1. Markets remained volatile this week as the world continued to ponder the possibility of a global trade wars, triggered by the U.S. President Trump continued to shake up the staff in his administration, which also added to the air of global uncertainty. The White House appears to be showing signs of further chaos in the weeks to come as rumors of further staff changes are flying through the media.
2. The seasonally adjusted number of Americans filing initial claims for state unemployment dropped by 4,000 claims to a new level of 226,000 for the week ending March 10. The previous week’s level was revised lower by 1,000 claims. The four-week moving average of claims decreased by 750 to a new level of 221,500 from the previous week’s revised average. The previous weeks’ average was revised lower by 250. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to their 2017 pre-hurricane norms.
3. President Trump fired current Secretary of State Rex Tillerson this week, announcing his termination in typical blunt fashion via Twitter. Trump tweeted on Tuesday “Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job! Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so chosen. Congratulations to all!” Tillerson only served in the post for a little more than a year and, according to foreign policy experts, may go down as one of the most ineffective individuals to ever hold the position of US Secretary of State. Despite the speculation over his effectiveness as Secretary of State, Tillerson was regarded as one of the stabilizing members of Trump’s administration. His dismissal, along with the departure of Gary Cohn last week, leaves very few stabilizing influences among Trump’s remaining staff.
4. The Washington Post reported on Thursday that President Trump was “now comfortable” removing national security adviser H.R. McMaster but is taking his time on any announcement because he does not want to embarrass him. The Post cited five sources with knowledge of the matter, and the Wall Street Journal separately confirmed the report. The White House subsequently denied the news, saying that the president has a “good working relationship” with McMaster and that “there are no changes” at the National Security Council at this time.
5. Russia’s First Deputy Defence Minister, General Valery Gerasimov reportedly said this week that he had “reliable information” that militants were preparing to “falsify” a government-led chemical attack against civilians in Syria. He continued, saying that the U.S. would then use the false attack to accuse Syrian government troops of using chemical weapons and launch a strike on government districts in Damascus. Gerasimov said “In case there is a threat to the lives of our military, the Russian Armed Force will take retaliatory measures both over the missiles and the carriers that will use them.” The U.S. Department of Defense responded to the remarks by asking Russia to “stop creating distractions” and to stop “enabling the Assad regime’s brutality.”
6. In a fundraising speech, which the Washington Post has obtained an audio recording of, President Trump appeared to make a veiled threat that the U.S. could pull its troops out of South Korea if trade negotiations did not go his way. In the audio, Trump can be heard saying “We have a very big trade deficit with [South Korea], and we protect them. We lose money on trade, and we lose money on the military. We have right now 32,000 soldiers between North and South Korea. Let’s see what happens.”
7. Concerns over the possibility of a trade war as the result of the Trump administration’s planned tariffs continued this week. In an op-ed piece titled “China must be ready for looming trade war” which ran on Wednesday in China’s state-run Global Times, the paper said “China has to brace for trade wars both in strategy and mentality. Beijing needs to give Washington head-on blows in a similar manner and must not be soft.” In closing the piece, the Global Times said “Since the countries that the US targets are more resilient politically, the Trump administration is likely to end up as the first to collapse. The Trump administration will pay dearly if its toughness causes the US to suffer heavy losses. Its only resource in support of toughness compared with previous administrations is Trump’s personality, which is not widely welcomed. Beneath his aggressive demeanor is a brutal reality. China won’t allow itself to be trampled upon. Perhaps it is China’s destiny to struggle with the US only in order to teach Washington a lesson. In which case, so be it.”
8. Events related to last week’s poisoning of a former Russian double agent in the U.K. have escalated further this week. The U.K. expelled 23 Russian diplomats and Prime Minister Theresa May announced a series of additional measures, including taking immediate action to “degrade Russian intelligence capability for years to come” and dismantling Russia’s “espionage network.” Sergei Skripal and his daughter Yulia remain in critical condition in a U.K. hospital, suffering the effects of a Russian-made nerve agent. British Foreign Secretary Boris Johnson said on Friday that “Our quarrel is with Putin’s Kremlin, and with his decision – and we think it overwhelmingly likely that it was his decision – to direct the use of a nerve agent on the streets of the UK, on the streets of Europe, for the first time since the Second World War.” Russia continues to deny involvement in the incident and said it will retaliate for the UK’s decision to expel its envoys by expelling some of the UK’s diplomats from Russia.
9. Adding further complication to relations between the UK and Russia this week, London-based Russian businessman Nikolai Glushkov was found dead in his south London home on Monday. The British police are treating his death as a homicide after a post-mortem concluded that he died as a result of “compression to the neck”. Police stated “at this stage, there is nothing to suggest any link to the attempted murders in Salisbury” and noted that there is also no evidence that Glushkov was poisoned.
10. Crude oil continued to hold its position in the lower $60-a-barrel range this week thanks to a sudden spike in prices on Friday. Prior to Friday’s price surge, crude was headed for a weekly loss over continued concerns that rising supply from the U.S. and other nations could offset the efforts by OPEC, Russia and other oil producing nations to curb their own production to boost prices.
