The Precious Metals Week in Review
March 31st, 2017
1. Last week’s failed vote to “repeal and replace” the Affordable Health Care Act (a.k.a. Obamacare) could be setting the stage for the “same old, same old” in Washington as government gridlock appears to be alive and well.
2. The number of Americans filing initial claims for state unemployment benefits dipped by 3,000 claims to a new level of 258,000 for the week ending March 25. The previous week’s data was unrevised. The four-week moving average of claims increased by 7,750 claims to a new level of 254,250 from the previous week’s unrevised average. The failure to show a significant recovery after last week’s surge in claims could still serve to make the Federal Reserve delay on some of its planned rate hikes later in the year if the unemployment trend does not solidly reverse by their next FOMC meeting.
3. After Congress failed to hold a vote on the repeal and replacement of “ObamaCare” last Friday, President Trump’s entire policy agenda has now been called into question. Mr. Trump has promised to address tax reform and America’s crumbling infrastructure issues and the failure of Congress to be able to follow through on his promise to overhaul the much-maligned ObamaCare, even though there is a Republican majority, could mean that his plans for these items could face resistance as well. On top of Congress failing to leap its first hurdle under the Trump administration, the U.S. is also rapidly approaching its “Debt Ceiling” and without some emergency spending measures, there could be another government shutdown in the works. It appears that even with a largely Republican controlled government, gridlock will continue to be the norm in Washington, D.C.
4. After just 10 weeks on the job, President Trump’s approval rating continues to be abysmal amid seemingly endless negative news commentary. This week Michael Flynn, president Trump’s former national security adviser, requested immunity from prosecution in exchange for testimony on Russia’s alleged influence in the 2016 election. The Senate Intelligence Committee rejected that request and Mr. Flynn’s lawyer, Robert Kelner, said in a statement regarding the request that no “reasonable person” would subject themselves to questioning in “such a highly politicized, witch hunt environment without assurance against unfair prosecution.” The continued negative press coverage can only be a further detriment to the Trump administration’s ability to govern effectively.
5. The Associated Press reported this week that North Korea is accusing the United States of basically using North Korea’s nuclear program as a smokescreen for its own desire to scale back banning of nuclear weapons. Ri Song Chol, a counsellor at North Korea’s U.N. mission, said the U.S. used nuclear weapons “to threaten and blackmail other countries”, including North Korea. He said he was responding to U.S. Ambassador Nikki Haley’s remarks from Monday that the U.S. would not participate in talks aimed at banning nuclear weapons because “bad actors” would not abide by any potential treaty. Ms. Haley said “North Korea would be the one cheering, and all of us and the people we represent would be the ones at risk.” Ri said that “The deceptive talk of the U.S. representative is to hide U.S. identity as a principal offender blocking the global effort for denuclearization of the world.”
6. Senator John McCain made waves with North Korea last week, saying on MSNBC’s “For the Record with Greta” that “China is the one, the only one, that can control Kim Jong Un, this crazy fat kid that’s running North Korea.” McCain continued, saying that China “could stop North Korea’s economy in a week.” North Korea’s state-run News Service carried out its own retaliatory criticism, saying “Noted idiot John McCain denounced as an infantile lunatic angrily soiling himself after slandering august personages of DPRK”. Senator McCain appeared to be unfazed by their remarks, saying “What, did they want me to call him a crazy skinny kid?”
7. In South Korea, official data showed that industrial output plummeted at its fastest pace in over eight years in February. The drop appears to have been due to scale backs in semiconductor production. The South Korean government said that despite the setback, the economy was still headed towards recovery. Lee Ho-seung, director general of the economic policy bureau told Reuters “Despite political risks in the country, we determine the economy is expanding at a pace for growth in the mid-2 percent range.”
8. President Trump is scheduled to hold his first meeting with Chinese President Xi Jinping next week in Florida and he tweeted out, ahead of the meeting, that the U.S. “can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.” The last line may have been directed to American companies, such as Apple, who carry out a large part of their manufacturing operations in China. For China’s part, Foreign Ministry spokesman Lu Kang said “Both sides should work together to make the cake of mutual interest bigger and not simply seek fairer distribution.”
9. Crude oil prices settled at just over $50 to end the first quarter as continued growth in U.S. supplies appear to be undercutting any help from OPEC’s decision to abide by a production cap agreement. The weekly Baker Hughes count of U.S. oil rigs jumped by another 10 rigs this week to a new total of 662, which is 300 more oil rigs than were operating in the U.S. at this same time last year.
