HTML5 Incompatible Browser

Precious Metals Review

Market information and news is critical for precious metal investing. However, many investors have limited time to sort through the massive amounts of market data and gold, silver and platinum news. The Monex Precious Metals Review consolidates the week's activities in a concise snapshot of the precious metal markets.

pmrmaster

PRECIOUS METALS REVIEW - JULY 22, 2016

In the precious metals markets this week . . .  

GOLD:
Monex spot gold prices opened the week at $1,328 . . . traded as high as $1,335 on Monday and as low as $1,313 on Wednesday . . . and the Monex AM settlement price on Friday was $1,322, down $6 for the week.  Gold support is now anticipated at $1,309, then $1,285, and then $1,267 . . . with resistance anticipated at $1,328, then $1,345, and then $1,372.

SILVER:
Monex spot silver prices opened the week at $19.90 . . . traded as high as $20.08 on Monday and as low as $19.32 on Thursday . . . and the Monex AM settlement price on Friday was $19.65, down $.25 for the week.  Silver support is now anticipated at $19.38, then $19.17, and then $18.68 . . . and resistance anticipated at $19.84, then $20.02, and then $20.47.

PLATINUM:
Monex spot platinum prices opened the week at $1,089 . . . traded as high as $1,108 on Thursday and as low as $1,067 on Wednesday . . . and the Monex AM settlement price on Friday was $1,085, down $4 for the week.  Platinum support is now anticipated at $1,078, then $1,052, and then $1,033 . . . and resistance anticipated at $1,107, then $1,120, and then $1,167.

PALLADIUM:
Monex spot palladium prices opened the week at $640 . . . traded as high as $690 on Friday and as low as $639 on Monday . . . and the Monex AM settlement price on Friday was $687, up $47 for the week.  Palladium support is now anticipated at $676, then $644, and then $627 . . . and resistance anticipated at $689, then $736, and then $777.

QUOTES OF THE WEEK:

From Simon Wilson, in a posting on the MoneyWeek website on July 17th:

''This week the International Monetary Fund (IMF) warned that Italy was unlikely to grow its economy back to pre-crisis size until the mid-2020s, implying 'nearly two lost decades.'

The IMF's latest economic health check found that high taxes, an 'inefficient public sector' and civil service wage growth that had for years outstripped productivity gains, had all contributed to one of the lowest productivity growth rates among advanced economies over the last 30 years.  Brexit-related uncertainty is expected to drag down the economy over the next two years, with growth in GDP of 1% or less.  The IMF added that public debt, at 133% of GDP, left policymakers 'very little room to cope with shocks.'

The banks face a situation that will get worse, not better, without intervention.  Which leads to another key reason for the exceptional weakness of Italy's banks -- its weak and often short-lived governments have spent years avoiding decisive action to tackle their festering problems.  After the global financial crisis, governments in the UK and the US in particular undertook a major recapitalisation of their banking sectors from 2008-2010.  Italy, where the banks at that point appeared stronger, chose not to.

It also failed -- unlike Spain -- to take the opportunity to set up a bad bank in 2012 at the height of the eurozone crisis, and has preferred to kick the can down the road ever since.  But as a senior Italian banker told the Financial Times recently: 'You think you are kicking the can down the road, but suddenly the road turns uphill and the can comes back and hits you in the face.' ''

. . . and from an interview with Charles de Valux and Charles de Lardemelle of International Investment Advisers in the July 18th issue of Barron's magazine:

''Brexit is a reminder that the euro zone has done little to integrate. While the regulators and banks would have us believe Italian government bonds, Spanish government bonds, Portuguese government bonds are money good and risk free, that's not the case.  Brexit raises the question of whether the euro zone is going to splinter.''

''The way we express our skepticism is by owning some gold.  Gold accounts for 6.6% of the Worldwide fund and close to 8% of our International fund.  We have remained partially hedged on the euro.  The euro is a lot lower now than it was a year and a half ago.  We want to be protected should the policy makers do even more quantitative easing or the euro zone eventually splinters.  We have to remain conscious of those risks.''

''The gold exposure is through gold bullion, as opposed to the shares of gold miners.''

. . . and from Simon Black, in a posting on the Sovereign Man website on July 18th:

''Now it's $13 trillion.
 
That's the total amount of government bonds in the world that have negative yields, according to calculations published last week by Bank of America Merrill Lynch.

Given that there were almost zero negative-yielding bonds just two years ago, the rise to $13 trillion is incredible.''

''Just like subprime mortgage bonds from ten years ago, these bonds are also toxic securities, since many are issued by bankrupt governments (like Japan).
 
Instead of paying subprime home buyers to borrow money, investors are now paying subprime governments.
 
And just like the build-up to the 2008 subprime crisis, investors are snapping up today's subprime bonds with frightening enthusiasm.

We'll probably see $15 trillion, then $20 trillion, worth of negative-yielding subprime government debt within the next few months.
 
So this trend will continue to grow for now, until, just like in 2008, the bubble bursts in cataclysmic fashion. ''

. . . and from Jim Rickards, writing in the Daily Reckoning newsletter, published by Agora Financial, LLC, on July 21st:

''Gold had a strong run-up in the immediate aftermath of the Brexit vote on June 23.  Some of those gains were given back once the situation stabilized and the Conservatives were able to form a new government faster and more smoothly that originally expected.

However, gold stayed well above the pre-Brexit level of $1,260/ounce and consolidated around $1,330/ounce.

Gold had another uptick in the immediate aftermath of the Turkish coup attempt on July 15.  These gains also faded when it became apparent that the coup would fail.  But gold found its footing again at $1,330/ounce.  We appear to be in a favorable technical pattern where bad news will send gold higher but good news does not take it lower.

Looking around the world at Russia, Syria, Libya, North Korea, the South China Sea, Venezuela and social discord from Europe to the U.S., it's difficult to make the case for a lot of good news.  Gold continues to perform its role as a safe haven in times of crisis, and there is no shortage of crises on the horizon.

On a fundamental basis, the Fed's hawkish posture of last May is a distant memory.  All indications coming out of the Fed right now are extremely dovish.  No interest rate hikes should be expected until 2017 at the earliest.  Forward guidance in the form of speeches and leaks to reporters confirms that dovish stance.  This is a positive for gold.  Generally, an easy money stance accompanied by low interest rates and a weaker foreign exchange value for the dollar lead to higher dollar prices for gold.

The dollar strengthened with the reactions to Brexit and the Turkish coup.  Now that those events are behind us, the weak dollar trend can resume.''

. . . and from a news posting on the Reuters website on July 22nd:

''Gold prices eased on Friday, reflecting tension between an easier global interest rate backdrop and the chance of U.S. monetary policy being tightened before the end of 2016.''

''Bullion has benefited significantly -- hitting its highest in two years earlier this month -- as central banks from Europe to Japan opt to keep policy looser for longer, because that neutralizes the opportunity cost of holding an asset with no interest rate. ''

''ANZ analyst Daniel Hynes said the market was also going through a bout of voidness post Britain's EU referendum result.

'But everything else is still very conducive for the growth of investments (in gold).  Once we just watch out for any short-term positioning that we saw coming just after the referendum, we will continue to see support for gold prices.' ''

Last update: Jul 22, 2016 11:46:52 AM

This is not a recommendation to buy or sell.