Written Commentary
GOLD & SILVER
The views that gold prices are being pulled higher by Bitcoin are dealt a blow this morning with gold at times trading nearly $40 an ounce higher and bitcoin at times trading $2000 lower. Another potential myth regarding the record run in gold is talk that global central bankers are dumping the dollar in favor of long gold positions. While we suspect central bankers have investment plans in motion to buy gold, the dollar has not suffered from a massive rotation. On the other hand, hedge fund managers continue to their build their long positions. So far, small investors have not rushed into gold ETF holdings with current gold ETF holdings down 4% versus holdings at the beginning of the year. Nonetheless, the gold trade remains fixated on the perception that the US and other central bankers are poised to cut rates despite the potential to rekindle the smoldering embers of inflation. In retrospect, gold open interest fell back sharply last week following a blowoff rally and reversal and now looks to rebuild in a fashion that confirms the upward bias. Not to be left out, silver has also managed a range up extension but remains well below its March highs and adjusted for the gains since the last positioning report was measured silver likely has the largest net spec and fund long since April 2022.
COPPER
Apparently, the copper trade has been able to discount last Friday’s 1.8% week over week jump in Shanghai copper warehouse stocks, which is surprising considering the rapid “trend” of building stocks at the exchange. However, copper should be cheered by a favorable Chinese Caixin Manufacturing PMI reading for March, but the gains were fractional. Perhaps the trade is cheered by signs of reduced refined copper production plans from several Japanese companies for the first half of 2024. Unfortunately for the bull camp. the net spec and fund long positioning in copper is burdensome with the May contract at this morning’s high sitting nearly 7 cents above the level where the report put the copper market at the largest net spec and fund long since April 2022.
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