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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...

The Monex AM closing price on Friday was $1,514, up $10 for the week. Monex spot gold prices opened the week at $1,504. . . traded as high as $1,524 on Thursday and as low as $1,481 on Tuesday. Gold support is now anticipated at $1,500 then $1,488, and then $1,467. . . with resistance anticipated at $1,520, then $1,540, and then $1,555.


The Monex AM closing price on Friday was $17.16, up $.19 for the week. Monex spot silver prices opened the week at $16.97. . . traded as high as $17.39 on Tuesday and as low as $16.59 on Tuesday. Silver support is now anticipated at $17.00, then $16.88, and then $16.67. . . and resistance anticipated at $17.30, then $17.52, and then $17.88.


The Monex AM closing price on Friday was $850, down $11 for the week. Monex spot platinum prices opened the week at $861. . . traded as high as $864 on Monday and as low as $833 on Wednesday and Friday. Platinum support is now anticipated at $830, then $818, and then $800. . . and resistance anticipated at $855, then $870, and then $891.


The Monex AM closing price on Friday was $1,445, up $15 for the week. Monex spot palladium prices opened the week at $1,430. . . traded as high as $1,458 on Tuesday and as low as $1,415 on Tuesday. Palladium support is now anticipated at $1,430, then $1,402, and then $1,377. . . and resistance anticipated at $1,460, then $1,487, and then $1,504.

Watch Managing Partner of the CPM Group, Jeffrey Christian, in our latest "A Year for Accumulation" video. You'll gain insight on recent moves in the metals market, the economy, and current events which could have an impact on how investors accumulate their metals in 2019
From Wall Street Breakfast in 8/15 All About That Yield Curve

''Recession fears took hold yesterday as short-term Treasurys paid more than long-term notes, a warning sign that investors are rapidly shifting their money into bonds to shield against potential losses they could incur by holding equities. No trouble? A brief inversion could be just an anomaly (others have not preceded recessions), but it may depend on how long the condition lasts. Others say the inversion occurred because of the Federal Reserve, which has kept its base short-term rate 'too high,'' while some maintain the yield curve has been distorted by more than $15T worth of foreign bonds that pay negative interest rates.''

...And From Saqib Iqbal Ahmed and Megan Davies in 8/15/19 Recession Watch

''A protracted trade war between China and the United States, the world's largest economies, and a deteriorating global growth outlook has left investors apprehensive about the end to the longest economic expansion in American history.

The rise in trade tensions has brought forward the next U.S. recession, a majority of economists polled by Reuters say. They now expect the Federal Reserve to respond with more interest rate cuts.
Here are the data points market watchers are eyeing for signs of a coming recession:

The Yield Curve
The yield curve is a plot of the yields on U.S. Treasuries - debt sold by the federal government - ranging from 1-month bills all the way out to 30-year bonds.
Longer-dated maturities typically yield more than shorter-dated ones because investors expect to be paid more for taking the risk of having their money tied up for longer.

Economists watch the gap in yields between longer and shorter maturities. A wide spread is usually associated with a stronger economy and a narrowing one indicates diminishing prospects for growth.

When the gap turns negative as it did recently with 10-year note yields dropping below those on 2-year notes for a time, it's called an 'inversion.' That's a negative signal for the economy because a recession often comes in its wake, but it can take as long as two years for a recession to begin.

The unemployment rate and initial jobless claims ticked higher just ahead or in the early days of the last two recessions before rising sharply. Currently the U.S. unemployment rate is near a 50-year low.
Claims will be watched for signs that deteriorating U.S.-China trade relations are spilling over to the labor market.

GDP Output Gap
The output gap is the difference between actual and potential economic output, or gross domestic product, and is used to gauge the health of the economy.
A positive output gap, like the one now, indicates that the economy is operating above its potential. Typically the economy operates furthest below its potential at the end of recessions and peaks above its potential towards the end of expansions.

However, the output gap can linger in positive territory for years before a recession hits.

Stock Markets
Falling equity markets can signal a recession is looming or has already started to take hold. Markets turned down before the 2001 recession and tumbled at the start of the 2008 recession.
On a 12-month rolling basis, the market has turned down ahead of the last two recessions.

Boom-Bust Barometer
The Boom-Bust Barometer devised by Ed Yardeni at Yardeni Research measures spot prices of industrial materials like copper, steel and lead scrap, and divides that by initial unemployment claims. The measure fell before or during the last two recessions.

