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Dec 28, 2018

EU FX I Currencies: Yen jumps as investors stay cautious amid volatile stock moves

Abigail Ng



The Japanese yen jumped on Friday as investors sought protection against volatile stock moves, while the greenback dipped as stocks traded higher after a dramatic week capped by large price swings.
The benchmark S&P 500 tested its 20-month low early in the week and was at the brink of bear market territory before the three main indexes roared back with their biggest daily surge in nearly a decade on Wednesday and a late rally on Thursday.
The yen gained despite higher stocks, soft domestic data and a decline in benchmark Japanese bond yields, which fell back into negative territory for the first time in more than a year.
That suggests that there’s still demand for some insurance against extended volatility over the holiday period that’s keeping the yen better supported, said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
The Japanese currency was last up 0.62 percent against the greenback at 110.30 yen at 3:00 p.m. ET. Another safe-haven currency, the Swiss franc, also jumped 0.73 percent to 0.9803.
“Markets are a bit more cautious on risk appetite, with the Japanese yen and the Swiss franc gaining,” said Lee Hardman, an FX strategist at MUFG in London.
The dollar index, a gauge of the greenback against a basket of six major currencies, fell 0.11 percent to 96.37.
The U.S. currency has been hurt in recent weeks by rising expectations that the Federal Reserve will pause its tightening cycle sooner than expected, or risk harming the U.S. economy with further interest rate increases.
A partial shutdown of the U.S. federal government, trade tensions between the United States and China and complications relating to Britains exit from the European Union are also keeping investors cautious.
“There’s still a lot of potential risk and uncertainty out there,” said Osborne.
Both chambers of the U.S. Congress convened for only a few minutes late on Thursday, but took no steps to end the partial federal government shutdown before adjourning until next week.

Source: CNBC

Bond Yields at Close Report: US Treasurys recover earlier losses as stock-market volatility persists

Matt Clinch


U.S. government debt prices rose on Friday, recovering earlier losses, as this week’s roller-coaster ride in the equity market continued.
The yield on the benchmark 10-year Treasury note was lower at 2.25 percent as of 3:25 p.m. ET, while the yield on the 2-year note slipped to 2.526 percent. Bond yields move inversely to prices.

U.S. Markets Overview: Treasurys chart

TICKER COMPANY YIELD CHANGE %CHANGE
US 3-MOU.S. 3 Month Treasury2.389-0.0210.00
US 1-YRU.S. 1 Year Treasury2.5910.0130.00
US 2-YRU.S. 2 Year Treasury2.518-0.030.00
US 5-YRU.S. 5 Year Treasury2.555-0.0360.00
US 10-YRU.S. 10 Year Treasury2.715-0.0280.00
US 30-YRU.S. 30 Year Treasury3.025-0.0040.00
Fixed-income assets are perceived as a safe haven compared to equities, and the two have been moving with an inverse correlation this week. Low trading volumes have meant high volatility with both markets surging both higher and lower.
Stocks rose in volatile trading after alternating between gains and losses for most of the session. This comes after a wild session where the Dow erased a 600-point drop to close positive.
Investors have fretted over fears of a monetary policy mistake by the Federal Reserve, an ongoing government shutdown in Washington and potential signals the global economy may be slowing down.
Wall Street is also watching developments on the trade front as China and the U.S. try to strike a deal on trade — and the clock ticks down on the two nations’ tariff cease-fire.
—CNBC’s Fred Imbert and Eustance Huang contributed to this article.

Source: CNBC

Asia, Europe & US Markets at Close Report.

                                                                           ASIA


As rest of Asia rises on Friday, Japan solidifies first annual decline since 2011

