Daily Market Report

Softer Dollar Boosts Gold

Recovering Treasury Yields and a slightly softer Dollar are giving the price of Gold a boost this morning.

Wall Street Gold traders, for the most part, seem to be pleased with their investment after going long when the spot price of Gold broke thru the $1,232 level earlier in the week. That level now becomes the support level in the event the market turns around. But at this point it looks like the price of gold has a strong foundation at these levels and should remain in a bullish mode the rest of the year.

No one knows what to make of the Equity markets after watching a 700 point swing yesterday.

So what do we make of the markets at this point.  The only sure thing seems to be alot more uncertainty and greater risks in the world financial system, thus more interest in safe haven gold.

Ball of Confusion – Are We Or Aren’t We?

On Tuesday, in a Marketwatch article, New York Fed President John Williams said, “The U.S. economy will stay strong in 2019 and inflation will move up above 2% and so the U.S. Central Bank should continue to raise interest rates gradually. Given this outlook of strong growth, strong labor market and inflation near our goal and taking account all the various risks around the outlook, I do expect further gradual increases in interest rates will best sponsor a sustained economic expansion.”

In my view, this is starting to sound alot like the desperate nonsense the FED gave us in 2007 and 2008 just before the financial meltdown.  The FED people love to talk out both sides of their mouths.  It's "x" today, "y" tomorrow, and whatever suits its fancy the next in order to get a short-term reaction of what it wants out of the market.  I have no idea why people put any TRUST in what these vermin have to say.

The article goes on to report that the Fed’s last policy statement used the word “strong” five times in describing the U.S. economy, he noted. “It accurately represents where we are,” he said. The New York Fed President said growth will slow in 2019, but only a bit, to a 2.5% annual rate from near 3% this year as the Trump tax cut will continue to provide a “tailwind” to activity.

This of course totally conflicts with what we just heard a few days ago when the Fed Chairman said we are close to neutral, indicating a dovish position on future rate hikes. And now the New York Fed President is taking a hawkish stance?

Then yesterday, Federal Reserve officials said they are considering whether to signal a new wait-and-see approach after a likely interest-rate increase at their meeting in December.

So, which is it? 

These kind of comments between Fed meetings just drive traders and investors crazy. These comments also cause crazy swings of volatility and move markets in unpredictable ways.  It also tells investors these people are not to be trusted.  In my view, they either have no clue what is going on, or they are shameless liars.

Also on Monday, the Equity Markets were cheering the President’s accomplishments at the G20 meeting with President Xi. Tuesday stocks dropped on fears of an economic slowdown. One must remember what the President said before the meeting with President Xi, “I’m very happy now with the current trade tariffs.”

Just leaving the ten percent tariffs in place will cause an economic slowdown here in the states, as you can be sure the costs will be passed on to the consumer.

Ball of confusion comments:

  • “The Fed has more rate hikes planned.”
  • “We are close to neutral.”
  • “Great meeting with President Xi. We got a lot accomplished.”
  • “If we don’t get a deal in 90 days, we are going with the 25 percent tariffs.”

Can you see how they are using words, with no concept of providing truth, to keep the public in the dark about what is really going on.

For those who are old enough to remember the Abbott and Costello skit “Who’s on first?” this modern day rhetoric surely beats out that confusing explanation.

With this level of uncertainty, I expect both the Bond market and the price of Gold to benefit from such madness. Time will tell if Equity investors get “fed up” (no pun intended) with all this talk, take their profits off the table and head into safer investments. Looks like Tuesday and Thursday’s Equity activity was just a start.

Have a wonderful weekend.

Investing in Precious Metals

Many Investment advisors recommend precious metals as part of a properly diversified portfolio to provide capital appreciation, liquidity, and a hedge against conventional paper assets. Because precious metals are counter-cyclical to paper assets, a diversification into gold, silver, and platinum can therefore reduce the total risk of your overall portfolio and preserve your wealth. History supports the premise that investment in precious metals is the best protection against uncertainties in the future.

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