Brad Yates

Brad Yates is the global head of trading at Elemetal Capital, a multinational integrated precious metals company headquartered in Dallas. Brad is responsible for global hedging implementation and proprietary trading, as well as longer-term strategy for the risk management team. His areas of expertise are macroeconomic analysis and derivatives, especially as they influence the precious metals space.

Articles by Brad Yates

• Metals Thoughts: Channel change

  Thursday, September 21, 2017

  ​The FOMC elected to hold rates steady yesterday to no one's surprise, but their forecast still calls for one more hike this year and three next year in addition to ​a $10 billion per month reduction in the balance sheet (currently around $4.7 trillion).

• Metals Thoughts: NoKo a go go

  Tuesday, September 12, 2017

  On Friday, gold failed the $1,350 breakout resistance among a stronger dollar and higher yields as Hurricane Irma shifted away from the most disastrous course and North Korea (NoKo) did not launch an ICBM ahead of their Founder's Day celebration. I've even heard some pundits say that disaster recovery is actually the fiscal stimulus we have been waiting for.

• Metals Thoughts: Crowded movie theater

  Tuesday, September 05, 2017

  It seems almost immediately after I wrote that the rally in gold was overcooked (at $1,295 spot) and would likely not break $1,300 that the 10-year yield broke below 2.15 percent and has been on a tear ever since (currently 2.078 percent).

• Metals Thoughts: Back to school

  Thursday, August 24, 2017

  ​We've taken a couple months away from publishing Metals Thoughts as it became a bit tedious to dissect every move plus/minus $35 on either side of $1,250 due to a misspelled tweet. With gold continuing to hold just below the $1,300 resistance for the third time this year and traders coming back from summer vacations, it seems prudent to get back in the habit.

• Metals Thoughts: End the Fed (holding of treasuries)

  Thursday, June 15, 2017

  ​We are halfway through a busy back-half of the week from a central bank perspective. The FOMC yesterday raised rates as expected and maintained their view that three total hikes for 2017 are likely. Rates traders seem to disagree with aggregate odds of a further hike in Fed Futures at 43 percent, and OIS implied 47 percent.

• Metals Thoughts: Eye on the vol

  Friday, May 12, 2017

  With French elections out of the way (for now) and basically all economic data continuing its trend of low growth, strong labor and retail demise, there isn't a lot on the calendar to cause a paradigm shift. At the end of the day, our view is that time and politics mostly don't change markets — rates do.

• Metals Thoughts: Peak populism

  Tuesday, April 25, 2017

  ​The first round of the French election pretty much went the way that risk markets were hoping for. We have since seen the dollar sell off to a post-election low of 98.7, particularly against the EURUSD (1.07 to 1.095), with equity markets rallying, rates moving higher and a general risk-on sentiment.

• Metals Thoughts: Same as the old boss

  Tuesday, April 18, 2017

  ​We seem to be gearing up for the next overreaction as markets and President Donald Trump learn that it's difficult to implement immediate change from the executive office. Geopolitical strife and some disappointing U.S. data managed to give us a bid last week and push us up out of the two-month $1,200-1,260 range amidst dollar weakness, but the last few days have seen a slight reversal of trend.

• Metals Thoughts: Mandate death trap

  Tuesday, March 28, 2017

  ​For the second time in a month, gold has challenged and failed the downsloping 200 DMA, but this time having significantly more support from other macro inputs, DXY and rates particularly. President Donald Trump seems to prefer personal experience to observed wisdom by undertaking the Sisyphean task of healthcare reform, only to be chased down the hill by the rock. The loss has many punters doubting the strength of his mandate for reform and considering the many factions within the GOP to perhaps be more formidable than prior thought.

• Metals Thoughts: When the levee breaks?

  Tuesday, March 21, 2017

  ​After the FOMC hike Wednesday, we saw a nice little relief rally, driven mostly by spec short covering. The last couple of days have been quiet, with $6-$8 daily high-low ranges abounding. Implieds are getting sold with both hands, with both one-month and one-year tenors at multiyear lows.