Eustance Huang


Japanese stocks ended their trading year in negative territory on Friday.
The Nikkei 225 and Topix index both struggled for gains on the day: The former slipped 0.31 percent to close at 20,014.77 while the latter shed 0.5 percent to finish its trading week at 1,494.09. The declines came on the back of two straight days of gains for both indexes.
Those losses saw the Nikkei 225 post its first annual loss since 2011. The Topix also booked its largest annual loss since 2011, according to Reuters. The Japanese markets are closed next Monday, making Friday their final trading day of 2018.
The moves in Japan came after the country’s central bank released its summary of opinions from its December monetary policy meeting, where it noted the “heightening” of downside risks to economic activity.
“Regarding the outlook for the global economy, risks have been tilted to the downside on the whole amid heightening uncertainties and a prevailing view that such situation will be protracted,” said the note from the Bank of Japan.
Japan’s industrial output also declined in November, registering a 1.1 percent fall as compared with the previous month. The country’s jobless rate also increased to 2.5 percent in November, as compared to 2.4 percent in October, according to data from the Ministry of Internal Affairs and Communications.
Other major Asian indexes gain
Elsewhere in Asia, however, stocks mostly saw gains on Friday.
The mainland Chinese markets, closely watched in relation to the Sino-U.S. trade war, were higher on the day. The Shanghai composite rose approximately 0.44 percent to close at about 2,493.90. The Shenzhen composite gained 0.288 percent to finish its trading week at around 1,267.87 while the Shenzhen component added 0.339 percent to close at about 7,239.79.
Meanwhile, Hong Kong’s Hang Seng index fractionally lower during its final hour of trade.
The ASX 200 in Australia gained about 1.02 percent to close at 5,654.3, with most of its sectors higher. The heavily weighted financial subindex rose 2.34 percent as shares of Australia’s so-called Big Four banks saw gains. Australia and New Zealand Banking Group climbed up by 2.70 percent, Commonwealth Bank of Australia rose 2.25 percent, Westpac gained 2.98 percent and National Australia Bank advanced 2.66 percent.
South Korea’s Kospi gained 0.62 percent to close at 2,041.04.


Asia-Pacific Market Indexes Chart


TICKERCOMPANYNAMEPRICECHANGE%CHANGE
NIKKEINikkei 225 IndexNIKKEI20014.77-62.85-0.31
HSIHang Seng IndexHSI25504.2025.320.10
ASX 200S&P/ASX 200ASX 2005654.3057.101.02
SHANGHAIShanghaiSHANGHAI2493.9010.810.44
KOSPIKOSPI IndexKOSPI2041.0412.600.62
CNBC 100CNBC 100 ASIA IDXCNBC 1007271.2333.980.47
Wild session on Wall Street
In overnight market action stateside, stocks rebounded from negative territory to ultimately add to their strong gains from Wednesday.
The Dow rose 260.37 points, or 1.1 percent, to close at 23,138.82. The S&P 500 advanced 0.86 percent to end the day at 2,488.83 while the Nasdaq Composite gained 0.4 percent to close at 6,579.49.
At its lows of the day, the Dow had fallen 611 points. The S&P 500 and Nasdaq fell as much as 2.8 percent and 3.3 percent, respectively.
Futures also pointed to a slightly higher open for stocks stateside, during the afternoon of Asian trading hours on Friday.
Fresh concerns over Huawei and ZTE
Markets stateside were rocked earlier during their trading session on Thursday by renewed tensions between China and the United States. The ongoing fight between the two economic powerhouses has rattled global stock markets for much of 2018.
Reuters reported, citing three sources familiar with the situation, that U.S. President Donald Trump is considering an executive order to ban American companies from using telecommunications equipment made by China’s Huawei and ZTE.
Hong Kong-listed shares of ZTE gained around 0.8 percent on Friday, as of their final hour of trade, after seeing declines the previous day. Its Shenzhen-listed counterpart, however, fell 1.56 percent on the day.
The report comes amid efforts by officials from China and the U.S. to strike a permanent trade deal. Earlier in December, the two countries agreed to a 90-day grace period on implementing additional tariffs in order to come up with an agreement.
Following that development, the British newspaper The Times also reported that Britain’s defense minister said he has “grave, very deep concerns about Huawei providing the 5G network in Britain.
A spokesperson for the Ministry of Defence confirmed Williamson’s comments to CNBC over the phone.
The next-generation 5G wireless standard is expected to be a significant leap over the current generation, enabling technologies such as the internet of things and autonomous vehicles through higher data transfer speeds and reduced communication time between devices. The U.S., China and even Finland are jostling for supremacy over the nascent technology.
Currencies
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.332 after seeing an earlier high of 96.517.
The Japanese yen, widely viewed as a safe-haven currency, traded at 110.48 against the greenback after touching lows around 111.3 yesterday. The Australian dollar was at $0.7048 after touching highs above $0.707 in the previous session.
— Reuters and CNBC’s Fred Imbert and Chloe Taylor contributed to this report.


