93 (87)
Allocation 0% (0%)
Dow is very high risk and is obviously again defying gravity. The economy is great, money is dirt cheap, so nothing can happen to us. From a risk weight perspective we cannot re-position anywhere close to even a minor long position. It is bad risk and equity investment only works for individual powerhouse stocks and great startups. Index wise it is a no go unless you wish to speculate very short term and accept the chance of being whipsawed, which is a more typical outcome for most traders at certain points, like now, in a sequence of trend seasons.

Last week: The Dow is showing a Deja Vue scenarioand it is not possible to predict any final top as a result of massive QE and further lowering of short term interest rates in the USA and Europe, whilst the latter also increases its bond purchases with MT tenor. All risk weight time frames remain in either Overbought or Bearish divergence position which makes the risk of mholding these assets too high. No change


S&P 500 Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 3093 (3067)

Standard & Poor 500 LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↑ (↓)
% Risk
Weight
92 (90) 95 (90) 92 (92)
Allocation 0% (0%)
All time frames are overbought and diverging in their own time frame. This simply is a very high risk market technically and from past experience this unprecedented development can only be a matter of sovereign manipulation which we know is a fact. It just appears to go on and on for so much longer than many of us would have expected. Yet is does not change the inherent risk image. Else just the same as Dow Jones. Stay away.

Last week: Another All time high close at 3064 and at month end October. Short Term Daily Risk weight is at 92%. We call this overbought territory. The MT Weekly time frame is in an uptrend at 90% and looking to rol over to bearish diverge relative to price and Risk weight in May and June of 2019. The Long Term Monthly risk weight also looks to want to roll over into bearish divergence in relation to the Jan 2018 high at 2877 with risk weight at 95% and the September 2018 High at 2942 with risk weight at 92%. This is an unprecedented bubble of a proportion that could shake investment markets without warning. Our technical risk approach to the Standard and Poors index does not permit any allocation under these extreme conditions. No Change


Brent Crude oil Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 8 November: 61.55 (61.55)

Brent LT-M MT-W ST-D
Trend ↑ (↓) ↑ (↑) ↓ (↓)
% Risk
Weight
28 (27) 35 (29) 78 (62)
Allocation 0% (0%)
Price range was fairly narrow last week ending unchanged. The inverse flag formation since Late September can fall both ways. The long term can resume down if market turns weaker or a few dollar price increase can create bearish divergence of ST versus LT. The picture isn't clear and thus a low risk trade cannot be made at this stage.

Last week: Brent could again turn up but our risk weight indicators taken from Stochastic, RSI and MACD do not offer a consistent enough picture to enter this market with low risk. The LT Monthly time frame looks potentially bullish but it has not been confirmed yet. The massive Aramco IPO may also influence short term activity as it is likely to issue a total of 5% of the stock in the near future which would be about a $100 Billion cash value.
Timing of the tranches for IPO is very critical in order to make this an orderly series of transactions.
Bottom line is that we do not yet see a new low risk entry point for Brent, hence No Change.

Last week: Brent rallied nicely after we removed our allocation. With ST risk weight at 92% and diverging vis a vis MT and LT, we feel more comfortable not having a position until this market shows its hand which will likely be driven by geo-political events. No Change for now

Posted in A - All Financial Blogs | 2020 Forecast.