A few weeks ago I wrote about the large managed money/hedge fund short positions in Palladium, corn, and soybeans in the futures market. At the same time, all three of these commodities had net long positions from the large producers, merchants, and swap dealers. Typically, those players in the futures market are always net short, as they use the futures markets to hedge their real world business activities, making a net long position bullish. The pure price speculators tend to be wrong at major market tops and bottoms. So, when you see those people net short, while the real world big business operators are net long typically it is a major bottom being made.
However, that doesn’t mean something is going to instantly rally.
Here is a chart of palladium.
It looks to me that palladium is in a stage one base.
It’ll take a close above the 1090 level, it’s 200-day moving average, to move it into a stage two bull market.
I’m not sure when that will happen, but I do believe it will at some point, and when it does I expect we’ll see palladium prices more than double, and those short forced to cover.
Typically, in a metals bull market gold goes up first and then silver and other industrial metals follow. All of them have now broken out except for palladium and platinum.
For instance, here is the BCIM ETF, which I bought back in March and talked about back then. It owns aluminum, copper, lead, and zinc.
BCIM was in a stage one base when it was trading below $22 and above $20.
It cleared $22 in March and early April and is now in a stage two bull market, with lots of upside.
For me, this position in BCIM is an investment that I hope to hold for long-term capital gains and not a day trade or short-term play.
That’s really how I am thinking about positions in commodities now.
I wanted to put in a buy to play a palladium short squeeze.
The largest palladium mining company is based in Russia.
The second largest is Anglo American Platinum and then Sibanye Stillwater, with operations in Africa.
The latter pays an over 8% dividend and its chart price action is closely correlated to that of Palladium.
I own shares of SBSW.
BTW – I didn’t buy it, but corn, which I mentioned the other week, did indeed break out.
On Friday, it closed right on its 200-day moving average.
Soybeans also are now on the verge of breaking out through their March highs.
I have no opinion on the stock market one way or the other right now.
The China market was closed for the last three days of last week, so there was no gold buying coming from there.
Americans have been net sellers of the GLD ETF all year and have zero interest now in what is going on in the precious metals markets or commodities, judging by Google search data.
I’ll be watching to see if the Chinese stock market breaks out this week.
Also, did this interview with Jim Goddard of www.howestreet.com.
Whenever I post something on a social media website that is critical of what big tech companies are doing – or skeptical of their innovations – it gets zero views, like it’s shadow banned. Either that, or people truly do not respond to such posts so the algos don’t show them. Big tech is going through an evolution to the destruction of news outlets, but no one knows about this or cares it seems.
-Mike
