The dollar is below 97 again and gold is holding it’s own. Silver a little weaker than gold has some work to do. Since we have broken below that 97 level, for gold and silver to bounce higher we need the 96 level to be broken. The mining stocks have been weak of late and we have to see which asset class will lead higher, if we indeed go higher, the physical or the paper. Either way, the dollar should give us a clue on direction. Gold and silver are flat at the open in Asia.
I will say if that was all gold and silver had in a run, it was rather pathetic. The data last week put a damper on the metals and watch the data this week to see if it also is somewhat bullish which will lead to a definite rate hike come September. A rate hike, if it is presumed to come, would be perceived by the market as bearish for gold and silver.
A week or two of good data is not reason alone for a rate hike when you have had 7 months of not so good data. But I have said for some time this year I expect the Fed to raise rates a bit as a token raise to keep their credibility intact. Why else would the Fed raise rates? So they have room to lower them in the near future when they realize we are sinking into a recession.
For now, that little word “perception” comes up again. The perception is that the economy is good, employment good and now retail sales are good and revised upward so the consumer will continue spending (70% of GDP). This in turn should push the stock market higher over the short term. Can we get to an all time high again before we capitulate? I think we might. While news can always change this analysis, barring any world events, I don’t see a lot of fear, something gold needs to move higher.
Let’s see what the week brings and if we can get the data to continue to be bullish for the economy, even though I believe it temporary in nature. Let’s also see if the dollar can push higher or give gold a chance to move higher if it falls below 96.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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