DAILY MARKET REPORT
Gold continues to ping-pong on either side of the $1200 mark unable to make a convincing move up or down. It, in fact, is right at $1200 as we write this report and down $3.50 on the day. Silver similarly is stuck in and around the $14 mark and down marginally on the day.
The precious metals are experiencing headwinds from weakness in both the yuan and euro in recent days. The situation in Europe – most notably having to do with Brexit and the budget situation in Italy – does not lend itself to quick or easy resolution. With respect to China, there have been rumblings of lower interest rates and a weakening economy. That prognosis is balanced in the United States against the prospect of rising inflationary expectations and concerns about stability in financial markets.
“Demand for copper shall be positive next year and in the coming years,” Marcin Chludziński, head of copper mining giant KGHM Polska Miedz SA, told Bloomberg yesterday. “The trade conflict may affect demand to some extent,” he concludes, “but on the other hand China is changing its growth model and starting to accelerate internal consumption in order to rely less on exports and more on its domestic market.”
In an odd break with standard operating procedure, ex-Fed chair Janet Yellen voiced her concerns about the dollar being too strong – a prospect she feels could widen the U.S. trade gap. It seems that much is up in the air at the moment on the global stage and gold is content to remain on the fence as a result – at least for now. That, as always though, is subject to change without notice. . . . . . . .
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 Crashes – Anatomy of a Typical Financial Crisis (2001)
Chart of the Day
Chart note: As the chart above illustrates, gold does not always react to the start of a crisis as anticipated. As the credit crisis gained momentum in 2008, gold declined as the dollar rose – acting in much the same way it is reacting now to the emerging markets crisis and U.S.-China trade war. It was not until late 2008, when the full extent of the crisis became all too apparent, that it began to move higher. Thereafter, from 2009 to September 2011, it rose to its all-time high of $1895 – a 215% gain in three years.