safe havens still bearish
Good morning and welcome to HUMP DAY! Pink Floyd greets me this morning with their iconic 1973 hit, “Time.” I remember first hearing this song circling a city (town) block on a Friday or Saturday evening in Tom’s ’56 Plymouth Savoy. It must have been just prior to high school graduation…the Spring of ’73.
The New York Spot Prices slid back again yesterday with Gold closing down $5.70 at $1,276.30, Silver was down $0.14 to $16.91, and Platinum was down $2.00 to close at $921. In overnight trading all of the precious metals continued to fall with gold dropping another $3.80, silver $0.08, and platinum dropped $9.00.
In other markets, the Dow was up 167.80 closing at 23,441.76 and currencies were mixed against the dollar with the Euro, Pound, and Ruble all gaining while the Yen, Yuan, Hong Kong, Canada, and Australian dollars all slipping.
Let’s jump right in to the news, as everybody seems to want their 15 minutes this morning. To start things off, Jim Wyckoff in his “PM Roundup” shares his thoughts about the risk-on market attitude and how it’s sinking the gold and silver markets. “A quieter world geopolitical scene is making for little trader/investor risk aversion in the marketplace at present, and that’s bearish for the safe-haven gold and silver markets. Rallying world stock markets recently - many of which are at or near record highs--are firm evidence risk-on attitudes are pervasive. While world stock markets that have been in bull runs for quite some time are also keeping money flows away from hard assets like the gold and silver markets, when the air starts to come out of the stock market bullish balloon (and it will at some point) money flows out of paper assets and into hard assets will significantly benefit the precious metals market bulls.”
MarketWatch is saying the same thing…only different! Investors are cautiously optimistic amid the uncertainty surrounding Trump’s pick to head the Federal Reserve for 2018 and beyond. Of course who he picks will determine interest rates going forward. It seems the one caveat to everything I’m reading is North Korea. The September reports on U.S. durable goods and new home sales which are due out this morning should solidify the markets. The economists that MarketWatch polled expect 0.7% growth for durables and 555,000 homes sold so I expect those numbers are probably factored into the markets. Anything better and the stock market should gain.
And finally, let’s flip the coin over and see the other side…
Mike Gleason, President of Money Metals Exchange shared his thoughts on China’s petroyuan. “The rise of a “petroyuan” could become the biggest threat to the U.S. dollar’s status as the world reserve currency. China’s appetite for imported oil is enormous and growing. So it makes sense for the country to seek direct trade deals with Saudi Arabia, Russia, and other suppliers. For its part, Russia is all too willing to deal in gold. Russian officials view the monetary metal as integral in combating international economic sanctions and supporting the ruble.”
I've been asked why we don't go back on a gold standard. Simply put, we can't. If you divide the debt ($20.4 trillion) by the gold the U.S. holds (147.3 million troy ounces), we would be valuing gold at $138,678 per troy ounce! That's not going to happen. Also, a gold standard has shown it does limit economic growth. And finally, it really only works when you are exporting more than your importing, otherwise, you'll soon run out of gold.
Well, I’ll let that be it for today. Go out there and make a difference! See ya’ll later!
*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.