• Metals Thoughts: The heavy load

  Wednesday, March 15, 2017

  The pace of headlines not directly related to President Donald Trump seems to be picking up a bit: Fed hikes, inflation vector shift higher, crude volatility, Brexit, whatever cute name Scottish Exit will get this time, Dutch/French elections, just to name the primary ones.

• Metals Thoughts: Light at the end of the tunnel

  Tuesday, March 07, 2017

  Gold prices are off about $25 in the last week and silver off an impressive $1.50. Our gold longer-term models based on rates and currencies still show some further weakness to come, but I think that with the Fed March hike now priced in and some support from moving averages, it’s more of a mixed bag. We’ve been doing some work here at analyzing prior recent low-volatility regimes and their duration/outcomes, which can be seen in Table 1 of this edition of Metals Thoughts.

• Metals Thoughts: Pick your paradigm

  Tuesday, February 28, 2017

  Gold broke but could not hold the 200 DMA at $1,262 Monday, and we are viewing that as a technical failure here. It is the first time since Nov. 10 that we have looked at the other side of that fence, so there is still some encouragement to be gained from the experience.

• Metals Thoughts: Channel surfing

  Wednesday, February 22, 2017

  ​When I left the desk two weeks ago, gold was trading at $1,235 and hasn’t gone more than $20 either way from there since. With most headlines these days high on apoplectic shock and low on actual economic substance, we are all basically reduced to spewing ideological confirmation bias instead of looking at asset prices.

• Metals Thoughts: Are you not entertained?

  Tuesday, January 31, 2017

  ​It seems we have gotten a small dose of the "Bad Trump" effect ​we spoke of last week. Sure enough, DXY and yields are slightly lower, all while the Chinese New Year has many out of office. We still face some technical resistance through the recent $1,220 highs and will likely need help from the FOMC to talk down the dollar a bit further with some dovishness, but at least the rollover from a week ago has been stemmed for now.

• Metals Thoughts: Bad Trump and the buck

  Tuesday, January 24, 2017

  Occasionally, there doesn't seem like too much color to add to the market as it is fairly straightforward. When the macro world's focus turns to all things USD and U.S. rates, we tend to see a really high negative correlation between USD and gold and, interestingly, a drop in realized volatility for metals. We have both of those going in spades right now as 40-day rolling correlations with USD/JPY are at minus-87 percent and 10-day even stronger at minus-94 percent.

• Metals Thoughts: Hard Brexit and soft dollar

  Tuesday, January 17, 2017

  ​Just when it seemed that gold had perhaps run out of steam trying to break the $1,200 mark, Donald Trump's press conference was scary enough to many investors to get the USD to weaken a bit and rates to come off and allow for further upside in metals.

• Metals Thoughts: Abandoned resolutions edition

  Tuesday, January 10, 2017

  We've been content to sit on our hands once the rally started, as it only seems to be a slight unwind of some of the frothiness that macro markets have priced in for the Donald Trump rally. Our first real tests are approaching quickly with gold's 50 DMA at $1,192 and a slew of support for the USD about $.50 below here.

• Metals Thoughts: A perfect 10

  Tuesday, December 13, 2016

  Trumpflation — or whatever you want to call it — has basically been priced into markets for perfect execution. The dollar remains incredibly strong against pretty much any cross, up 5 percent in the broad indices and as much as up 16 percent against what had been the darling of the year, JPY.

• Metals Thoughts: 1 hike to rule them all

  Tuesday, December 06, 2016

  ​We seem to have settled in just a bit over the last couple of weeks, and while the downtrend since the U.S. election is still in place, we have had a few days respite from the selloff and seem ready to challenge the downtrend to the upside.

• Metals Thoughts: Midnight diplomacy edition

  Tuesday, November 29, 2016

  The USD is taking a slight breather from its one-way appreciation trade, and that has given metals an opportunity to form something of a base in the last couple of sessions. The ETF selling continues at a pretty steady pace and has done nothing but liquidate since early November.

• Metals Thoughts: Brave new world

  Tuesday, November 15, 2016

  By now you have already read a thousand articles about "What Donald Trump means for _____," and I'll try and avoid that sort of simplistic analysis — primarily, because that assumes certainty in even the beginning of the probability tree, which I don't think even the president-elect has just yet.

