Gold, Silver, Copper Testing Six-Year Lows

With the dollar having recently risen to a new seven-month high, commodity prices are in retreat. The brown line in Chart 1 shows the CRB Index (of nineteen commodity markets) falling to the lowest level since August (through yesterday). That commodity selling started in mid-October just as the U.S. Dollar Index started rising. A rising dollar almost always results in lower commodity prices (and stocks tied to them). The commodity selloff has been quite broad and includes industrial and previous metals, energy prices, and agriculturals. Several of those markets are testing six-year lows.

dollar_12nov15
The orange bars on top of below chart show the price of gold falling back to its summer lows. [So have silver, palladium, and platinum]. That has pulled gold and silver miners lower. Industrials metals like aluminum and copper are also under pressure. The red bars in the chart below show copper testing its 2015 lows as well. A drop into new lows would put that economically-sensitive commodity at the lowest level in six years. That has hurt copper shares.

copper_12nov15

The first chart below shows the Global X Copper Miners ETF (COPX) falling back to its September low. Its red relative strength line also turned down in mid-October (when the dollar started rising). [Aluminum and steel stocks are also under pressure]. The same is true of gold and silver shares. The chart below shows the Global X Silver Miners ETF (SIL) in a similar situation, as are gold miners (GDX) on top of the second chart below. All are reacting badly to a rising dollar. And all are weighing on the broader market.

copper_miners_12nov15

silver_12nov15

Courtesy: StockCharts.com

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