                                                                           Europe

European markets close higher; tech, banks and oil record big gains

David Reid,Matt Clinch,Chloe Taylor


European markets closed higher Friday with all major bourses and sectors in positive territory.


European Markets: FTSE, GDAXI, FCHI, IBEX


TICKERCOMPANYNAMEPRICECHANGE%CHANGEVOLUME
FTSEFTSE 100FTSE6733.97149.292.27515270139
DAXDAXDAX10558.96177.451.7154231187
CACCACCAC4678.7480.131.7469673203
The pan-European Euro Stoxx 600 index ended provisionally higher by 1.9 percent while the FTSE 100 was up 149 points, or 2.3 percent, at 6,733 by the close of trading. In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt both ended up by around 1.7 percent.
Tech and bank stocks led the charge. Among the former, AMS, Sitronic Nam, Infineon and Logitech were big gainers while in the banking sector Banco BPM and Metro Bank attracted buyers.
Basic Resources stocks were also among those leading the gains after a rise in Chinese stocks overnight and as fears over a US-China trade war subsided.The ongoing fight between the two largest economies in the world has rattled global stock markets for much of 2018.
Rio Tinto, Evraz, Anglo-American, Glencore, Antofagasta and Randgold Resources were all bid up following a rise in metal prices.
Other sectors enjoying substantial gains on Friday morning trade include Construction & Material, Chemicals and Oil & Gas.
Friday’s gains come after heavy selling in the region on Thursday, when the DAX had closed down 2.4 percent. The German bourse is still in bear market territory, around 20 percent off its most recent 52-week high. It’s also on track for its worst month since January 2016 and its worst year since 2008.
U.S. stocks fell and then rose sharply in Friday morning trade.
Asia stocks gained on Friday, with the Shanghai Composite Index edging up 0.3 percent, South Korea’s KOSPI adding 0.5 percent and Australian stocks climbing 0.6 percent. Japan’s Nikkei, however, slipped 0.5 percent after surging almost 4 percent in the previous session.

                                                                                US

Dow closes lower, ending a volatile week on Wall Street

Fred Imbert,Eustance Huang




Stocks gyrated in yet another volatile session on Friday as Wall Street concluded a roller-coaster week.
The Dow Jones Industrial Average traded 54 points lower in the final hour of trading. The S&P 500 was down 0.16 percent while the Nasdaq Composite climbed 0.2 percent. Gains in Apple, Amazon and Netflix lifted the tech-heavy Nasdaq. Both the Nasdaq and S&P 500 were also lower earlier on Friday.
Friday’s moves took place after the Dow closed 260 points higher on Thursday, erasing a 611-point loss. That reversal marked the 30-stock index’s biggest intraday turnaround in eight years. The S&P 500 also posted solid gains after declining more than 2 percent while the Nasdaq erased a 3 percent loss.
“We’re in the year-end period where there are a lot of folks that have stepped away from the market and therefore some significant changes in buy or sells have a more profound impact on the market,” said Gibson Smith, founder of Smith Capital Investors. “There’s another big component: A lot of focus-driven issues are being driven to a head. Some of it is on trade, some of it on the government shutdown, the Federal Reserve versus Donald Trump, they are all coming to a head at a time when there is a lot of illiquidity in the market. ”
“I think the market is growing tired of some of the uncertainty and some of the erratic nature of communication that has come out. That’s causing some of the volatility,” Smith added. “The volatility is going to continue and it’s going to continue into the New Year. There are still a lot of unresolved issues that sit on the horizon.”
Thursday’s gains added to Wednesday’s historic rally in which the major indexes had their best day in nearly 10 years.
“We all know that 2017 was an outlier - historically calm by multiple measurements. Volatility - on the other hand - is ‘normal.’ While very true, that tune can’t be used to describe what’s happened this week,” Frank Cappelleri, executive director at Instinet, wrote in a note to clients. “In just two and a half days, the SPX has witnessed its worst Christmas Eve showing ever, its biggest gain since 2009 and now the largest intra-day positive reversal since 2010.”
For the week, the major indexes are all up at least 3.5 percent and were all on pace to post their biggest weekly gain since late November.
Stocks are still, however, on track for their worst December performance since 1931. The S&P 500 was down 9.8 percent for the month through Thursday’s close while the Dow has lost 9.4 percent.
Investors have fretted over fears of a monetary policy mistake by the Federal Reserve, an ongoing government shutdown in Washington and potential signals the global economy may be slowing down. Wall Street is also watching developments on the trade front as China and the U.S. try to strike a deal on trade — and the clock ticks down on the two nations’ tariff ceasefire.
“When you look at more economically sensitive stocks in the United States today, they’re priced as if a recession is a forgone conclusion,” Sean Stannard-Stockton, president and chief investment officer at Ensemble Capital Management, told CNBC’s “Squawk Box. ” That, he said, “might happen, but it also might not.”
“We definitely think that investors in kind of more economically sensitive, high-quality businesses are going to be well rewarded for buying stocks at these prices,” Stannard-Stockton said.
The recent moves in stocks also put the Dow and S&P 500 on track for their first yearly loss since 2015. The Nasdaq, meanwhile, was on pace to log its first yearly decline since 2011.

