Metals – FX- Indices – update – 2 Dec 2018


Precious Metals: Gold & Silver vs US Dollar, Euro, GBP, Ratio

Gold/USD

We remain cautious and stay with 60% gold allocation. (Our gold allocation vs USD remains 60%. This pair has still not confirmed a full allocation even though other asset classes remain more vulnerable and would justify a higher allocation to Gold. Within any asset allocation policy Gold must play an important enough role, simply because a minimum range of around 5% protects better than no allocation in any institutional portfolio)
Gold/USD Month Week Day Hour
Nov 30 close 1222 (1223)
Trend Direction Up (Up) N (Down) Up (Up) Up
Risk Weight 20-25 (20-25) 65-70 (65-75) 70-80 (65-75) 55-60
Allocation 60% (60%)

Silver/USD

LT risk still down Nov 30. No change in allocation. For a serious trend change in the Metals space Silver usually takes a lead. That has not happened yet.(LT trend risk is narrowing. This is an indication of an ending Downtrend. Next weekend is month end. A trend change to Up is required to call a LT trend change. Weekly and daily risk weight cannot yet confirm an early LT, hence allocation remains at 40%)
Silver/USD Month Week Day Hour
Nov 30 close 14.14 (14.24)
Trend Direction Down (Down) Up (Down) Up (Up) N
Risk Weight 05-15 (10-15) 25-30 (25-30) 50-55 (50-55) 40
Allocation 40% (40%)

Gold/EUR

More range trading expected. Technically, risk weight a bit more positive this week. No change in allocation. (The LT trend prevails without imminent divergences. Hourly overbought range may give just a little ST pressure early in the week. Stay with allocation at 75%)
Gold/EUR Month Week Day Hour
Nov 30 close 1078 (1079)
Trend Direction Up (Up) Up (Up) Up (Up) Down
Risk Weight 20-40 (20-40 75-80 (70-75) 70-75 (65-75) 85-90
Allocation 75% (75%)

Silver/EUR

Weekly turned up whilst Daily turned down. This pair still looks range bound. No change in allocation. (No change in risk patterns. Same allocation)
Silver/EUR Month Week Day Hour
Nov 30 close 12.49 (12.58)
Trend Direction Up (Up) Up (Down) Down (N) Down
Risk Weight 15-20 (15-20) 40-45 (40-45) 50-55 (20-35) 60-65
Allocation 45% (45%)

Gold/GBP

Both Daily and Weekly trends turned Up. Risk weight favours a slight increase of allocation to 60% from 50%. (Medium term higher risk vis a vis LT favors a no change position at 50% allocation)
Gold/GBP Month Week Day Hour
Nov 30 close 956 (953)
Trend Direction Up (Up) Up (N) Up (Down) Down
Risk Weight 20-40 (20-35) 65-75 (65) 80-85 (80-90) 65-70
Allocation 60% (50%)

Silver/GBP

Trend and Risk weight look fairly neutral with a bias o Silver ownership. NO change in 50% allocation. (If end of Nov (next week update) show an uptrend in Monthly whilst Medium term indicators are positive or low risk we will increase allocation from current 50%)
Silver/GBP Month Week Day Hour
Nov 30 close 11.09 (11.12)
Trend Direction Up (Up) Up (Down) N (Up) N
Risk Weight 10-15 (10-15) 35-40 (30-35) 65 (65-70) 40-50
Allocation 50% (50%)

Gold/Silver Ratio

The 25 year high close around 86.00 and LT trend still up we still cannot call a top for the ratio even though tempting sometimes. As a result Silver can still not be seen as the leading metal. Owning Precious metals and probably from a higher base allocation seems evident because almost all LT Metals trends have a lower risk weight and/or in an uptrend. We remain flat, i.e no overweight for Gold or Silver. (The Ratio is semi-volatile range bound closing above 85.00 again. Whilst the nominal price sill hovers around highs of the last 25 years there is no clear signal of an ending uptrend with monthl;y still is clear uptrend with increading risk similar risk weight. Next week's close may turn out crucial. We remain flat for now) All time high: 1941 = 97, 1991 = 90
AU/AG Ratio Month Week Day Hour
Nov 30 close 85.33 (85.33)
Trend Direction Up (Up) N (N) Down (Down) Down
Risk Weight 75-85 (75-85) 80-85 (75-80) 60-65 (50-55) 55-65
Allocation Flat

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

Euro/USD

Another week of 1% rangebound sideways extension. Daily trend turned Up from Down but looking neutral. No change from last week. (Weekly turned Up. This is a signal for the beginning of Eur down trend hesitation. Dollar top in sight therefore but not quite. Stay with 70% hedge on long dollar positions vs EUR)
EUR/USD Month Week Day Hour
Nov 30 close 1.1310 (1.1340)
Trend Direction Down (Down) Up (Up) Up (Down) N
Risk Weight 10-20 (10-20) 20-25 (15-20) 50-55 (50-55) 5-10
Allocation 70% hedge (70% hedge)

