1. Gold rally comes to “explosive end”
- The gold rally came to an “explosive end” this week, as Commerzbank described it. Gold lost 6 percent on Tuesday, the largest single-day loss since 2013.
- Silver prices plunged by 15 percent, the largest decline since 2008.
- But the rally may not entirely be over. After a historic bust in 2013, “it took nearly seven years for prices to regain their previous levels,” Commerzbank said. “No such prolonged period is likely this time, however.”
- The reason is that the fundamentals favor gold and silver – negative real interest rates, an unprecedented increase in the money supply and skyrocketing debt. The chance of an interest rate increase in the near-future is nil.
2. U.S. oil production declines from a few companies
- The U.S. accounted for 30 percent of the global quarter-on-quarter decline in oil output in Q2, with production falling by 2.36 mb/d, according to Standard Chartered.
- But the bulk of U.S. oil production declines has come from a surprisingly small number of companies. “50% of the decline in the sample came from the first 3 companies and 80% of the decline from the first 10,” Standard Chartered said.
- The top 3 include EOG Resources (NYSE: EOG), ConocoPhillips (NYSE: COP) and Continental Resources (NYSE: CLR).
- With companies bringing supply back online, U.S. liquids output could rise…