• Metals Thoughts: Good night and good luck

  Tuesday, November 08, 2016

  ​There is little I can add in the way of insight into the political outcome for today's general election, but we can look at the way the chips are stacked for some insight into the potential market reactions. Hillary Clinton's odds for victory look to be anywhere between 70 and 84 percent, depending on which poll aggregator model you use. Most Wall Street polls I have seen skew toward the higher end of that, though there is some innate selection bias.

• Metals Thoughts: Subpar Tuesday edition

  Tuesday, November 01, 2016

  With the election only one week away, FOMC tomorrow and nonfarm payrolls on Friday, it's not surprising to see implied volatility catching a bid here, especially as both gold and silver have been able to sustain the upward sloping support from the respective 200-day moving averages.

• Metals Thoughts: Ample support edition

  Tuesday, October 25, 2016

  The big stories this morning all seem to be revolving around base metals/broad industrials, and that has given a bit of a bid to the precious complex in spite of some continued dollar strength. Both gold and silver are hovering around their 200-day moving averages, with gold slightly below it and silver just above — neither of which is much of a change over the last few weeks since the drop in early October.

• Metals thoughts: Sudden stop edition

  Tuesday, October 11, 2016

  Gold and silver both seem to have arrested their falls over the last week, with both sitting squarely on top of their 200-day moving averages. The almost relentless dollar strengthening since mid-September has pretty much every opposing currency weaker, and that has had a follow through to metals across the board.

• Metals Thoughts: A look over the edge

  Tuesday, October 04, 2016

  ​With Golden Week (China) and Rosh Hashanah both occurring, trading volumes are noticeably lighter. Some stronger-dollar, higher-yield dynamics have put precious metals on the back foot. Interestingly, much of this is going on as some of the U.S. economic tailwinds are decreasing a bit.

• Metals Thoughts: Home on the range

  Wednesday, September 28, 2016

  We've had an incredibly quiet last few sessions since last week's FOMC/BoJ shenanigans, and the resistance of the 50 DMA seems to have held for now around $1,333. As you would expect, implied volatility has pretty well collapsed and 1M gold vols are the lowest since July 2015.

• Metals Thoughts: Bank doubleheader

  Tuesday, September 20, 2016

  ​The next 36 hours or so are likely to have an outsized effect on capital markets the world over as we get the Bank of Japan (BoJ) statement tonight and the Federal Open Market Commitee (FOMC) announcement and presser tomorrow afternoon.

• Metals Thoughts: Failure to yield

  Monday, September 12, 2016

  ​The broad commodities indices have seen decent selling so far today, with generally all risk assets getting some to some extent or another. The tone flipped last week when the ECB failed to meet extremely dovish expectations, and bond crowned prince Jeffery Gundlach made broad prognostications (again) for the case for going to cash amid some mild hawkishness.

• Metals Thoughts: The almighty dollar

  Tuesday, September 06, 2016

  Welcome back from the long weekend (or perhaps even the long summer). We are basically flat to prices from the first of July, and volatility has been coming off accordingly. As the new school year begins, we have new opportunities, but the low volatility regime is likely to persist for a couple more weeks as of yet — with the Sep. 20-21 FOMC meeting as an interesting potential catalyst.

• Metals Thoughts: Tight lines

  Tuesday, August 23, 2016

  Gold — along with most every other asset class — has pretty much been a dollar story of late. Dollar weakness means higher asset prices. Last week's brief experiment with yen strengthening through the 100 USDJPY level seems to be held at bay for now, but barely and is probably the single biggest number to watch right now. It's not uncommon to test a level, sell off and then break through after consolidation, and we have witnessed the same thing through the 110 and 105 levels already this year.

• Metals Thoughts: Yen roars against dollar

  Tuesday, August 16, 2016

  In last week's article, I noted that one of the requirements for another leg higher in gold would be for the USDJPY to break below 100 — and that has now happened. The next level to watch will be the 99.02 low tick from the Brexit shenanigans. If we hold 100 and then 99, it will encourage metals bulls, especially as they have now had six weeks since the most recent highs.

