30-Dec (USAGOLD) — Gold is mildly defensive on the last trading day of the year, retracing a portion of Thursday’s solid gains. Nonetheless, the yellow metal appears poised to notch its first positive annual performance in four-years.
At this point it looks like gold will close around 8.5% higher for the year. Silver is on track to record and annual gain of about 15%. Not too bad when you consider that the metals have been under pressure for the last five-months!
Meanwhile, CNNMoney reported today that the major U.S. stock indices will end the year up “between 8% and 14%.” However, those too have come under pressure during the trading day. For now, the eagerly anticipated DJIA 20,000 level will have to wait until next year . . . or maybe even longer.
On that note, I was reminded that yesterday marked the 27th anniversary of the 38,957.44 all time high in the NIKKEI 225. At the time, it was not de rigueur to wear kooky hats proclaiming the inevitability of the next ‘big-round-number’, but man, wouldn’t you love to have a “NIKKEI 40,000” hat from back in the day?!
The index hasn’t been anywhere close to that level since; even with the massive QE efforts of the BoJ. Of the approximately ¥10 trillion worth of ETFs on the BoJ’s balance sheet, more than half are tied to the Nikkei 225.
One of these days, one of those Dow XX,XXX hats are going to be the kiss of death. It may not be 20,000, but one of these days . . .
Gillian Tett of the FT points out today that political risks in the the developed world have ramped up significantly in the past year:
Most notably, 2016 was the year when western markets were rocked by political shocks almost as startling as anything seen recently from the emerging markets world. In 2017 investors will probably confront even more political risk in the “developed” world that will make asset values look more volatile. — Gillian Tett
Heightened political risk can substantially amplify other risks. The implosion of the Renzi government in Italy for example, is going to make it much harder to resolve the developing banking crisis.
Ms. Tett warns that even greater political risks in 2017 is “bad news for anybody who hates market volatility.” One asset class that may benefit in such an environment is a safe-haven like gold.
Additionally, recent events suggest we may be getting closer to cyber warfare that could pose considerable risk to the traditional banking and financial services industry. The U.S. has retaliating against Russia for recent cyber attacks that perportedly influenced the recent U.S. Election. Vladimir Putin responded by saying, “we reserve the right to retaliate.”
We have maintained for some time — and now it may be a better idea than ever — that investors keep a portion of their wealth outside the traditional (electronic) banking/financial system. A stash of gold and/or silver coins held in your possession can’t be hacked or electronically disappeared.
On behalf of everyone here at USAGOLD, I would like to wish each and every one of you a happy and prosperous new year.