From the Trading Desk
In a move that sent shockwaves through every financial market, the UK voted to exit the European Union on Friday of last week. Gold immediately skyrocketed from the low $1,250s all the way up to over $1,360 with the price jumping all over the place for a large chunk of Friday’s early trading session. The fallout from the referendum has been substantial. Equities, especially financial institutions, have been hammered, UK credit was downgraded by a variety of credit agencies, UK 10 year yields declined below 1% for the first time on record, and the GBP has lost over 10%. This is just the immediate reaction to the referendum. Many economists posit that this move by the United Kingdom could just be a “canary in the coalmine” of further global economic distress. Investor anxiety in other financial markets has already translated into gains for gold and this should continue to be true in the near term. Dips down to $1,300 will likely find sizable bids while overhead resistance is coming in at $1,360.
The U.S. however, took off higher like I thought it might if you read yesterday’s Current Thoughts.
The dollar did break lower below the target I spoke about yesterday. Gold and silver however opened lower and pretty much stayed at that level all day with silver performing slightly better than gold on the rebound. I still lean bullish as long as the dollar continues south as I do believe they will come back to that inverse relationship again.
Not much else to say right now except the more I read and research on what’s really going on in this world, the more I am convinced as ever that a deflationary credit contraction is coming, the likes of which we have not seen since the 1930’s. Those who are not prepared it will take by surprise, hence my writing of the book Illusions of Wealth. There are many ways to profit in up or down markets.
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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