Free Editorial
Conflicting Signals
From the HRA Journal: Issue 310
It's not getting any less weird out there, that's for sure. We saw continued deterioration in several US economic metrics, but some stabilization elsewhere. There was enough "bad news is good news if it keeps bond yields low" vibe to maintain the SPX near its highs. That's impressive given how much traders could worry about if they had a mind to.
Down the Rabbit Hole
From the HRA Journal: Issue 309
We're in the midst of what I think is a fairly minor, and expected, gold correction. Junior resource traders, of course, are acting like the world is coming to an end. Multiyear bear markets are bound to make one defensive.
Major market traders seem pretty calm given so many people are suddenly talking about an impending recession. I still think we will probably see one but, like any good contrarian, I'm not liking how much company I suddenly have in thinking that. There is no evidence markets are trading based on that recession assumption though. I guess comments about it are just lip service for most.
The Adjustment Bureau
From the HRA Journal: Issue 308
Trade wars and geopolitics, along with signs of decelerating economies around the globe, continue to support bullion prices. The new gold bull market is very much official now. Even if we get some near-term pullback-and we should hope for one-I think the die is cast.
Equities have been fairly calm, given all the craziness at a political level. Falling bond yields have cushioned the stock market, though you can see traders-final--starting to ask themselves WHY yields are so weak everywhere. Expect volatility to be high for an extended period.
It’s On (For Gold, At Least)
From the HRA Journal: Issue 306
Gold.
Gold.
Gold.
Did I mention gold?
Loose Cannon
From the HRA Journal: Issue 305
Saved by the bell, or the tweet I should say. I was putting this extended version to bed when US President Trump decided he'd go after yet another major trading partner.
That was a little too much for Wall St, and finally generated enough concern to flatten bond yields, again, and generate strong buying that lifted gold prices back through $1300/oz. At this point, it's a bounce, not a trend, but I think gold now goes higher if we don't quickly see a moderation in the multi-front trade war Trump seems committed to.
Floatation Device
From the HRA Journal: Issue 304
What, me worry? Wall St continues to be remarkably calm in the face of a blow up of China-US trade talks. Trump is now threatening to raise tariffs on ALL Chinese imports to 25%. No one knows if that is just bluster – Wall St seems to assume it is – but that seems like an over-optimistic assumption with this particular President.
Lack of fear and a less accommodating US Federal Reserve continues to weigh on resources and especially on gold. We may see a little more base metal weakness to go with it if the trade war really heats up, I’m not sure new tariffs will really impact base metal demand in China but a lot of traders surely think it will, which amounts to the same thing in practice, in the short run at least. Most of the biggest Chinese exports to the US (like mobile phones) are relatively light users of metals. The actual impact on base metal demand will be smaller than the feared impact, but it’s the latter that will drive trading I’m afraid.
A Self-Dealing Market
From the HRA Journal: Issue 303
The editorial in this issue deals with a subject that I think is too ignored. It's one of THE main reasons for the current bull market in NY but rarely gets talked about, and almost never gets talked about for what it truly is, which is a form of insider trading. I don't want to sound like I condone insider trading. But I do get sick of Wall St being holier than thou when it comes to junior markets. Wall St has no reason to feel virtuous. To paraphrase the old saying in tech- when it comes to Wall St, insider trading isn't a bug, it's a feature.
Cursed?
From the HRA Journal: Issue 302
The FOMC cranked up the dovishness yesterday, after I’d finished the editorial naturally. It’s really just more of the same and doesn’t change the message, just reinforces it. Added dovishness has given gold a bounce, but it’s still fighting against the extreme “risk on” stance on Wall St. Traders just don’t care that the Fed is clearly worried about a substantial economic slowdown.
Bipolar Base Metals
From the HRA Journal: Issue 301
Wall St continues to bask in the love of the FOMC, with lots of soothing comments to warm the cockles of trader's hearts and bring on the bids.
I've still got some real concerns about the US economy as the year wears on, but maybe all this stock market joy turns things around. Some rapidly deteriorating economic readings will need continued attention though.
PRE-PRE-PDAC
Gold's moving again, just in time for the run-up to the annual PDAC conference in Toronto, and the Metals Investment Forum that precedes it. Copper is trading very well too. While I've pointed out many times that this isn't as unusual as some think, I'm sure generalists at least will make much of the fact that bullion is moving higher in tandem with the $USD.
Gold is moving higher on straight up demand, not as the "anti-dollar". To my mind, this increases the odds of this move having some "legs". That's good, since I still think the important price level lies on the other side of the $1350 mark. Reaching the $1360's is what would really make the generalists pay attention.
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