Volatility of the Copper Markets Combined with the ‘Trump’ Effect

By Stuart Edwards – Re-Blogged From http://www.Gold-Eagle.com

Much like other commodities, traders have always devoted a certain level of attention towards copper. There are two key reasons for this observation. First, this red metal is highly indicative of industrial demand and therefore, the health of domestic economies. Secondly, political policy shifts and fiscal plans can have a knock-on effect in regards to its pricing. We have witnessed a great deal of volatility during the past few months and while the medium-term outlook remains positive, many are wondering if a support level will soon be reached. Let us take a look at the root causes of this volatility as well as what to expect in the coming months.

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The Commodity Cycle: What It Means for Precious Metals Prices

By Stefan Gleason – Re-Blogged From https://www.moneymetals.com

The cycle for any commodity follows the same basic pattern…

When prices are low, production falls. As new supplies diminish, the market tightens and prices move higher. The higher prices incentivize producers to invest in production capacity and increase output. Eventually, the market becomes oversupplied, prices fall, and the cycle starts all over again.

Of course, this is a simplified model of what drives commodity cycles. Booms and busts can be amplified and extended by speculators, by unexpected shifts in demand, or even by interventions from central banks and governments.

Regardless of the causes, commodity markets will always be cyclical in nature. Commodities as a group can be pressured upward or downward by extrinsic forces such as monetary inflation or credit contraction.

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Is The Economy At The Cusp Of The Next Recession…Or Maybe Worse? (Part II)

By Burt Coons (AKA the Plunger) – Re-Blogged From

http://www.Silver-Phoenix500.com

Part II takes a look at the macro economic backdrop for the trade of the year. Spoiler alert- its not a pretty picture, but don’t think doom and gloom, instead embrace crisis and opportunity! With our understanding of the history of oil we now focus on the macro backdrop for our Big Trade.

When the tide goes out you find out who has been swimming naked”– Warren Buffet

“This time around everything gets revealed in the next recession”-Plunger

In the next recession those leaning the wrong way… the levered players, will be forced to heave out their non-productive assets at fire sale prices. Commodity producers with entrenched costs will have to increase production as lower prices beget even lower prices since insufficient cash flows can only be recovered through higher volume production.

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Depression, Stagflation, Stag-Depress-Flation

By Gary Christenson – Re-Blogged From The Deviant Investor

The United States suffered through a deflationary depression in the 1930s. Stock prices crashed, currency in circulation declined, commodity and real estate prices fell hard and human misery prevailed.

President Roosevelt revalued gold from $20.67 to $35.00 per ounce in 1934 – a substantial devaluation of the dollar. Make-work and government spending programs were implemented. War followed the depression. ( https://en.wikipedia.org/wiki/Gold_Reserve_Act )

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How Prices Get Set

By Ted Butler – Re-Blogged From http://www.Gold-Eagle.com

In the quest to explain something that may be complex into something easily understood, please allow me to reference a recent issue most in the US are now familiar with: i.e. the shocking rise in price for EpiPens, produced by the Mylan drug company. An EpiPen is a life-saving medicine in injectable form for those suffering a food allergy attack. Since many of the victims are children unknowingly ingesting what to them is poison, Epipens are prevalent in schools and have become a vital part of life for many families.

Shocking and persistent price increases of many hundreds of percent over the past several years for a drug that hasn’t changed much had finally reached the boiling point of public and political consciousness and all manner of discussion has erupted. This is not a matter, by any means, limited to Mylan, as there have been many recent cases of skyrocketing prices on a variety of drugs. Having gotten my interest, I was sure that when I looked into the matter, I would discover a case of unbridled greed on the part of Mylan. While I wasn’t disappointed by my preconceptions, I also came away with the opinion that it wasn’t quite as simple as that.

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Silver’s New Bull Market

By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com

Silver officially entered a new bull market this week, decisively crossing the necessary +20% threshold.  Speculators and investors alike are returning as awareness spreads of how radically undervalued silver is compared to prevailing gold prices.  When silver awakens to a new bull market after a long bearish slumber, massive gains are usually unleashed.  Silver’s tiny advance so far is just the tip of the iceberg.

This Tuesday, silver surged 4.4% higher on strong Asian bidding in parallel with gold.  The catalyst was fascinating, China finally launching its long-awaited yuan-denominated gold benchmark.  China is the world’s largest gold producer, importer, and consumer, a commanding position that should grant it much bigger say in the gold industry.  The new yuan gold price will ultimately challenge London’s century-old hegemony.

The prospects of more Chinese with their deep cultural affinity for precious metals having easier price discovery and access catapulted silver into bull-market territory.  Its previous best close of 2016 about a week earlier was only 18.5% above its 6.4-year secular low in mid-December leading into the Fed’s first rate hike in 9.5 years.  Tuesday’s big Chinese silver rally boosted this young upleg’s gains to 23.7%.

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Gold Stocks’ Spring Rally

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The red-hot gold stocks have spent most of March in consolidation mode, grinding sideways near their 2016 highs.  Interestingly this month’s rally pause is par for the course seasonally in gold-stock bull markets.  Like gold itself, this sector tends to slump to a seasonal low in mid-March before embarking on a strong spring rally in April and May.  With gold stocks back in a bull, their seasonality warrants consideration.

Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year.  While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals.  We humans are creatures of habit and herd, which naturally colors our trading decisions.  The calendar year’s passage affects the timing and intensity of buying and selling.

Gold exhibits high seasonality, which seems counterintuitive.  Unlike grown commodities like crops, the mined supply of gold is constant year-round.  But supply is only half of the fundamental supply-demand equation that drives pricing.  Gold’s investment demand happens to be highly seasonal, and that’s what sets gold prices at the margin.  Investors favor gold buying far more at some parts of the year than others.

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