Daily Market Report
Wednesday, April 26, 2017
Let’s start with the domestic morning headlines that are impacting precious metals:
A stronger U.S. dollar and higher treasury yields are keeping the pressure on the price of gold this morning.
Outflows continue in both the Gold and Silver ETF funds as investors look to cash in their chips for a chance at the equity table.
The entire U.S. Senate heading to the White House today for a North Korea briefing. I would love to be a fly on that wall.
Now to the News around the globe that has a direct effect on our market.
What does Ms. Marine Le Pen have to do to win the run off with Mr. Macron for the French Presidency?
It seems that not only the markets are thrilled with Mr. Macron’s victory in the first round of the election, the European Union Community experienced a welcome sigh of relief.
Even though the polls give Mr. Macron 62 percent and Le Pen 39 percent with under two weeks to go, don’t count her out just yet. Most political French commentators say it’s not possible for her to win unless something radical happens. First and foremost, she needs to change her policy on exiting the Euro to give herself any chance. Something European gold investors would not be happy with.
We all agree she is a highly controversial individual because of her anti-immigration policies and her close ties to Russia. What most believe hurt her, was her trip in March to visit with Russia’s President Putin. It was reported she was there also to try to secure financing from Russian banks to help with her campaign.
Time Magazine has reported that in 2014, Le Pen’s Party, The National Front, took out a nine million Euro loan from a Moscow bank, so it seems that there is a strong relationship with Russian government.
Since this is a known fact about Ms. Le Pen, I agree something radical must change in the next 11 days to give her any chance, otherwise she will go the way of the 2016 Democratic Vice President candidate (I bet most don’t even remember his first name) Tim…Kaine, probably never to be politically heard from again.
The Gold market had heightened interest in this election as most believed a Le Pen victory would be the end of the EU, as France would be the next to exit and ultimately cause a breakup of the European Community. But at this point the odds are in favor of the EU staying just as it is today.
I find it interesting that since President Trump met with China’s President Xi, North Korea hasn’t attempted their sixth Nuclear test. I don’t want to anticipate America’s response to that test as Kim Jung-un must be fully aware that the U.S. might respond militarily if he tries something.
I mention both the French election and the problem with North Korea, as these two news items are seemingly the only catalysts for a higher gold price at this time. Just look at all the attention the stock market has received since the corporate tax cuts are all the talk on Wall Street. Avoiding a government shut down is also at the top of the list. So at this time, without any significant news, the price of gold seems to be headed into market hibernation for the time being.
If you remember a week ago we reported that the Wall Street Gold Traders took their profits when the market traded back to the $1,278-$1,279 level and got out. Since then the only place you might find them is at a high end steak house on the east side of Manhattan enjoying their lunch.
If the gold market breaks thru the 200-day moving average at $1,253, I expect they will be back in the market playing it from the short side.
Patience everyone, there are better days ahead.
Finally, here is a public service announcement: Don’t get too excited about the proposed corporate tax cuts when the politicians are behind closed doors trying to take away or reduce your 401(k) tax benefit. THAT’S RIGHT, as Wall Street is cheering President Trump’s corporate tax cut guess who winds up paying for part of that tax windfall; YOU DO!
Congress is reportedly looking at how it treats all 401k contributions. Right now, any income and gains your 401(k) generates don’t get taxed until you make withdrawals. But one proposal would impose a 15% tax on annual gains within 401(k) plans. If you participate in a 401k you need to call your representative and tell him or her don’t you dare tax upfront our 401k plan!
Just giving you a heads up, and remember always read the small print first.
Have a wonderful Wednesday.