Gold & Silver Are Loving The Gov’t Shutdown Conflict, Stock Volatility

Video Length: 00:35:55

Gold and silver markets are trading relatively quiet this week as the U.S. stock market continues to show surprising strength. It’s surprising at least to investors who expected markets to reflect growing political threats to the economy. ?As the partial government shutdown enters an unprecedented 28th day, economists are warning of a significant hit to first quarter GDP.

It’s not that furloughed government workers contribute much to economic productivity. It’s that since they are now starting to miss paychecks, they will have less to spend into the economy. GDP measures the nominal size of the economy, not how productive or efficient or free or fair it is.

An expected downtick in GDP, however slight, will pressure the Federal Reserve to back off on rate hikes and ready its stimulus bazookas for deployment. So in the strange world of Fed-dominated markets, bad news for the economy is being interpreted as good news for stocks.

A rising stock market often – though not always – depresses demand for bullion.

This week gold prices once again traded just below the $1,300 resistance level. As of this Friday recording, gold has pulled back a bit and comes in at $1,284 an ounce to register a weekly decline of 0.3%.

Silver is off 1.1% for the week to trade at $15.47 per ounce. Platinum is down 1.2% now to trade at $804. And finally, palladium, which is pulling back a bit today like the other precious metals, is still spiking 5.0% higher this week to a record $1,388 per ounce price.

The palladium market is exhibiting highly unusual trading activity as something of a buying panic sets in over shortage fears. And, as our podcast guest David Jensen last week pointed out, the explosive price action in palladium could be a precursor to what lays ahead for platinum and silver – and possibly even gold.

The mining industry is having great difficulty growing production. Economically viable new deposits are few and far between. Some of the majors are deciding the best way to acquire new reserves is to buy up the competition.

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