• Metals Thoughts: The chain

  Tuesday, August 09, 2016

  ​Gold and silver have generally held their respective ranges since we last discussed and don't show much to encourage that the barriers will change anytime immediately. In many aspects, we have seen some healthy resetting of the table and a few of the things I would look for as encouraging have surfaced, but the supply-demand balance for physical is still worrying.

• Metals Thoughts: Two-legged stool

  Tuesday, July 26, 2016

  Gold and silver are hanging somewhat precariously with some of the recent extreme momentum having come off a bit, and both the ETFs and futures markets turning into slight net sellers. I can make an argument either that it’s a respite for another leg higher (prices haven’t collapsed despite spec redux), or that we have a long way to go should buying support not emerge. I think the headlines, largely from central banks will be the determinants here, and all eyes are on the Fed in particular to see how they respond to the two incredibly noisy jobs reports we have seen recently.

• Metals Thoughts: Spinning our wheels

  Tuesday, July 12, 2016

  There has been a fair amount of choppiness to the market in the last week without really getting anywhere from a price movement perspective. Since our close on July 1, we are up about $4, but have had some volatile sessions in the interim — especially Friday after the particularly strong jobs report.

• Metals Thoughts: Brexit stage left

  Thursday, June 30, 2016

  The surprise from the Brexit "leave" victory last week is abating a bit, and markets seemed to have settled. However, we — like the Brits — still have plenty to sort out. The most damaging thing about the surprise was how certain everyone was that "Bremain" would carry the day.

• Metals Thoughts: No more bets

  Tuesday, June 21, 2016

  The table is basically set for Brexit results (late Thursday night), and we have Janet Yellen's two-day testimony to keep us busy until then. Yesterday's trading had the definite feeling of "wait and see" that we often get before much anticipated events, so it is interesting to see us breaking through the $1,280 support and stops level here.

• Metals Thoughts: Expensive insurance

  Tuesday, June 14, 2016

  ​Somewhere between a Brexit vote, global negative interest rate policy, a U.S. election and a less steep fed hike path, traders the world over are finding excuses to go risk-off. Since none of this is altogether new or surprising, it's been fairly moderated in asset prices, but the derivatives have been host to a lot of action.

• Metals Thoughts: Uniformly underwhelmed

  Tuesday, June 07, 2016

  ​Friday's terrible number for the headline job creation has taken the wind out of the June-hike sails. In case you have been under a rock, the U.S. economy added only 38,000 jobs in May, versus expectations of 160,000 or so. Even if you add back the 35,000 or so jobs that have already come back in from the resolution of the Verizon labor strike, it's a poor number.

• Metals Thoughts: Carried away

  Wednesday, June 01, 2016

  ​Metals had a tough month of May, with speculative positioning running out, hawkish FOMC minutes, the dollar strengthening and then breaking the 50 DMA to the downside. Fed chair Janet Yellen's comments Friday at Harvard made it clear that at least July (if not June) is a live meeting, and the market had to immediately reprice the curve.

• Metals Thoughts: Tourist season

  Tuesday, May 24, 2016

  ​The USD's three-week rally has extended the mighty dollar to a high since late March on the back of some hawkish FOMC minutes last week. Investors immediately repriced interest rate hike bets for June from 5 percent to 32 percent.

• Metals Thoughts: Summer break

  Tuesday, May 10, 2016

  With summer rapidly approaching, it seems an appropriate time to hit pause on our weekly focus. Let's take a look at our broader, medium-term macro outlook and establish where upside and downside risks to our base case exist. Here's my version of a summer long-form beach read.

• Metals Thoughts: Late-inning rally

  Monday, May 02, 2016

  ​The Bank of Japan holding off on any further action has created a massive Yen carry unwind and a general lack of faith in Kuroda/Abe ability to push the Yen lower. That combined with general hedge fund outflows has big offer in the dollar and has been turbo fuel for what I otherwise consider to be an overextended gold rally.

• Metals Thoughts: Doha on my mind

  Tuesday, April 19, 2016

  ​Spot gold has bounced off the 50-day moving average again with the aid of a weaker USD, now at $1,236 all the way north of $1,250. We count this as the second such test so far in April, and so far seems to be successfully held.