Source: CNBC

The Week Ahead

Nyandabeh Ella Vincent,

Week commencing 31 December


Chris Beauchamp, market analyst

The usual quiet two weeks over Christmas and New Year will make life quite dull for economic and corporate calendar watchers.
However, some big numbers such as non-farms, China data and UK purchasing manager indices (PMIs) do appear.

Economic reports

Week commencing 31 December


Monday 31 Tuesday 1 Wednesday 2 Thursday 3 Friday 4
Full-year earnings
Half/Quarterly earnings
Trading update Next

Upcoming dividends (3 January)

FTSE 100: Randgold Resources (31 December) Experian, British Land
FTSE 250: Dairy Crest, Auto Trader, Aveva
Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.

Index dividend adjustments

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Source: IG

Crude Oil at Close Report: US crude rises 1.6%, settling at $45.33, but posts third straight weekly loss

Tom DiChristopher



Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images
Oil prices ticked were higher on Friday after a week of volatile trading, but shed early gains on profit-taking ahead of the New Year holiday as global crude benchmarks hovered near their lowest levels in more than a year.
U.S. light crude ended Friday’s session up 72 cents, or 1.6 percent, to $45.33, after reaching $46.22 a barrel earlier.
Brent crude oil futures were up 6 cents at $52.22 a barrel by 2:28 p.m. ET, having earlier risen to $53.80 a barrel. It had dropped 4.2 percent on Thursday.
Both benchmarks posted their third straight week of losses, with Brent dropping about 3 percent and WTI falling roughly half a percent.
Oil prices fell to their lowest levels in a year and a half this week and are down more than 20 percent for the year, depressed by rising supply and concerns about the health of the global economy.
U.S. crude inventories were down by 46,000 barrels in the week to Dec. 21, the Energy Information Administration said on Friday. Gasoline stocks rose by 3 million barrels, compared with analysts’ expectations in a Reuters poll for a gain of 28,000 barrels.
“The report was modestly bearish, as crude oil stocks held steady versus expectations of a sizeable decline,” said John Kilduff, a partner at Again Capital Management in New York. “The net effect of the report should keep prices fairly flat ahead of the weekend.”
Traders appeared to be squaring their books ahead of expected light volumes on Monday and a market closure on Tuesday for the New Year’s Day holiday.
“Looks like some people in the U.S. and UK got a nice opportunity to bail out of longs,” Sukrit Vijayakar, principal and trader at Trifecta Consultants in Mumbai, told Reuters Global Oil Forum.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude prices had been pressured by slowing economic growth “coupled with the expectation of strong U.S. production in the new year.”
The United States has emerged as the world’s biggest crude producer this year, pumping 11.6 million barrels per day, more than both Saudi Arabia and Russia.
Earlier this month, OPEC and its allies, including Russia, agreed to cut output by 1.2 million bpd, or more than 1 percent of global consumption, starting in January.
Russian Energy Minister Alexander Novak said on Thursday that Russia would cut its crude output by between 3 million and 5 million tonnes in the first half of 2019 as part of the deal.
Novak also told reporters the U.S. decision to allow some countries to trade Iranian oil after putting Tehran under sanctions was one of the key factors behind the OPEC deal.
Imports of Iranian crude oil by major buyers in Asia hit their lowest level in more than five years in November as the U.S. sanctions on Iran’s oil exports took effect last month, government and ship-tracking data showed.

