Precious Metals & Markets Wrap-up: Week Ending October 14 2016

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GoldInvestments
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Precious Metals & Markets Wrap-up: Week Ending October 14 2016

Postby GoldInvestments » 26 October 2016

A flat but positive week for us while gold stabilized its recent decline. Oil remained strong, and the $Aussie was steady. More progress was made with our daily trade pursuits last week. The flat trading range in large cap stocks awaits the December FOMC meeting to brace for a decline. There is now a 65% chance the Fed will hike on December 14. Market participants are nervous and currency traders equally as much.

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The rationale for a hike is still believed to be a face saving credibility thing for the Fed. We believe this is part of the mix, but their credibility is restored when repeatedly they have stated that rate decisions will be data dependent. To be fair, they are closely monitoring data. The data is not gangbusters, so they shouldn't hike. Yes there are no bullets in the chamber to play the rescue role in recession, but quantitative easing will fill that need if required.

Some Fed challengers may reference that the Fed forecasted 4 hikes this year, therefore not raising the Fed funds rate even once is a forecast failure. Why raise if the data suggests otherwise? Blaming congress could regain the credibility concern even if it was a real issue in the first place. A hike would hike the $US also and therefore impact large cap earnings. It is worth it hiking? Because current market behaviour is consensus driven, that hike might need to come. How much the stocks and currencies would already be priced in is another factor in itself.

Gold may not suffer in the event of a hike because technically the 13.5 month technical low may have been reached. Historically gold is not always a counter relationship to the $US. Sometimes they do follow each other in the same price direction for several months. Many technicians suggest this scenario could be in the making. Inflation signs are showing and gold sniff that space as good as oil. Oil is strong here against the supply glut story, so a continued price growth period is high in probability.

by Steve Andelkovic
Funds Manager
Gold and Energy Investments
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Freddy
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Re: Precious Metals & Markets Wrap-up: Week Ending October 14 2016

Postby Freddy » 05 November 2016

Totally agree and besides we're forgetting US dictates the prices since we create most of the demand, so considering that US increase it's energy independence hence a significant dip in prices. No rocket science to understand this folks.


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