Gold off marginally in quiet trading early

DAILY MARKET REPORT

Gold was off marginally in early trading – down $2.50 at $1188.50 in a quiet market session thus far. Silver is down 5¢ at $14.76. The precious metals seem to be taking a breather after a strong two-day run to the upside that gathered momentum after Bloomberg shed light on the rift between the White House and the Fed on interest rates. The president also accused China and the EU of manipulating the yuan and euro to gain leverage in the trade wars. Germany announced yesterday recording the largest trade surplus in the world for the third straight year – a performance not likely to escape the notice of the Trump administration. An improving Chinese yuan added to the shift in momentum for gold over the last couple of days. Today, though, gold is down despite the yuan trending to the upside during Asian trading hours indicating that we might see gold go positive before the day is out.

Quote of the Day
“[T]he object of speculation may vary widely from one mania or bubble to the next. It may involve primary products, especially those imported from afar (where the exact conditions of supply and demand are not known in detail), or goods manufactured for export to distant markets, domestic and foreign securities of various kinds, contracts to buy or sell goods or securities, land in the country or city, houses, office buildings, shopping centers, condominiums, foreign exchange. At a late stage, speculation tends to detach itself from really valuable objects and turn to delusive ones. A larger and larger group of people seeks to become rich without a real understanding of the processes involved. Not surprisingly, swindlers and catchpenny schemes flourish.” – Robert Z. Aliber and Charles P. Kindleberger, Manias, Panics and CrashesAnatomy of a Typical Financial Crisis (2001)

Chart of the Day

Chart note: Mapping and comparing secular bull markets is a risky business. No two are exactly the same, but at the same time they do follow a general pattern moving from accumulation to public participation and finally excess mania with ebb and flow occurring at each stage. The Dow Jones Industrial Average began its 1980-2000 secular bull market at 760 and topped at 11,723 – rising roughly 15.5 times. Gold began its secular bull market in 2002 at $280 per ounce. If gold were to match the Dow’s performance, it would rise to $4300 per ounce by 2022 – a 15.5 times gain. That said, the timeline for bull markets can vary – some shorter, others longer. In gold’s secular bull market of the 1970s, it rose 24 times in a ten year period – from $35 per ounce to $850 per ounce. If it were to match that price performance, it would be priced at $6500 per ounce.

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