USD/Swiss franc

Last weeks range between 0.9930 and 1.00. With Daily trend turning Down the risk of upward pressure increase whilst Monthly and Weekly remain in higher risk territory. No Change in hedge allocation. (Divergence between daily and Weekly will likely push this pair above par again. Same range outlook. No change in hedge for 70% long dollar positions)
USD/CHF Month Week Day Hour
Nov 30 close 0.9970 (0.9970)
Trend Direction Up (Up) Down (Down) Down (Up) Down
Risk Weight 75-85 (75-85) 70-80 (80-85) 20-25 (20-25) 65-75
Allocation 70% hedge (70% hedge)

British Pound/USD

Cable closing on the lows within a 1.5% range. This pair appears to be moving towards a fully hedged short sterling position vs USDollar, but trend/risk position favors a max 70% hedge. (Daily turning up last week indicates bottoming action LT but not quite finished. Stay with 70% short cable hedge)
Cable Month Week Day Hour
Nov 30 close 1.2735 (1.2824)
Trend Direction Down (Down) Down (Down) Down (Up) Down
Risk Weight 10-15 (10-20) 15-30 (30-35) 15-20 (20-25) 5-10
Allocation 70% (70%)

British Pound/Euro

GBP moved slightly lower this week. We remain to keep short GBP position vs EUR hedged at 60%. (This pair saw a slight increase in price last week but looks speculative whilst Trend and Risk are leaning towards a 'potential' move for a weaker pound. Prudence, so no change in short sterling hedge of 60%)
GBP/EUR Month Week Day Hour
Nov 30 close 1.1255 (1.1310)
Trend Direction N (N) Down (Down) Down (Down) Down
Risk Weight 50-55 (55) 45-60 (60-70) 15-20 (20-30) 65-70
Allocation 60% (60%)

Bitcoin/USD

BTC rallied to close the Fri-Mon opening gap of the previous weekend at 4415 reaching a high of 4475. A trend can extend substantially in highly controlled markets and this LT trend is still down albeit risk weight is becoming lower. (A very strong depreciation again closing Friday 23 at 4415. Market turned further south over the weekend with a low of 3653 creating a gap from last Friday's close. We could see a rally into the 4,415+ again which could last severeal days but this market still looks extremely vulnerable given the scare for the vast no of smaller participants. They were likely sellers over the weekend. Interesting that there is just one gap left to fill at 2828. Whilst the LT trend is down any size price move is possible. This is the kind of market where many wealthier non professional investors will be forced out at lower levels still) Remaining 'opening up' gap still to fill at 2828. We excluse 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.
BTC/USD Month Week Day Hour
Nov 30 close 4040 (4415)
Trend Direction Down (Down) Down (Down) Down (Up) N
Risk Weight 10-15 (15-20) 10-20 (25-30) 20-25 (5-10) 25
Allocation 0% (0%)

INDEX: US30, S&P500, Dollar Index, Brent crude oil

Dow Jones

Last week's Daily Low risk pushed the market strongly higher with a near 1200 point recovery. This rally could now last a bit longer but will likely find strong resistance given the continued downtrend at the long end. (Market dropped 1000 points last week and remains hig risk even though daily shows an oversold risk weight. With Weekly in down trend and Monthly in established downtrend Daily risk may give some short term relief but Risk is Down. MT and LT. No change; zero % allocation)
US30 Month Week Day Hour
Nov 30 close 25538 (24286)
Trend Direction Down (Down) Down (Down) Up (Down) Up
Risk Weight 75-85 (75-85) 35-45 (40-45) 50-70 (0-5) 85-95
Allocation 0% (0%)

Standard & Poor 500

130 point recovery still showing the same high risk continuation as DJII. Rallies should be used to unwind remaining positions. (100 point drop last week. No Change; 0% allocation. Same risk analysis as DJII).
S&P500 Month Week Day Hour
Nov 30 close 2760 (2632)
Trend Direction Down (Down) Down (Down) Up (Down) Up
Risk Weight 70-80 (70-80) 30-35 (30-35) 55-80 (0-10) 85-90
Allocation 0% (0%)

Dollar Index

Despite a 30 pip higher close last week, the Daily trend turned down. With Weekly in higher risk downtrend and Monthly still up, the index still has upward momentum to finish. (Index up 0.5 point last week. With hourly oversold, expect some upward pressure very short term. Index starting show some exhaustion. No change. Long dollar positions to remain 70% hedged for now)
USDIndex Month Week Day Hour
Nov 30 close 97.20 (96.94)
Trend Direction Up (Up) Down (Down) Down (Up) Down
Risk Weight 80-90 (80-85) 75-80 (80-85) 55-60 (50-55) 75-85
Allocation 70% (70%)

Crude Oil

Price recovered early in the week towards 61.40 before turning down again. Weekly trend still down but diverging into a possible turn in oversold territory. Daily similar so we are happy to increase to 40% allocation. (Another 13% drop during the week may have come a little early. Daily and weekly risk is low. whilst monthly risk weight has widened. This gives room for a rally short term. We'd feel comfortable with a fresh 30% allocation from 0%)
Brent Month Week Day Hour
Nov 30 close 58.68 (59.20)
Trend Direction Down (Down) Down (Down) Up (Up) Down
Risk Weight 60-80 (65-80) 5-10 (10-25) 10-15 (10-15) 25-30
Allocation 40% (30%)

Posted in A - All Financial Blogs | 2020 Forecast.

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