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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.

In the precious metals markets this week...

Monex spot gold prices opened the week at $1,298 . . . traded as high as $1,308 on Thursday and as low as $1,274 on Friday. . . and the Monex AM settlement price on Friday was $1,276, down $22 for the week. Gold support is now anticipated at $1,272 then $1,245, and then $1,210. . . with resistance anticipated at $1,282, then $1,297, and then $1,308.


Monex spot silver prices opened the week at $16.81. . . traded as high as $17.31 on Thursday and as low as $16.46 on Friday. . . and the Monex AM settlement price on Friday was $16.50, down $0.31 for the week. Silver support is now anticipated at $16.37, then $16.10, and then $15.80. . . and resistance anticipated at $16.68, then $16.90, and then $17.12.


Monex spot platinum prices opened the week at $907 . . . traded as high as $913 on Thursday and as low as $884 on Friday. . . and the Monex AM settlement price on Friday was $887, down $20 for the week. Platinum support is now anticipated at $873, then $852, and then $828 . . . and resistance anticipated at $907, then $955, and then $988.


Monex spot palladium prices opened the week at $1,012. . . traded as high as $1,023 on Monday and as low as $984 on Friday. . . and the Monex AM settlement price on Friday was $987, down $25 for the week. Palladium support is now anticipated at $971, then $944, and then $922. . . and resistance anticipated at $995, then $1,017, and then $1,048.

***Want to know the latest on gold and silver in this age of uncertainty? Monex VP Mike Maroney offers analysis and commentary on recent activity in the economy, geopolitics and the precious metals markets. Check out video here

From Victor Dergunov in the 6/14 The Silver Rally Could Turn Epic As Inflation Continues to Climb

''It's all about inflation, and there are clear signs the inflation situation is significantly hotter than the Fed is seemingly implying. In addition, the gold to silver ratio is beginning to back off extreme highs, silver is starting to noticeably outperform gold, and the dollar could provide additional tailwinds to silver's already favorable backdrop. Ultimately, the combination of these underlying factors couples with higher than anticipated inflation will likely drive silver prices significantly higher in the second half of this year and beyond.

Let's start with the core PCE, the inflation gauge the Fed uses. The core PCE is currently at only about 1.8%, and since the Fed is prepared to let inflation rise above 2%, possibly to 2.5%. or even higher to keep growth pumping, real inflation is likely to go much higher. It is important to note that the last time the core PCE touched 2% was in 2012, when silver prices were much higher.

Now, let's look at other widely followed inflation indicators that may portray the real inflation picture more accurately than the continuously subdued PCE. The consumer price index CPI, which is calculated similarly to the PCE is showing inflation at 2.8%, that's a massive 100 basis point disconnect from the Fed's gauge. Moreover, this is about a 120-basis point YOY increase, and a 30-basis point surge just over last month. These are the highest CPI readings since 2012, and this time the clear trajectory is higher, not downward.

We can also observe the purchaser price index PPI. The PPI final demand is at 3.1%, also the highest level it's been since 2012. Perhaps more importantly, the PPI final demand goods prices are at over 4% right now. This is rather staggering and illustrates that raw materials necessary to make countless consumer products are more than 4% higher today than they were at this time last year. These types of costs are bound to be passed on to consumers which suggests real inflation along with consumer prices is likely to go significantly higher. Also, with rising oil/energy costs and other raw material increases there is no indication that this is a transient phenomenon, or that prices will level off or decline any time soon.

All this tariff and trade war talk could end up being quite negative for the dollar, especially if it ever turns into action instead of just words. Do you know what else is damaging to the buck? Trillion-dollar budget deficits, and unsustainable nation debt, $500 billion trade deficits, rising inflation, record amounts of all types of debt, as well as other factors.''

...And From CPM Group in the June Precious Metals Advisory

''The global economy continues to grow, with numerous underlying risks that could derail this growth. These two factors collectively help to explain the range bound nature of gold and silver prices. Gold, for example, has been between $1,250 and $1,375 for most of 2017 and all of 2018, with optimism about the economy pushing prices to the low end of the range and concerns about the myriad ways in which things could turn bad pushing it higher.

The risks in the broader financial markets are real, market participants are keenly aware of these risks, but this is not sufficient for investors to buy gold and silver in volumes large enough o push prices higher strongly enough to break out of the range that these markets have been stuck in for a while. These risks are what have helped prices remain at elevated levels. Gold prices, while off from their record high level in 2011, are still at historically elevated levels.

It will require one of these risks to actually materialize and in fact derail growth for gold and silver prices to break out of the range on the upside. It is hard to say what the trigger will be. It could be a trade war between the U.S. and much of the rest of the world, which could materialize within the next few weeks, or it could be some other sort of problem that may take longer to appear.

Meanwhile the global economy continues to grow, exerting downward pressure on precious metals prices. The strong U.S. employment figures for May have raised market expectations for a total of four rate hikes this year. That may not happen; the interest rate bulls may have gotten ahead of the Fed and financial realities. This interest rate hawkishness helped to push gold prices below $1,300 in late May and early June. Prices did not slip below $1,290, however, as investors keep an eye on the risks to the U.S. and other economies as well as signs of recent strength. The Italian political situation helped counter the pressure from investor expectations of higher interest rates.

In the absence of any of the numerous risks looming on the near horizon actually materializing, global economic growth should be expected to continue over the next couple of years. There is no basis that says that any one of the current risks actually will materialize.

Even if none of the current known risks trigger an economic slowdown, the economic expansion itself is long in the tooth, especially in the United States, and at some point by virtue of business and economic cycles economic growth will slow. Replacement demand for various goods will slow, the ongoing economic growth will allow monetary authorities to tighten policy, and eventually economic growth will decline for a time on a cyclical basis.

While monetary authorities around the world are not likely to rush to contain inflation, especially given that it has been so hard earned during the current recovery, they are expected to and have already in some cases begun to tighten policy. In the event that none of the current risks materialize, economic growth can continue over the next few years, feeding off of the momentum that has built up over the past several quarters, even in a gradually tightening monetary policy environment.

The slowing of economic growth itself, when it comes, could be the trigger for one of the risks. For example, when economic growth is strong, growing debt while understood as a risk is ignored. However, when economic growth slows, this debt can become an important trigger for accelerating the economic decline.

What brings on the next global economic slowdown - a political or financial market risk or a cyclical downturn - will determine how soon the slowdown arrives. Given the above possibilities, now is the time to build positions in the gold and silver markets for the medium to long term.''

Last update: Jun 15, 2018 11:24:00 AM

This is not a recommendation to buy or sell.