Housing Market
Housing starts and building permits - a signal of upcoming demand in the housing market - have fallen ahead of some recent recessions.

High Yield Spreads
The gap in yields between high-yield corporate bonds and U.S. government securities tends to widen before recessions. In the 2007-2009 recession they widened dramatically. Credit spreads typically widen when perceived risk of default rises.

Misery Index
The so-called Misery Index adds together the unemployment rate and the inflation rate. It typically rises around the approach to and in the early stages of recessions, then falls off as the drop off in demand for goods and services in a downturn relieves upward pressures on prices.

What is different this time is that one of the big conundrums facing policymakers is the fact that inflation is actually too low for their liking. As such, the 'Misery Index' may not look quite so miserable in the next recession.''

...And From Randall W. Forsyth in 8/12 Barron's How This Bull Market Could End

''The collapse of interest rates worldwide to zero and below suggests a financial world that is dark and cold, frozen and lifeless. Yet the plunge in bond yields to historic lows correspondingly results in high values for assets from residential and commercial real estate, speculative-grade debt, and especially common stocks, which surely makes for a warm feeling for owners of those assets.

This past week's market divergence makes the question more than an intellectual conundrum; it affects practical investing decisions needed to meet goals for retirement, education, or future generations. Interest links the present with the future. Savers reap the reward for the restraint of their present appetites, while borrowers are able to bring forward either spending or investments that will pay off later. Interest always has been greater than zero, given that humans would rather have something sooner rather than later and have to be bribed to wait.

But why should savers always expect interest on money they set aside? That's what Robert Kessler, who heads Kessler Investment Advisors, a Denver-based firm that specializes in managing Treasury portfolios, provocatively asks. In Germany, investors pay 50 basis points (one-half of a percentage point) to guarantee the safe return of their money.

A negative interest rate might actually be an outgrowth of demographics and technology, writes Joachim Fels, global economic advisor at Pimco, the big bond manager. That's contrary to the typical view that negative rates are an unnatural state of affairs imposed by the European Central Bank, the Swiss National Bank, the Bank of Japan and others.

But rising life expectancy increases desired savings, Fels continues. People may no longer value present consumption over future consumption, as in past generations, when they often died before they retired and struggled to meet current needs. To transfer purchasing power to the future, they may accept a negative interest rate and save more. New technologies also reduce the need for capital and are becoming cheaper, cutting the demand for investment, he adds, which also lowers the floor on interest rates.

The U.S. has not trouble financing its budget deficit running at an annual rate of $1 trillion, in part due to the 'exorbitant privilege' resulting from the dollar's status as the main reserve currency. Indeed, President Donald Trump complains continually about the strength of the greenback, owing to the attractiveness of U.S. investments, which stems from offering some of the highest yields on the planet along with unmatched liquidity and safety.

Despite this sunny-side-up view, Kessler predicted here almost exactly a year ago that a 10-year Treasury yield would head toward 1% in the next recession. That was contrary to the predictions of other high-profile seers who contended that the benchmark note was headed to 4% or higher. In recent days, however more than a few, including Pimco's Fels, have predicted that U.S. interest rates could follow those abroad to zero, or below, along with the resumption of quantitative easing.

The question is whether such a collapse toward the zero bound would occur in a recessionary plunge in markets for stocks and other risk assets - in an economic and financial Ice Age, as Societe Generale's Albert Edwards has long predicted.

[Mark] Grant [chief global strategist at B. Riley FBR], by contrast expects that a drop in U.S. interest rates to new lows will light a fire under prices of assets from stocks to corporate bonds to real estate. Lower interest rates should spur a new round of borrowing, allowing borrowers to refinance debts at reduced costs. Lower risk-free rates then would make returns on other assets relatively more attractive, But he adds, once rates get close to zero, diminishing returns from cheap credit will set in.

Gold, by contrast, is in the early stages of a bull breakout from its six-year base. Gold has moved up from $1,300 an ounce in late May to over $1,500, while the dollar has held relatively steady and could reach $1,800, she indicated. Another thing to ponder: For the first time in history, gold actually provides a better yield than currencies that sport negative interest rates.''

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This is not a recommendation to buy or sell.

Last update: Aug 16, 2019 10:55:53 AM

This is not a recommendation to buy or sell.