• Metals Thoughts: Dollar bets

  Tuesday, April 12, 2016

  The broad dollar index has seen an impressive revaluation since early March, and it has helped spur a bid under many risk assets and anything dollar denominated, which very much includes metals.

• Metals Thoughts: A tradition unlike any other

  Tuesday, April 05, 2016

  Interesting action overnight as we saw a reversal of some recent trends: ETFs were sellers, Asian physical market were buyers, and correlation with WTI swung back to negative. The EFP bouncing back about 20 cents overnight is indicative of some good futures buying.

• Metals Thoughts: Terror in Brussels

  Tuesday, March 22, 2016

  ​Markets and security forces are on high alert this morning in the wake of the terror attacks in Brussels that have left at least 25 dead and 50-plus injured. There is a slight flight to safe assets, but the net effect seems to be somewhat muted as we are sadly growing used to these sorts of headlines on an all-too-frequent basis.

• Metals Thoughts: A crack in the dam

  Thursday, March 10, 2016

  ​Despite Thursday's drop, gold (and to some extent silver) can still be considered as having outperformed everything it is normally correlated with. Put simply, either gold knows something the rest of the world doesn't or we are due for some repricing.

• Metals Thoughts: Friday Happy Hour

  Friday, March 04, 2016

  ​After a strong suite of jobs data this morning, gold continues to outperform expectations. In continuation of a three-week trend, the reaction to positive data was to sell, then buyers came in on the dip, and the net result is actually higher.

• Metals Thoughts: All night long

  Friday, February 26, 2016

  Gold has held up surprisingly well in spite of a crude and equity rally. Funds are putting on bullish structures, and the ETF builds are continuing at a historic rate and are threatening one-year highs.

• Metals Thoughts: Don’t call it a comeback

  Tuesday, February 16, 2016

  In what has likely been the most exciting week for metals since 2013, gold has traded up as much as 5.2 percent and right back down again — all over the course of three effective trading days.

• Metals Thoughts: Fat Tuesday

  Tuesday, February 09, 2016

  ​Over the last week, gold and silver are up $60 and $1.10, respectively, and have blown through most every technical level you could ask for. The next major resistance is both a major psych level and the long-term down trend that started in 2014.

• Metal Thoughts: Double rainbow

  Tuesday, February 02, 2016

  Last week saw oil, gold, long duration treasuries, the U.S. dollar and most U.S. equities all higher (show in Chart 2, below). As best I can tell, that hasn't happened in at least a year. All of those asset classes benefit in some way from lower interest rates, so much of it was due to weak GDP and perceived dovishness from the FOMC. You would not normally expect the U.S. dollar to rally as well, but much of that was driven by new levels of Bank of Japan (BoJ) aggression. Still, it's a bit of an anomaly.

• Metals Thoughts: A new hope

  Tuesday, January 26, 2016

  Gold has broken through its heretofore stubborn resistance at the 100 DMA and also made a new high above its prior January highs of 1,113. The higher highs, higher lows, trend is still in place from the Dec. 3 lows.

• Metals Thoughts: Space oddity

  Tuesday, January 12, 2016

  ​Gold started the year with a $45 rally from $1,065 basis, but for the last few days has seemed bound and determined to give much of it back. Silver has already achieved that feat, having been up as much as 4 percent on the year as recently as Jan. 8 and has now given all of that back.

• Metals Thoughts: 2016 outlook

  Tuesday, January 05, 2016

  Welcome to 2016. In many ways, gold was the dog that didn't bark after the Fed hiked rates and so our desk has turned bullish for 2016. There are a lot of interesting short-term developments, but the gist is: CFTC positions show that long liquidations have continued. Net spec longs are the lowest level since 2008, and shorts are at elevated levels as well. Beginning-of-the-year hedging could weigh us down for a few trading days, but our broader outlook is neutral to higher.

