DMR–Gold marginally higher, headed for third straight weekly gain

DAILY MARKET REPORT

Gold is trading marginally higher at $1228 early – up $2.50 on the day. Silver is up 10¢ at $14.72. Concerns about a slowdown in China’s economy – a restraint on gold and the commodities complex over the past few weeks – dissipated somewhat on an announcement from China’s Bureau of Statistics that its GDP had grown at a 6.5% clip.  The gold market will likely view the report as a positive for gold and commodities in the near term, though concerns linger about its stock and debt markets.  Oil also bumped higher in the early going.  SPDR, the gold ETF, reports a 2.5% increase in its holdings over the past two weeks, an indication of institutional buying.  Gold is headed for gains three weeks running if current prices at least hold through today’s close, and holding its own despite headwinds from dovish Asian and European interest rate policies favorable to the dollar.

Quote of the Day
“They are the strong hands who patiently await to scoop up shares when markets falter. As the smart money, these players unload inflated shares to the ‘dumb’ money or retail investors at ‘FOMO’ or fear-of-missing-out emotional peaks. The masses are advised to blind buy and hold. Retail investors are cajoled as ‘brave’ if they ‘ride it out.’ And whatever ‘it’ is can be counted in years, even decades. Time is precious to us mere mortals. Our lives are finite; Wall Street lives on forever. The precious time it takes to break-even is ignored. Not relevant. One of my favorite Nashville-based songwriters Drew Holcomb begins a song with a seminal line: ‘Time steals every paradise I’ve been looking for.’ When Wall Street prospers, Main Street doesn’t necessarily follow a similar, prosperous path.” – Richard Rosso, Real Investment Advice

Chart of the Day


Chart courtesy of Advisor Perspectives

Chart note: The relationship between margin credit and stock market performance is interesting to monitor.  With interest rates extremely low historically, investors borrowed at extreme levels to buy stocks.  Now with interest rates rising, one wonders how long it will be until these same forces either choose to sell because of the carrying costs are forced to sell because of margin calls.  Shades of 1929. . . . .

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