Source: CNBC

Gold Price at Close Report: Gold holds near 6-month high on softer dollar, tumultuous stocks

Huileng Tan



Gold prices held near six-month highs hit on Friday, helped by a softer dollar, concerns over slowing economic growth and wild swings in equities, putting bullion on track for a second straight week of gains.
Spot gold was up 0.3 percent at $1,278.99 per ounce as of 1:46 p.m ET, and up 1.7 percent so far this week.
Earlier it had peaked at $1,282.09, its highest since June 19. U.S. gold futures settled $1.90 higher at $1,283.00 per ounce.
“A weaker U.S. dollar is fueling higher gold prices and the volatility in the stock markets is worrying people about the prospects in 2019, which is also moving people to gold,” said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
“But, prices are not able to extend gains as there is less liquidity in the markets and not many people want to put positions ahead of the long weekend.”
The dollar index, a gauge of its value against six major peers, fell 0.06 percent, adding to gold’s appeal by making it cheaper for holders of other currencies.
The final week of 2018 has seen wild swings in equities, with the CBOE Volatility Index, Wall Street’s main fear gauge, hitting its highest level since early February before easing slightly.
Financial markets are expecting U.S. growth to slow next year due to rising interest rates. A measure of U.S. consumer confidence posted its sharpest decline in more than three years in December, emphasising the possibility.
A darkening outlook for global economic growth, a simmering trade war between the United States and China, as well as Brexit-linked uncertainty may trigger renewed risk aversion and help lift gold prices in 2019, said Ilya Spivak, a currency strategist at DailyFx.
Gold is often used by investors as a hedge against political and financial uncertainty.
“As long as the U.S. government continues to remain shut, it may invoke some safe-haven bids and help gold to touch new highs,” said Afshin Nabavi, senior vice president at MKS SA.
Both chambers of the U.S. Congress convened for only a few minutes late on Thursday but took no steps to end a partial federal government shutdown before adjourning until next week.
Among other precious metals, silver rose to a near-five-month high at $15.364 per ounce and was last up .74 percent at $15.32. It was on track for its biggest weekly gain since July 2016, up 5.2 percent so far this week.
Platinum was down .65 percent at $790.80 per ounce, and palladium fell 2.31 percent to $1,245.49. Palladium has gained about 3 percent this week.

Siource: CNBC

Metals I CMI Spot Prices as of the Close of Trading in New York,

Spot Prices as of close of trading in New York
 
Friday, December 28, 2018
 
 
 
GOLD
 
TODAY
 
$1,281.60
CHANGE
 
+$1.80
WEEK AGO
 
$1,257.00
MONTH AGO
 
$1,222.90
YEAR AGO
 
$1,307.95
SILVER
 
TODAY
 
$15.41
CHANGE
 
+0.13
WEEK AGO
 
$14.86
MONTH AGO
 
$14.26
YEAR AGO
 
$17.17
PLATINUM
 
TODAY
 
$797.00
CHANGE
 
-$3.00
WEEK AGO
 
$797.90
MONTH AGO
 
$823.50
YEAR AGO
 
$936.30
PALLADIUM
 
TODAY
 
$1,1265.00
CHANGE
 
-$10.35
WEEK AGO
 
$1,236.00
MONTH AGO
 
$1,165.40
YEAR AGO
 
$1,061.10
GOLD/SILVER RATIO
 
83.17
 

Will Coins and Bars Save Gold?

