Metals, Miners & Macro: RBE's Weekly Market Report + Portfolio Update

Gold, Silver, DXY, GDX, SIL, Bitcoin, Palladium, Platinum, Lithium, Uranium, Fertilizers, Copper, Lumber + RBE's Stocks

Hey gang—commodities powered higher early this week, fueled by a weakening US Dollar stretching last week’s drop—until Friday stalled the rally. The VIX spiked 20%, the S&P 500 fell nearly 2%, and momentum faded. X hummed with a report: “New coronavirus with pandemic potential in China.” Was this the cause for the drop or was it simply that underlying weakness in the equity market is showing through? At RBE’s Substack, we tune out media distractions—price trends tell the true story. Weekly charts cut through the short-term volatility, keeping us locked on the market’s important signals.

We always start our weekly wrap-up with some key macro charts that help us gauge broad commodity sector dynamics. This week, we’ll look at:

• DXY – U.S. Dollar Index

• DBC/SPY Ratio

• JX – TSX Venture Index

• WTI Crude Oil

DXY - U.S. Dollar Index

The US Dollar has undoubtedly been weak over the last few weeks—especially within the context of a resurgence in inflation seen through CPI/PPI reports. Hot inflation readings failing to put a bid under the dollar is a notable character change and indicative of the Fed losing control of taming the problem through policy. That said, the easy part of the selloff is nearing completion—price is trading in a major support zone and likely bounces hard when reached. This will pressure the commodity space in the short term, but we’re seeing encouraging long-term signals emerging that suggest commodities begin to really outperform the broader market. Let’s look at a key ratio below—the relationship between DBC / SPY:

DBC/SPY Ratio:

This chart succinctly answers the question: commodities or stocks in the years ahead? The resounding response from the market = hard assets. This monthly setup has confirmed a multi-year double bottom in the ratio—suggesting that the commodity segment of the market will outperform the stocks in the S&P 500. As investors in the space, this is a welcome signal—capital rotation will provide a strong tailwind for us in the years ahead.

JX - TSX Venture Index

This index is our barometer for risk appetite toward junior resource companies in the commodity space. Price is close to confirming a breakout from its multi-year basing/reversal pattern—but has yet to fire the necessary signals (momentum breakout + high volume confirmation). Positive signals are emerging, however, with price maintained above all key EMAs. If/when this index breaks out, the microcaps within the commodity sector will begin to move higher in tandem across the board.

WTI - Crude Oil

Oil prices have been sliding since producing a false breakout in early January and appear on a fast track to testing the critical long-term support level at $65. Why does this matter for us from a macro view? Oil prices influence the cost of producing other commodities, currencies, and general investor confidence in the health of the economy; it’s often viewed as the linchpin that sets the trend for many other commodity prices.

Gold (Weekly)

We’ve highlighted this level for weeks on end now—and price continues to respect the upper boundary of our Resistance Zone. After 8 weeks of green candles + RSI into nosebleed levels, it’s prudent to expect a consolidation. Let’s look at the 4hr timeframe below to get a better idea of the near-term direction.

Gold (4 Hour Chart)

We’ve noted there is a bearish divergence developing at this critical price juncture. Does this mean the bull market is over? No. Does it support the thesis that a consolidation is due from around these levels? We think so. Price is still above all short-term EMAs—so no confirmation of a deep correction has fired—but we’re expecting price to enter a cooling-off period, likely testing longer-term supports rising from below. Those looking for imminently higher prices will likely be disappointed.

Silver