This commentary previously appeared on Real Money Pro on Oct. 15, 2015, at 1 p.m. ET. Click here to learn about this dynamic market information service for active traders.
Despite the bounce-back in equities and a bit of dollar strength, gold has managed to rebound from a 15-minute flash crash this morning to tack on gains. Gold is higher seven of the last eight sessions and continuing to see inflows from CTAs (commodity trading advisers). Major gold producers Barrick (ABX), Kinross (KGC), Newmont (NEM) and Goldcorp (GG) are all little changed after rallying double-digit percent this week on back of the gold price and rumors of consolidation. The tie-up of Barrick and Newmont has drawn speculation for the past decade, but the one to watch is Agnico Eagle (AEM), where superior management from Barrick has migrated.
Base metals remain in a tight trading range as London Metal Exchange members nurse their hangovers from this week's festivities in London. The conversations this week were more focused on the trading companies like Glencore (GLNCY) and Noble than they were on prices. Everyone still seems to be bearish aluminum on supply surplus and hopeful on zinc if Glencore really does cut back 500,000 tons of production. Copper does seem to be forming a bottom in here and has some advocates, but bearish China sentiment continues to weigh on rallies.
Energy loans continue to get mention in bank earnings releases as Citigroup (C) is the largest lender to the patch. Energy companies have sold $61 billion of debt and equity since January, and even though the write-downs got mention from JPMorgan (JPM) and Bank of America (BAC), it seems the banks have offloaded a decent amount of the risk to their client base. WTI has settled back into the middle of the $40/$50 range. I think selling this strangle makes quite a bit of sense for the next few months as inventories will weigh on upside and Vladimir Putin's aggression will support the downside.