10. The euro started the week with a bump to the upside against the U.S. dollar but soon peaked and drifted sideways through Tuesday afternoon. On Tuesday, the euro began a fairly steady drift to the downside but appeared to reach a floor late on Thursday and looks set to close the week out lower against the U.S. dollar. The Japanese yen also saw a bump higher at the start of the week, but had eventually peaked by Tuesday afternoon and it too began trending to the downside. The yen however, saw a recovery take place on Friday and it appears set to close the week slightly higher against the dollar.
With his healthcare overhaul now a failed effort fast receding in the rearview mirror, Trump has doggedly turned his attention to trying to overhaul U.S. trade agreements. He has ordered a comprehensive review of America’s trade deficits and is apparently intending to seek the collection of unpaid penalties for past violations of such agreements. President Trump will be meeting with Chinese President Xi Jinping next week in Florida and the outcome of that meeting is likely to be closely watched to see if the increasingly contentious relationship between the U.S. and China deteriorates further. Mr. Trump’s criticism over Chinese trade tactics, their growing military presence in the South China Sea, and their “hands off” approach to dealing with North Korea have led to more than one barbed exchange between officials and representatives for the two countries. Elsewhere in Asia, South Korea’s former President Park Geun-hye was arrested and placed in jail on Friday over her role in the corruption allegations that ultimately led to her impeachment. She apparently has not been formally charged, but prosecutors will still be able to detain her for up to 20 days without doing so. It is widely expected that Park will be charged with extortion, bribery and abuse of power. In Venezuela, political tensions were stoked when the high court annulled the country’s legislation and announced that it would be assuming Congress’ role in a ruling that authorizes President Nicolas Maduro to create oil joint ventures without a congressional mandate. Venezuela’s attorney general chastised the high court in a rare split from his usual support for President Maduro and government bond values crashed amid international disapproval of the move and the street protests that it triggered.
In Europe, UK Prime Minister Theresa May followed through on her commitment to trigger “Article 50” this month and delivered the official letter of intent to the European Union on Wednesday. The delivery of that letter will now begin a two-year negotiation process on the terms of the UK’s divorce from the EU. In the wake of the official beginning of the UK’s exit from the EU, Scotland’s First Minister Nicola Sturgeon declared that she had a mandate from her people to hold a second referendum on Scottish independence from the UK. Scotland overwhelmingly voted to remain in the EU during the UK’s referendum and it was widely expected at the time that it would make another play at separating itself from the UK. The UK government is likely to block such a referendum until after the EU exit process is completed since it will be busy with its own negotiations. Sturgeon has called for the UK to approve a second referendum on Scottish independence between the fall of 2018 and the spring of 2019. In an environment of ongoing political uncertainty in the U.S.; geopolitical uncertainty throughout the globe; and a globally connected economy that continues to struggle to recover from a financial crisis that is now coming up on 10 years old, savvy investors recognize that they must maintain diversity in their investment portfolios. These wise investors continue to purchase physical precious metals as part of a plan for a well-diversified portfolio that avoids over-exposure to any single asset class whenever they recognize a buying opportunity to do so.
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.
Trading Department – Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
|Mar. 24th 2017||Mar. 31st 2017||Net Change|
|Gold||$1249.00||$1249.20||00.20 + 0.02%|
|Silver||$17.77||$18.24||0.47 + 2.64%|
|Platinum||$969.00||$949.700||(19.30) – 1.99%|
|Palladium||$813.00||$798.50||(14.50) – 1.78%|
|Dow Jones||20596.72||20663.22||>66.50 + 0.32%|
Month End to Month End Close
|Feb. 28th 2017||Mar. 31st 2017||Net Change|
|Gold||$1253.30||$1249.20||(4.10) – 0.33%|
|Silver||$18.44||$18.24||(0.20) – 1.08%|
|Platinum||$1028.50||$949.70||(78.80) – 7.66%|
|Palladium||$771.00||$798.50||27.50 + 3.57%|
|Dow Jones||20812.24||20663.22||(149.02) – 0.72%|
Previous year Comparisons
|Apr. 1st 2016||Mar. 31st 2017||Net Change|
|Gold||$1223.50||$1249.20||25.70 + 2.10%|
|Silver||$15.05||$18.24||3.19 + 21.20%|
|Platinum||$955.20||$949.70||(5.50) – 0.58%|
|Palladium||$560.90||$798.50||237.60 + 42.36%|
|Dow Jones||17792.75||20663.22||3147.28 + 17.97%|
Here are your Short Term Support and Resistance Levels for the upcoming week.
Support 1220/1200/1190 17.90/17.50/17.20
Resistance 1250/1275/1300 18.35/18.75/19.00
Support 930/880/860 790/740/710
Resistance 975/995/1025 815/840/875