Tuesday, January 26, 2016

Global Volatility and the Rise of Precious Metals

Another day, another oddity courtesy of the purveyors of false hope, as China stocks crashed overnight, sparking a small rally in Europe and a monumental one in the United States.

Gold and silver investors, however, were not fooled, with the price of both precious metals rising in tandem - an equally odd event, given the blatant manipulation of the metals markets - to multi-month highs.

Silver gained a cool two percent, finishing the New York session at 14.495, its top tick since November 10. Gold, at 1119.70, saw its best level since November 3rd. Both price levels are notable as the twin titans have been kept solidly in a tight range for the past two months. While it's too early to call, the signal is for a breakout from these moribund levels, but, as any investor in the shiny stuff can surely attest, we've seen this play before.

Still, with world markets in turmoil, the rise of gold and silver back to a place of prominence as true currency would be in line with global concerns over instability, dull trade and the overarching risk of deflation.

In China, the SSE closed down 6.42%, the lowest close since early last year and a sure sign that all is not well in the Red Dragon's stomach. The Nikkei and Hang Seng were also lower by more than two percent.

Europe's markets were modestly higher, with gains on the majors of one percent or less.

The US equity market was another story altogether, romping right out of the gate on what can only be assumed to be false hope, in that the FOMC kicked off its first meeting of the year, and the thinking is that after the recent turmoil, the Fed may at least roll back its rate hike language. There is no chance of a rate move in either direction come tomorrow when the policy is released. Nobody is sweating bullets over this non-event. Stay tuned for further boredom and stupidity at 2:00 pm ET on Wednesday.

Bonus: for those unfamiliar with gold's traditional place as a global currency and why buying gold now might not be such a bad idea, see this article by Hugo Salinas Price, The Coming Revaluation of Gold.

Today's Closing Prices:
S&P 500: 1,903.63, +26.55 (1.41%)
Dow: 16,167.23, +282.01 (1.78%)
NASDAQ: 4,567.67, +49.18 (1.09%)

Crude Oil 31.42 +3.56% Gold 1,117.80 +1.13% EUR/USD 1.0866 +0.15% 10-Yr Bond 1.9940 -1.38% Corn 369.25 -0.14% Copper 2.04 +2.23% Silver 14.52 +1.87% Natural Gas 2.12 -1.62% Russell 2000 1,017.97 +2.07% VIX 22.50 -6.83% BATS 1000 20,270.92 +1.65% GBP/USD 1.4351 +0.75% USD/JPY 118.4055 +0.04%

No comments: