Live Stream Commodity Commentary
Carley Garner, futures and options broker with DeCarley Trading, live streams opinions, 
analysis, and insight into futures markets such as gold, crude oil, corn, soybeans, Treasuries, the E-mini S&P and more.
Will natural gas follow oil higher?
Although the oil and natural gas markets face vastly different fundamental stories, they do have a few aspects in common. For starters, we’ve seen oil and gas drilling rig counts collapse to levels not seen since the financial crisis and at a pace we have never seen before. Secondly, both commodities will be influenced by the currency markets and the dollar strength is showing signs of fatigue. Both of these factors should at least provide support to the gas market and might even help pull prices up toward a more equilibrium level.
Treasuries are giving mixed signals, but gravity could take hold.
The mantra, “don’t fight the Fed”, has been the trendy tagline to reference high-flying Treasury securities. This is for good reason, the Federal Reserve unleashed bazooka style monetary policy to combat the COVID-19 virus and its economic effects forcing interest rates toward zero.
The masses seem to have accepted the idea of negative interest rates. In fact, they seem to be expecting it. The Fed isn't expected to make any changes to the Fed Funds rate until we get more clarity on the impact of the COVID shutdown. Thus, unless the bond vigilantes take it upon themselves to push short-term rates into negative territory, it might not happen. Also, now that we've seen the idea of negative interest rates become mainstream, the story might finally have run its course. That’s generally how it works; once a fundamental story becomes seemingly obvious, its implications are already priced into markets, and prices generally reverse against generally accepted expectations.
The Gold-to-Silver Ratio Suggests Silver is a Bargain.
Gold and silver futures generally move in the same overall direction, albeit often at varying paces. Yet, today’s extreme fundamental environment in which the economy has been turned off, but the floodgates have been opened to fear have resulted in the two precious metals taking two very different paths. As investors have turned to gold as a portfolio hedging mechanism, the industrial demand for silver has cooled off. As a result, the gold-to-silver ratio has risen over 100 for the first time in history (at least as far as I am aware). In the past, an excessive gold-to-silver ratio reading has eventually translated into higher silver prices. Will this time be different because of COVID-19? Probably not.
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