First, I wish to say Completely happy Holidays and Merry Christmas to all of you; 2020 was a difficult 12 months for all of us and fully unprecedented. 

This week began with a bang on December twenty first, with silver having a $2.51/ozvary and Platinum fluctuating $134.4/oz. One lesson I’ve realized in 2020 is that volatility can come out of nowhere and at any hour, day or evening, and in any commodity. With futures buying and selling practically 23 hours a day, it is likely to be sensible to make use of resting good-’til-cancel orders to benefit from these wild swings. 

Planning ahead, the primary half of 2021 ought to proceed to assist a number of commodities on our radar, whereas the again half will give Gold a renewed raise. For these perma-bulls on gold/gold miners, it isn’t that Gold won’t carry out within the first half; it’ll simply underperform different asset lessons leaving these lengthy scratching their heads asking why. Merely put, investor asset allocations are shifting in direction of greater progress, greater inflation trades with the main focus across the new administration’s insurance policies with the potential of the economic system reopening. How do I do know this? It is clear by the efficiency over the fourth quarter futures costs in a number of asset lessons and particular person commodities. 

Digging into the main points, the tier one prime three performers are Lumber (+42%), Russell 2000 (+38%), and Heating oil (+32%), whereas tier two standouts are Platinum (+22%), Copper (+19%), Crude Oil (+18%) and Silver (+11%). The place is Gold, you may ask? Gold (unch) is following the opposite rate-sensitive merchandise 10-Yr Observe (-1.22%) and the 30 Yr Bond (-2.50%). What I imagine will occur is that the tier two performers will catch as much as the highest performers whereas the 10-Yr Treasury yields will proceed to punch greater by 1% and in the end as much as 1.59% by mid-2021.

10-Yr Yield Chart

There are two factors to establish on this chart: the October 2018 excessive that marked the highest in yields, and March 2020 low that didn’t retest in August and signaling the underside in yields. 

Gold Futures Chart

Conversely, there are two factors to establish on this chart: the October 2018 low that marked the underside in Gold and the August 2020 excessive that signaled Gold’s prime. 

For some purpose, and this being primarily a “bullish gold” web site, I really feel the necessity for justifying my causes for not being a “perma-bull” on Gold however slightly a “cycle-investor”. Subsequently once we see the cycle prime in financial information and Treasury yields, I’ll be a part of the plenty once more as a Gold bull or if it can string a sequence of “greater highs and decrease lows” technically. 

Different Markets/Concepts

With time slicing brief earlier than I begin a street journey to my mother and father for Christmas, I wish to throw out a few of our concepts we’re placing to work. (apologies for grammar or not going into element on every). 

Excessive Conviction trades for 2021

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1. Lengthy April Silver 29.50-35.00 name spreads 
2. Lengthy February Copper 360-365-368 name butterflies
3. Lengthy March 10-Yr Observe 138-135 put spreads
4. Lengthy February mini Crude Oil futures utilizing a scale in strategy at three and four-star assist ranges. 
5. Lengthy March Copper futures from three and four-star assist ranges
6. Brief March U.S. Greenback futures towards three and four-star resistance ranges
7. Lengthy January Platinum Futures

Further Concerns

1. Lengthy the March Micro Russell on a correction to a few and four-star assist ranges
2. Lengthy the March Canadian Greenback (it’s a commodity forex that works inverse the U.S. Greenback.

Final notice, the 2021 commodity calendars arrived on the workplace, so our advertising staff constructed the labels and despatched them out within the subsequent week. For those who didn’t request one, accomplish that right here as we bought only a restricted quantity. *Out there to U.S. residents solely. You’ll be able to request yours right here:  Blue Line Futures 2021 Pocket Calendar.  

Good luck and good buying and selling