• Metals Thoughts: Short shorts

  Tuesday, December 08, 2015

  ​Friday's nonfarm payrolls report was a seemingly bearish first blush, with the headline number coming in at the high end of the consensus range (211K), a positive revision to October's big number, and growth in the participation rate. The noise of a monthly number notwithstanding, you would have expected gold and silver to sell off, but that was not to be.

• Metals Thoughts: Fed solo

  Tuesday, December 01, 2015

  As U.S. traders return from the Thanksgiving holiday, not a lot has changed in the macro picture. The market is still factoring in the likelihood of a December rate hike — 74 percent currently — and asset prices are moving accordingly.

• Metals Thoughts: All about the Benjamins

  Tuesday, November 17, 2015

  Get the U.S. dollar right, and you can basically nail gold's movements of late and probably for the foreseeable. With rolling 10-day correlations near 85 percent, it is clear that everything for the yellow metal is driven by Fed hike expectations.

• Metals Thoughts: Cold November pain

  Tuesday, November 10, 2015

  Gold technically eked out an "up" day Monday, closing about $2 above where it opened (depending on how you measure a close), which ended a streak of eight straight losing days. March was the last time that had happened, and 10 times in a row never happens. Ever.

• Metals Thoughts: Fool me a dozen times

  Tuesday, November 03, 2015

  I said it last week, and it still holds true that we have traded almost straight down in gold, and somewhat in silver, since the Oct. 14 highs. Macro data seems OK, equity markets are higher and rates are modestly higher — all with a lower VIX (volatility index), stronger U.S. dollar and higher probability of a rate hike in December.

• Metals Thoughts: Fall classic edition

  Tuesday, October 27, 2015

  Metals have traded largely lower in the last 10 days, but has a bit of sideways feel to it ahead of the FOMC nondecision. Our breakout from this year's lower-highs, lower-lows trend is still alive, but a move below 1156 and 1104 would have the world looking at the $1K price target yet again. We will feel it is confirmed if we breach $1,200 to the upside, but that will certainly require some external stimulus from headlines or the dollar.

• Metals Thoughts: Austrian economics edition

  Friday, October 16, 2015

  It has been almost nonstop bid since the non-farm payrolls ​disappointed for the September number. For the first time since January, we positively breached the 50-, 100- and 200-day moving averages. While momentum has run out in the last 48 hours, it is not uncommon during a rally to take a breather, especially considering it's LME Week in London and the LBMA industry conference begins tomorrow in Vienna.

• Metals Thoughts: As good as it gets?

  Tuesday, October 06, 2015

  Friday's weak non-farm payrolls and even weaker August revision have effectively changed the prevailing paradigm for risk markets. Gold and (especially) silver have caught a bid, equity markets are having their longest winning streak of the year and yields are much lower all across the curve.

• Metals Thoughts: 1 step back

  Tuesday, September 29, 2015

  ​After a volatile week, gold is basically right where we left it last week, but with a failed move above the 100 DMA at 1149. Silver has not fared nearly as well amidst the uncertainty and seems to be getting dragged along with PGMs and other more cyclical metals.

• Metals Thoughts: Fed dove edition

  Tuesday, September 22, 2015

  The much-anticipated Fed meeting last week was incredibly dovish. We expected a "hold" but a bit of hawkishness from the dot plots, press conference or future implications. Instead, the meeting showed little indication that this committee is in any hurry to get off the zero-rate lower bound and begin rate normalization.

• Metals Thoughts: The market waits

  Tuesday, September 15, 2015

  With two days until the Federal Open Market Committee (FOMC) answers the "will they or won't they" question, metals markets have gone quiet. According to Bloomberg, yesterday's aggregate trading volume was the lowest since Dec. 31, largely due to Rosh Hashanah, COMEX Metals Week, FOMC jitters and, of course, fashion week.

• Metals Thoughts: Maybe September isn’t dead

  Tuesday, September 01, 2015

  ​Last week's combination of an impressive Q2 GDP revision to 3.7 percent (from 2.3 percent) and the Fed's Jackson Hole Symposium was enough to stem the tide of "September is dead" sentiment. The probability of a September rate hike had swung from 55 percent in early August all the way down to 20 percent earlier in the week, before settling around 38 percent currently. Economists in most polls are still calling it just shy of a coin flip.