11. The euro drifted mainly sideways at the start of the week, then took a sharp move to the upside on Tuesday. The euro could not maintain its upward momentum however and had peaked by early Wednesday morning. From there, the euro moved fairly steadily to the downside, crossing briefly into negative territory late Thursday night. The euro tried to remain positive for the week through Friday, but a sharp drop towards the close of trading will mean the euro closes to the downside against the U.S. dollar for the week. The Japanese yen saw a dip to the downside at the start of trading for the week before drifting slightly higher through Tuesday. Early Wednesday morning the yen took a fairly sharp move to the downside, but it soon reached a floor and begin a steady move back higher that lasted through Friday. Despite a sharp drop on Friday, the yen still appears set to close the week higher against the U.S. dollar.
Chaos within President Trump’s administration will likely continue to lead to market uncertainty and volatility in the coming weeks. Media reporters have taken to converging on the White House each Friday to find out who the latest person to be fired is. Rumor has it that morale within the Trump administration’s ranks is at extreme lows. This week alone, Trump fired Rex Tillerson from his post as Secretary of State, and also terminated his personal assistant, John McEntee “for security reasons.”
Trump’s abrupt firing of Rex Tillerson as Secretary of State this week may also have put any proposed meeting in May between President Trump and North Korea’s Kim Jong Un in jeopardy. Rumors of additional terminations have been flying around Washington, D.C. over the last few weeks as several high-profile individuals have either resigned or been fired. President Trump’s Chief of Staff John Kelly, who himself has been rumored to be on the proverbial chopping block, reassured staff members on Friday that there were “no immediate personnel changes at this time”.
The Washington Post and the Wall Street Journal both published articles this week reporting that National Security Advisor H.R. McMaster would be the next official to be terminated but the White House quickly attempted to quell those reports. McMaster himself would neither confirm nor deny that he would be leaving, saying only that “Everybody has got to leave the White House at some point.”
Tensions between the UK and Russia ratcheted up this week as UK officials laid the blame for last week’s attempted murder of former Russian double agent Sergei Skripal and his daughter Yulia directly on Moscow and expelled 23 Russian diplomats from the UK. World leaders, including France, Germany, Britain and the US issued a joint statement on Thursday condemning the chemical attack on the two and blaming Moscow for the event. In their joint statement, the aforementioned countries said “We, the leaders of France, Germany, The United States and the United Kingdom, abhor the attack that took place against Sergei and Yulia Skripal in Salisbury, U.K., on 4 March 2018. This use of a military-grade nerve agent, of a type developed by Russia, constitutes the first offensive use of a nerve agent in Europe since the Second World War. It is an assault on UK sovereignty and any such use by a State party is a clear violation of the Chemical Weapons Convention and a breach of international law. It threatens the security of us all.”
The four nations also called upon Russia to provide complete detailed records of its Novichok nerve agent program to the Organization for the Prohibition of Chemical Weapons. Russia continues to deny any responsibility in the attack and suggests that such attacks have been planned and carried out by some other entity looking to sow further discord between Russia and the rest of the Western nations.
Russia also apparently issued a warning to the U.S. this week that it believes a similarly staged chemical weapon event is being planned in Syria and that if the US uses any supposed chemical attack as an excuse to launch cruise missile strikes against Damascus that the Russian military will respond immediately with retaliatory strikes on both the missiles and any carriers that launch them.
Amid the escalating geopolitical tensions, macroeconomic tensions also continue to surge as the upcoming trade tariffs that the US intends to impose on some of its trading partners stoke further speculations of a looming global trade war. China, in particular, seems to be taking a stance that a trade war with the U.S. will have a more harmful impact on the U.S. than it would on China and seems to be relishing the chance to “teach the U.S. a lesson”.
Next week will mark the first meeting of the US Federal Reserve under new chair Jerome Powell. Market volatility is likely to increase further next week as rumors and speculation swirl around the Fed’s future moves on interest rates throughout the remainder of the year. Most agree that, at a minimum, the Fed will conduct three interest rates in 2018 but Fed watchers will be parsing through any post-meeting minutes for any indication that more than three rate hikes could take place.
Savvy investors continue to take steps to diversify their portfolios against global uncertainty. Many of these investors have come to recognize a pattern in the behavior of precious metals ahead of Federal Reserve meetings and look for buying opportunities, in the form of temporary price dips, to acquire more physical precious metals at a discount, to aid in diversification, before prices begin to rally after the markets sift through and absorb the latest Fed decision.
Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.
Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
|Mar 9th2018||Mar 16th2018||Net Change|
|Gold||$1323.50||$1313.50||(10.00) – 0.76%|
|Silver||$16.63||$16.29||(0.34) – 2.04%|
|Platinum||$964.50||$951.00||(13.50) – 1.40%|
|Palladium||$994.00||$997.00||3.00 + 0.30%|
|Dow Jones||25335.74||24946.51||(389.23) – 1.54%|
Previous year Comparisons
|Mar. 17th2017||Mar 16th2018||Net Change|
|Gold||$1231.10||$1313.50||82.40 + 6.69%|
|Silver||$17.44||$16.29||(1.15) – 6.59%|
|Platinum||$963.00||$951.00||(12.00) – 1.25%|
|Palladium||$ 778.50||$ 997.00||218.50 + 28.07%|
|Dow Jones||20914.62||24946.51||4031.89 + 19.28%|
Here are your Short Term Support and Resistance Levels for the upcoming week.