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Wow, what a week! Market whiplash was on the menu. Buy the dip in gold wins again!
The stock indices dip on Monday was reminiscent of October 19, 1987. James Baker, the US Treasury Secretary at the time, was at odds over currency valuations and interest rates with our trading partners. Push came to shove the following week and world markets tanked the following Monday. They did begin to recover days later.
Last week on Thursday Japan raised their interest rate which ran counter to the rest of the world’s largest economies who were keeping interest rates steady or lowering them. This derailed the Yen Carry Trade where cheaper Yen is used to purchase other assets. So…on Monday world markets tanked. Now a few days later they have begun to recover. As I wrote last Friday, “Here we go again!”.
How did gold and silver do versus the Dow Jones Industrial Average (DOW)? From the close on Friday, August 2nd to this morning, August 9th, gold is up .40% so far this morning, and is up .16% from last Friday’s close, silver is up .14% this morning and down 2.46%, from last Friday’s close, and the DOW is down .10% this morning and down .83% from last Friday’s close. The largest drawdowns during the week were 1.1% for gold, 4.14% for silver, and 2.6% for the DOW. Gold doing what it does. Hedging your assets.
Gold continues to be well above its 50-day and 200-day moving averages. Silver continues to trade between its 50-day and 200-day moving averages.
The one significant economic report out this week was Thursday’s initial jobless claims report which came in lower than expected. Will this put a delay in a fed rate cut or have cause for a smaller cut?
The talking head prognosticators who are usually wrong, bellowed about a Fed emergency interest rate cut after Monday’s market meltdown. As of today, no emergency rate cut.
My customers have been buying silver at these levels and with the gold/silver ratio at 89.45 it is at a level where historically silver has moved higher.
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