Metals – FX- Indices – update – close 21 June 2019

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

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 21 June: 1399 (1342)
Trend Direction Up (Up) Up (Up) Up (Up)
Risk Weight 65-75 (65-75) 75-90 (55-80) 85-95 (80-85)
Allocation 60% (100%)

As we analysed in our interim update 20 June, the more critical level to be taken out decisively is 1434. Thus far this market has performed as expected but there is a risk of mild pause or even strong reaction into recent MT support levels now at 1200. That risk can increase very rapidly as both the ST (Daily) risk weight and the MT (Weekly) are showing potential bearish divergence, i.e risk weight is lower at higher current price than previous with a lower price peak. If ST risk weight turns down from this relatively overbought condition, still a LT uptrend but a ST downturn would be reason to lighten the 100% position to 60%. If executed, a clean break upward of 1434 would re-initiate back to 100%.

(The week ended with all time frames in an uptrend. No change as a result)


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

Silver/USD Month Week Day
Close 21 June: 15.31 (14.83)
Trend Direction Down (Down) Up (Up) Up (Up)
Risk Weight 25-35 (25-30) 35-55 (20-35) 80-90 (50-65)
Allocation 100% (100%)

No change: Silver still lagging Gold in the metals rally but risk weight analysis shows substantially more potential whilst a higher ST risk weight shows no imminent divergence.

(Hourly Daily and Weekly time frames are in an uptrend, whilst Monthly hesitates at the 25% risk weight level. No change)


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

Gold/EUR Month Week Day
Close 21 June: 1230 (1195)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 75-85 (80-85) 70-80 (55-80) 85-90 (80-90)
Allocation 60% (100%)

Gold vs EUR shows similar divergence in ST and MT timeframes. The high close of 27 June 2016 needs to be taken out decisively for this market to find unhindered advance towards the 2012 high at 1386. Pure risk demands a (temporary) reduction of the position to 60%. This can be done some time on Monday morning as Hourly risk is trending up (for now).

(Except for hourly nearing oversold risk weight, all listed timeframes are Up. The risk is extended moves as we have seen in equities for years. Therefore stay with trend in this case. No change)


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

Silver/EUR Month Week Day
Close 21 June: 13.46 (13.23)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 40-50 (40-45) 35-55 (25-35) 80-85 (55-65)
Allocation 100% (100%)

A strong rally last week followed by a reversal on Friday. Similar lag vs Gold as against USD but ST Daily trend now turning down. It is a trading toss whether to reduce and come back in later, but we prefer to hold the position and stay with the MT trend in this case.

(Market tanked on Monday and recovered rest of the week with a mild setback on Friday. Daily and Weekly trend are technically dominant, so no change)


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

Gold/GBP Month Week Day
Close 21 June: 1096 (1065)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 75-85 (75-90) 85-95 (80-95) 85-90 (85-95)
Allocation 60% (100%)

Following on from last week GBP eyes stronger technically. We reduce to 60%.

(The same technical picture as against USD and EUR, except GBP looks to become lower risk weight relative to USD and EUR. No change for now)


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

Silver/GBP Month Week Day
Close 21 June: 12.03 (11.77)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 35-45 (35-40) 60-80 (40-65) 80-90 (60-75)
Allocation 100% (100%)

In spit of ST Daily trend turning down with higher risk weight, we stay with the MT and LT trends. A weekly resistance line from June 2016 broke marginally last week and should provide support. NO change.

(Everything medium term technically points towards a higher silver price. 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 21 June: 90.98 (90.03)
Trend Direction Up (Up) Down (Down) Up (Down)
Risk Weight 90-100 (90-100) 85-95 (90-95) 60-65 (80-85)
Allocation 50/50 AU/AG (50/50 AU/AG)

A flat week ended strong again for the Ratio. With multiple divergence building in Daily timeframe and high risk MT and LT timeframes, we need patience with the shared allocation. Because we are reducing various gold positions the virtual allocation of silver is a bit higher than 50/50. The principle now is not to touch silver which still shows more potential to advance.

(The ratio has TRIPLED since the low in April 2011. An unprecedented uptrend with a single 6 months correction in 2015. Risk weight levels remain very high and silver should remain a favorite in the metals space. We stay with a 50/50 distribution between Gold and Silver for Wealth preservationists. Speculators may start to increase the silver component towards 75% for a medium term hold)


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

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

EUR/USD Month Week Day
Close 21 June: 1.1365 (1.1205)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 5-15 (5-10) 40-55 (30-35) 55-70 (60-75)
Allocation 100% (100% hedge)

No change. Our technical analysis is confirmed by market action with nice 1.5% drop in the dollar. The present risk weight indicates a more prolonged weakness of the USD.

(Short term breaking news seems to drive traders, whilst many analysts still predict a strong dollar advance. We believe from our technical analysis that dollar strength is indeed fading and the quick drop of EUR last Friday is just another nail into the formation of a stronger bottom building. No change as the risk is for USD to weaken medium and long term)


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

USD/CHF Month Week Day
Close 21 June: 0.9750 (0.9980)
Trend Direction Down (Down) Down (Down) Down (Up)
Risk Weight 65-80 (75-80) 10-20 (20-30) 10-15 (35-40)
Allocation 100% (100%)

Same picture as EUR. Stay fully hedged.

(This pair may hover around par for a while longer with risk being towards a weaker dollar. No change)


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 21 June: 1.2730 (1.2580)
Trend Direction Down (Down) Up (Up) Up (Down)
Risk Weight 20-30 (15-30) 10-20 (5-15) 50-75 (45-60)
Allocation 100% (100%)

No change. Full hedge on long dollar positions.

(Cable finished the week lower than expected following unsubstantiated political rumour. That is short term and should have no impact on our MT and longer term outlook. Technically we must not speculate on a continuation of lower bottoms and the current risk weight position demands a fully hedged long dollar exposure. 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 21 June: 1.1200 (1.1215)
Trend Direction Down (Down) N (Down) Up (Down)
Risk Weight 50-65 (50-65) 0-5 (0-10) 15-25 (15-25)
Allocation 100% (75%)

The slight drop below 1.1200 and current timeframes risk weight lowers the risk of being fully hedged on short GBP exposure. We increase to full hedge at 100%.

(Hovering around the 1.1225 level all week, risk weight in different time frames demands the higher hedge of short GBP or long EUR exposures. No change in GBP favoured over EUR by 3 to 1)


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

BITCOIN BTC/USD Month Week Day
Close 21 June: 10160 (8650)
Trend Direction Up (Up) Down (Down) Up (Up)
Risk Weight 40-70 (35-60) 85-90 (85-90) 90-95 (60-75)
Allocation 0% (0%)

The high this weekend is $11,120. This market is so incredibly speculative with 2 or 3 major market makers driving crypto bugs into potential fast money again. This is possible because there is no proper regulation against this type of consumer directed market manipulation and these same market makers apparently have a huge windfall and can afford to fight this mental battle. From a risk perspective this crazyness must not part of our programme until it becomes properly regulated. The wrong perception and normal human greed drives small investors into a high risk long position where as usual most people buy high and sell low. For existing long BTC holders this is of course great, but only if they are setup to also sell again vs fiat currency.

(BTC blasted through 9000 this weekend. The crypto community i extremely bullish with forecasts floating of 50,000 plus within 1 or 2 years. This is a very hot kitchen and not for the faint hearted. Technically still very high risk because this market is completely controlled but just a few major players. No change and no more than lost opportunity)

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, Dollar Index, Brent crude oil

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

US30 Month Week Day
Close 21 June: 26719 (26089)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 80-85 (75-80) 50-75 (30-45) 90-100 (85-90)
Allocation 0% (0%)

We remain uninvested in this index as technical risk simply demands it. It clearly has been a major opportunity loss the past 6 months in what can be considered unprecented times and events. As long as opportunity loss is not a real loss, even after inflation considerations, we feel comfortable staying out.

(Approaching the highs again without technical risk weight confirmation. This is a potential investment divergence risk greater than the BTFD opportunity. Great till it ends. No change from our October 2018 stance)


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

Standard & Poor 500 Month Week Day
Close 21 June: 2950 (2887)
Trend Direction Up (Down) Up (Up) Down (Up)
Risk Weight 80-90 (80-85) 55-75 (40-50) 90-100 (85-90)
Allocation 0% (0%)

No change. Of course the S&P risk analysis usually runs symmetrical to INDU. It has been an amazing ride for hardcore index investors, but the risk is simply not attractive at all. Something needs to change in the long term risk position for us to deliver a new long position.

(Same picture as INDU. This is a trading market for very short term positions only. There are technical opportunities intra-day playing hourly vs daily and daily vs weekly, but investment risk in these indices is high. Individual stock opportunities are different but tyhe technical picture smells like a slowdown is on its way. No change)


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

USD Index Month Week Day
Close 21 June: 96.10 (97.45)
Trend Direction Down (Down) Down (Down) Down (Up)
Risk Weight 80-90 (85-95) 35-50 (55-65) 15-35 (25-40)
Allocation 100% (100%)

No change. Long dollar positions against the other majors to remain fully hedged.

(The index technically confirms our analysis of the USD vs other majors. Owning future dollar income without a hedge is a high risk. We stay at 100% cover)


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

Brent Month Week Day
Close 21 June: 65.35 (62.84)
Trend Direction Down (Down) Up (Down) Up (Down)
Risk Weight 40-50 (40-50) 20-25 (15-25) 50-75 (10-20)
Allocation 50% (0%)

On Thursday we took a 50% and slightly opportunistic allocation in Brent crude based on an upturn of ST risk weight in Wednesday. This is purely technical and not based on Strait of Hormuz activity. If Daily diverges strongly from Weekly in the coming days we may reduce the position again.

(Crude is a bit similar to Gold but in opposite direction. Trends are down even though marginally. Dollar weakness may trim oil price decline. Short term news about possible Iranian activity does not affect the fundamental demand for oil based on economic activity long term. It appears weak and technicals confirm this. For now at least and we stay without any position in oil until a break to the upside materializes. We may get there soon with risk weight where it is, but not quite yet)

Posted in A - All Financial Blogs | 2020 Forecast.

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