Metals – FX- Indices – update – close 12 July 2019

GOLD: Gold vs US Dollar, Euro and GBP

Gold/USD Price Live, Weekly risk position analysis relative to Hourly, Daily, Weekly and Monthly data
(Previous week in brackets)

Gold/USD Month Week Day
Close 12 July: 1415 (1398)
Trend Direction Up (Up) Down (Down) Up (Down)
Risk Weight 70-85 (70-85) 80-85 (80-90) 50-60 (75-80)
Allocation 60% (60%)

Daily Gold chart suggests lower risk of a more substantial correction, however no definitive technical view. If, during the coming week we approach 1390 and the ST Daily shows risk weight divergence vis a vis the MT Weekly we return to 100% invested.
A clean break of 1434 on Daily basis opens a clean air market and return to the 1800 level with a full allocation. These are the triggers, so no change for now.

(Market talk is bulllish, but technical indicators and market behavior are telling us to be very cautious. Risk weight and trend at this moment shows higher risk of possible further correction, the extend of which is always unknown. No change)


Gold/EUR Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Gold/EUR Month Week Day
Close 12 July: 1255 (1245)
Trend Direction Up (Up) Up (Down) Up (Down)
Risk Weight 80-90 (80-90) 75-85 (75-80) 65-70 (75-85)
Allocation 60% (60%)

A huge price to risk-weight bearish divergence in MT Weekly time frame confirms the temporary downside risk for gold. Gold vs Euro now trades at 90% of the all time high recorded in September 2012. We would be looking to get back into full allocation either if Gold/USD breaks 1434 or a price correction that delivers bullish divergence in ST Daily timeframe or a risk-weight divergence between daily and weekly.

(Technical risk favors same caution. No change)


Gold/GBP Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Gold/GBP Month Week Day
Close 12 July: 1126 (1115)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 85-95 (85-95) 85-90 (85-95) 70-80 (75-85)
Allocation 60% (60%)

Gold/GBP is at 94% of the all time high recorded in Sept 2011. Large correction risk appears more limited but not out of the woods. Given trend direction we also wait for full allocation if Gold/USD breaks above 1434 or a bullish divergence in ST timeframes.

(Same risk caution appliers to this pair. No change)


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

Silver/USD Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/USD Month Week Day
Close 12 July: 15.20 (14.97)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 25-35 (25-35) 60-70 (60-70) 40-50 (50-65)
Allocation 100% (100%)

Silver still shows relative weakness, but risk-weight remains at much lower levels than gold with trend direction still in favor of upward movement. No change.

(The technical position for Ag/USD still looks stronger than gold, but we have short term doubt about not having reduced our risk. Silver still gets hit hard on every opportunity which remains extremely suspect of large scale manipulation. Given our lower risk stance of Gold we prefer holding full allocation in Silver as a long term low risk play)


Silver/EUR Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/EUR Month Week Day
Close 12 July: 13.48 (13.33)
Trend Direction Up (Down) Up (Up) Up (Down)
Risk Weight 40-50 (40-45) 60-70 (60-65) 40-50 (50-65)
Allocation 100% (100%)

Same picture applies to Euro where the price chart is also challenging a resistance level currently at 13.48. If that breaks there is light into the 17.00+ level or 20%. We stay with full allocation.

(The uptrend which started in May has not shown any high risk development in spite of a ST downtrend in force. We hold the fully allocated position)


Silver/GBP Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/GBP Month Week Day
Close 12 July: 12.09 (11.94)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 40-55 (40-50) 75-80 (75-80) 55-65 (60-80)
Allocation 100% (100%)

Silver/GBP sits just above the 2016-2019 resistance line with a mixed trend and risk-weight level. We stay with full allocation and the LT trend.

(A pause in the rally that started early May and a further ST price decline is entirely possible. The LT trend however still shows strong support for an advance towards the end of Q3. No change)


Gold/Silver Ratio Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GOLD/SILVER Ratio Month Week Day
Close 12 July: 92.75 (93.03)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 90-100 (90-100) 85-95 (85-95) 75-85 (80-85)
Allocation 50/50 AU/AG (50/50 AU/AG)

MT Standard deviation resistance is at the 102 level. With the ratio above LT historic highs and risk weight in overbought territory we feel comfortable staying with even a slight overweight Silver to Gold allocation.

(The incredibly persistant and slow advance higher of the ratio is not at all supported by Risk weight position from ST to LT. It tells us to be patient and stay with the more or less equal distribution between Gold and Silver holdings. Holding on fully to Silver ag fiat currency and with a lower risk allocation to Gold, the math would demand a slightly smaller Silver holding, but this risk aspect only applies to very large positions. The true calculated exposure therefore is now 37.5/62.5 Au/Ag. The 50/50 allocation is a guideline for all positions, old and new)


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

EUR/USD FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

EUR/USD Month Week Day
Close 12 July: 1.1270 (1.1220)
Trend Direction Up (Up) Down (Up) Up (Down)
Risk Weight 10-20 (10-15) 55-65 (60-65) 20-30 (35-45)
Allocation 100% (100% hedge)

Technically (and fundamentally) there appears to a fight for survival of the world reserve currency going on. Trend and risk weight demands a fully hedged long dollar exposure.

(Last week's range showed a relative large drop (USD strength). The rapid ST risk weight reduction supports staying fully hedged on long Dols)


USD/CHF FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

USD/CHF Month Week Day
Close 12 July: 0.9830 (0.9910)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 45-65 (50-65) 15-25 (10-20) 65-80 (50-55)
Allocation 100% (100%)

Trend and risk weight across time frames confirms that long dollar exposure should remain full covered for the normal transaction risk horizon which typically is 6-9 months.

(Unless the USD breaks that imaginary 8 year resistance we continue to advise a fully hedged long dollar exposure. This market, from a more speculative point of view, looks it may test the 1.01 level again in the near future. It may be appropriate therefore to hold new long dollar exposures and achieve a 1 to 2% higher value vs CHF)


Cable GBP/USD FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GBP/USD (Cable) Month Week Day
Close 12 July: 1.2560 (1.2515)
Trend Direction Down (Down) Down (Up) Up (Down)
Risk Weight 10-25 (15-20) 10-20 (15-20) 15-30 (20-30)
Allocation 100% (100%)

Cable tried to challenge the Dec 2018 lows last week but recovered slightly from 1.2440 to 1.2560. In spite of a relatively strong USD, the Trend and risk weight levels across time frames call for a fully hedged long dollar transaction exposure. I.e losing on this position appears a lower risk than vice versa.

(It looks like Cable may test the early January low at 1.24. Risk weight however shows very potential bullish divergence against price. This risk position demands staying with a fully hedged long dollar exposure)


USdollar Index Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

USD Index Month Week Day
Close 12 July: 96.72 (97.17)
Trend Direction Down (Down) Up (Down) Down (Up)
Risk Weight 75-85 (75-90) 30-40 (25-35) 60-75 (50-55)
Allocation 100% (100%)

The dollar index which tracks the value of USD vs major world currencies remains in that broader 95 to 98 price range. We recommend no change to a full hedged long dollar exposure.

(The picture is changing a little in favor of the USD this week but the LT risk weight and trend still require to manage risk based on a fully hedged long dollar exposure. The 95-98 broader range needs to be broken to change or confirm our current allocation. No change)


GBP/EUR FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GBP/EUR Month Week Day
Close 12 July: 1.1145 (1.1151)
Trend Direction Down (Down) Down (Up) Up (Down)
Risk Weight 30-45 (25-50) 0-10 (0-10) 15-30 (20-25)
Allocation 100% (100%)

Short GBP exposures to remain fully covered with fwd contracts. No change.

(Sterling still has strong 3 year support at 1.07 with the upper range resistance at around 1.1800. We stay with the fully hedged short GBP exposure as initiated middle of June)


BTC Bitcoin Price, Weekly risk position analysis based on Daily, Weekly and Monthly data

BITCOIN BTC/USD Month Week Day
Close 12 July: 11757 (10985)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 55-75 (55-75) 65-80 (75-85) 55-60 (30-40)
Allocation 0% (0%)

This crypto looks a little heavy but is so volatile and unpredictable that it still cannot be part of a responsible investment portfolio. That view and those times may change if the monetary system is sufficiently moving into wider commercial acceptance of crypto tokens. That moment actually may be closer than most people think. No change otherwise.

(The past full week for this 24/7 traded crypto has been as wild as before with another 30% price trading range. Technically this looks like a pause in the wider risk weight spectrum with some (significant) price erosion before another attempt to rally with fierce momentum presents itself. This remains a no risk zone for us and only for speculators that can afford to loose 30 or 40% at these levels or at any level for that matter)

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 risk position analysis based on Hourly, Daily, Weekly and Monthly price data

US30 (Dow Jones) Month Week Day
Close 12 July: 27332 (26922)
Trend Direction Up (Up) Up (Up) Up (Up)
Risk Weight 80-85 (80-85) 90-95 (85-95) 80-90 (90-95)
Allocation 0% (0%)

The easy call is to follow price, a promise for lasting low interest rates and further announcements of large scale stock buy backs with borrowed money. The risk-weight numbers unfortunately demand a low risk approach which means no allocation. It is a missed opportunity and one we need to swallow. Question is where to put one's excess funds? Certain mining stocks, certain residential and/or commercial real estate and strongly established Crypto exchanges in major financial centres if they offer a tradeable token. As more of these new crypto exchanges are going global this is an area of investment to closely watch. No change for the Dow allocation at 0%.

(Bearish divergence in all time frames makes this index a high risk affair at these levels. We simply must not participate until a more realistic risk weight and trend position ensues)


S&P 500 Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

Standard & Poor 500 Month Week Day
Close 12 July: 3014 (2990)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 85-90 (85-90) 90-95 (80-95) 85-95 (90-100)
Allocation 0% (0%)

Even though we are seeing a mind blowing price level, the risk weight is simply not in favor of any allocation. The same view applies to this S&P broader index as INDU.

(Except for the daily ST chart, bearish divergence risk weight in MT and LT also makes this index a high risk affair at these levels. We simply cannot participate until a more realistic risk weight and trend position develops)


Brent Crude oil Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

Brent Month Week Day
Close 12 July: 67.00 (64.44)
Trend Direction Down (Down) Up (Up) Up (Up)
Risk Weight 35-45 (35-45) 30-40 (25-35) 75-90 (50-55)
Allocation 0% (0%)

Crude is a tougher call and we are a bit uncertain. Having gone from long to flat again last week this market appear to show be showing price support at the 61.00 level. Since the April high at 75.60 we haven't yet seen a proper bottom and in fact we haven't seen a proper technical bottom since the Dec 2018 low, which we missed because the Monthly time frame still showed a strong downtrend. That is a potential risk (picking bottoms) that appeared too high at the time. No change for now and for the same reason. LT Monthly trend is down.

(Poor technical risk also leads to potential opportunity loss, but the oil market is not showing any clear direction at which can only lead to wilder swings in a broader price range. This market like some other pairs above are now more speculative tradeable markets based on hourly and ten minute indicators. From the position of a more MT risk management approach with only weekly updates the more speculative approach is not covered)

Posted in A - All Financial Blogs | 2020 Forecast.

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