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Wow! What a week! That deserves repeating. Wow! What a week!
Tuesday was Election Day and what a sweep it was. On Wednesday, the stock indices rallied strongly, and, in my opinion, the metals markets overreacted to the downside concerned about higher interest rates, tariffs, and how spending in the second Trump administration would affect the economy. Gold was down $73.00 an ounce and silver was down $1.44 an ounce.
On Thursday they both rebounded and recouped over 50% of the downside move. The new jobless claims number was a bit above the consensus forecast which helped the metals.
The other big news on Thursday was the FED’s interest rate announcement where they lowered the benchmark interest rate ¼ of a point following the ½ point decrease at their last meeting. If the economy and employment are doing so well why lower interest rates? Why indeed?
Could it have something to do with The Conference Board’s Leading Economic Index (LEI) signaling a recession? Here is a link to their website and the chart where it shows their Recession Signal occurred in September of this year. Scroll down to the chart. https://www.conference-board.org/topics/us-leading-indicators.
On Friday morning, the metals gave up most of Thursday’s gains with two factors weighing on them. The University of Michigan’s November Index of Consumer Sentiment and Index of Consumer Expectations both increased from October’s numbers. On the positive side of those numbers, it may have been that respondents were confident of a Trump election win and better economic news ahead. The other factor was Vladimir Putin saying that Russia is not abandoning the US Dollar. Buy metals on the dip. Or the upside momentum.
Until next time…
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