arkadiusz-sieron



There is a disconnection between paper and physical gold prices and the former has to catch up with the latter eventually. Myth or fact? We invite you to read our today’s article about demand for gold coins and bars and find out whether it will save the yellow metal.
The best stories are about the conflict between good and evil, or light and dark. In the precious metals market, we also have such a narrative, or actually several variations on the theme. But one of the most popular thread is the ‘disconnection’ between paper and physical gold. The characters are clearly identified: paper market is the powerful Empire while the physical gold is Rebellion, which heroically fights a stronger and more vicious opponent.
The battle is about gold and silver. The paper market suppresses their prices by malicious use of derivatives, mainly futures, and other techniques of manipulation. Luckily for the Rebellion, these actions are doomed to failure. When the fraud is exposed and the paper gold market collapses under its own weight, ‘real’ market forces come to the fore, pushing the gold prices eventually back to the fundamental level which would be reflected in the pure physical price market. In other words, after being manipulated for years, the ‘true’ price of gold will surface.
According to this narrative, the declines in the gold prices are practically always seen as something suspicious or even fake. Hence, many investors do not react adequately to market changes, but wait for the “imminent” rebound, missing many opportunities to gain.
The fact that the prices of bullion coins or bars typically lag behind the spot price only reinforces the belief in the disconnection between paper and physical markets. It’s true that prices of gold bars and coins are above the spot price, but this is due to premium for refining or minting and selling to retail investors. Bullion dealers quote prices higher than London fix, since they bear higher costs than wholesale players and add some markup to make a profit.
Another thing is that there is a limited capacity to produce them, which lifts prices. For example, only the US Mint (surprise, surprise) can mint US Mint coins. When strong demand meets limited supply we have higher prices. However, it proves neither a shortage of gold, nor the disconnection between physical and paper market. It rather demonstrates the lack of enough equipment for coining.
Moreover, the fact that bullion dealers slowly cut the prices of coins and bars should not be very surprising. You should know the mechanism from the gas stations: the price of gas rises much faster than it falls in a response to changes in the crude oil prices. One reason for this is limited competitive pressure. But it’s also true that gas stations wait with cuts to cover the costs of the higher-priced gas still in their tanks. The same applies to bullion dealers. They reduce retail prices with some delay, as they wait to cover the costs of the higher-priced coins and bars still in their inventory.
The best example of the permabull mindset is the immediate reaction to the plunge in gold prices in 2013. After a decade-long bull market, the sudden dive was a bitter pill to swallow. Therefore, people deluded themselves that the decline was an anomaly. The quote from Doug Casey is very telling:
My first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity.
He wrote these words in April, 2013, after the price of gold slid to $1,400 level. Five years later, it is lower, not higher, at the level of about $1,200, as one can see in the chart below. Of course, the price of gold may eventually go higher. But a term “eventually” is not very useful in trading and investments. If the price is going to decline and provide an ultimate buying opportunity at much lower price levels, it simply makes sense to close the positions and reopen them much lower (perhaps profiting from the decline). And you know: Didi and Gogo waited for Godot for a long time, but he never arrived.
Chart 8: Gold prices (London PM Fix) from January 2013 to November 2018.
Gold prices (London PM Fix) from January 2013 to November 2018
To be clear, we are not admirers of our monetary system based on paper currencies. We acknowledge that it is more inflationary than the gold standard and may collapse one day. We like gold, but we like objectivity and truth much more. And we care about our clients’ portfolio’s returns much more than we do about the profits of gold sellers and producers that would prefer one to believe that gold is going to always go up and never decline. Still, we are sympathetic to part of gold bulls’ arguments. At first glance, it makes sense: the supply of money increases, the currencies systematically depreciate, so the price of gold should only rise.
However, such reasoning does not take into account market sentiment and investors’ psychology. People react differently to low and high inflation. If we have hyperinflation, or just high and accelerating inflation, gold will shine, without a doubt. But we have modest inflation. Moreover, the US dollar is not the only currency which depreciates – all currencies depreciate in a similar pace. Actually, thanks to strong demand for greenback (due to its status of international reserve), and contained inflation, the dollar looks quite attractive. Especially given that gold does not bear any yield.
The bottom line is that the gold price discovery might indeed not be perfectly honest. Perfect honesty is very rare on Earth, perhaps even rarer than gold. But it does not mean that there is a disconnection between paper and physical gold prices. It’s a perfect… nonsense, as any price differential would create enormous arbitrage opportunities. There might be a disconnection between the paper and physical prices in the future if there is a shortage of a given precious metal (it’s unlikely that we’ll see shortage of gold, but silver is a different story), which has already happened in the palladium markets about two decades ago, but this is unlikely to happen anytime soon and very unlikely without a powerful parabolic upswing in prices beforehand. We have definitely not seen one recently.
If you enjoyed the above analysis and would you like to know more about the macroeconomic outlook and the gold market, we invite you to read the December Market Overview report. If you’re interested in the detailed price analysis and price projections with targets, we invite you to sign up for our Gold & Silver Trading Alerts. If you’re not ready to subscribe yet and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!
Thank you.
Arkadiusz Sieron, Ph.D.
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
Gold News Monitor
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Source: SunshineProfits

Trump threatens to shut border 'entirely' unless Democrats fund wall

Erin Durkin



Donald Trump threatened on Friday to close the US southern border with Mexico entirely if his demands for money to build a wall there are not met.

The escalating threats came on the seventh day of a partial government shutdown that began when the president refused to accept legislation to fund government agencies unless it also contained money for the wall.
“We will be forced to close the Southern Border entirely if the Obstructionist Democrats do not give us the money to finish the Wall & also change the ridiculous immigration laws that our Country is saddled with,” Trump said on Twitter.
“The United States looses [sic] soooo much money on Trade with Mexico under NAFTA, over 75 Billion Dollars a year (not including Drug Money which would be many times that amount), that I would consider closing the Southern Border a ‘profit making operation,’” Trump said. “Either we build (finish) the Wall or we close the Border.”
Trump has previously claimed that the US is making money from his renegotiated version of the North American Free Trade Agreement (Nafta).

Donald J. Trump (@realDonaldTrump)
We will be forced to close the Southern Border entirely if the Obstructionist Democrats do not give us the money to finish the Wall & also change the ridiculous immigration laws that our Country is saddled with. Hard to believe there was a Congress & President who would approve!
December 28, 2018
Many government agencies have been shut down for the last week, after their funding expired when Trump declared he would not accept an extension unless it contained $5bn for his border wall.
About 800,000 federal workers have either been placed on leave or required to work without pay.
The shutdown is expected to continue into 2019, after the House and Senate adjourned on Thursday without taking any action to end the impasse.
In January, Democrats will take control of the House. The incoming speaker, Nancy Pelosi, has said the chamber “will vote swiftly to reopen government and show that Democrats will govern responsibly in stark contrast to this chaotic White House”.
The longer the shutdown continues, the more the public will feel its effects. Smithsonian museums have so far remained open with money they had on hand, but announced on Thursday that all museums and the National Zoo will be closed starting on 2 January.
Nine cabinet-level departments, including homeland security and the justice department, are affected by the shutdown, along with dozens of other agencies.
Federal workers are still set to receive paychecks beginning on Friday, which were processed before the shutdown. But those who were supposed to work last Saturday, the first day of the shutdown will be short a day’s pay. The next paycheck will not come if the shutdown continues.
The government offered tips for federal workers unable to pay rent, mortgages or other debt and looking to fend off creditors. “I am a federal employee who has recently been furloughed due to a lack of funding of my agency,” said one of the sample letters from the Office of Personnel Management. “Because of this, my income has been severely cut and I am unable to pay the entire cost of my rent, along with my other expenses.”
Trump has threatened to close the border with Mexico before, as a caravan of Central American migrants were making their way toward the US. That did not happen, though officials temporarily closed the busiest port of entry into the US last month amid clashes with members of the migrant caravan.
It is not clear how an outright closure of the border would work. At just the San Ysidro port of entry, about 70,000 cars and 20,000 pedestrians cross each day.

Trump on Friday also repeated his threats to cut off all aid to Guatemala, El Salvador and Honduras, the countries of origin for many migrants attempting to cross the US border and seek asylum. He said the three nations have been “taking advantage of U.S. for years!”
Meanwhile, Trump is also defending himself from criticism that he was inappropriately political during his visit to US troops in Iraq, where he signed Make America Great Again campaign hats and a Trump 2020 patch presented to him by service members.
“CNN & others within the Fake News Universe were going wild about my signing MAGA hats for our military in Iraq and Germany,” Trump said on Twitter on Thursday evening. “If these brave young people ask me to sign their hat, I will sign. Can you imagine my saying NO?”
He said his team did not bring or distribute the hats.

Source: The Guardian