The Precious Metals Week in Review

May 5th, 2017

 

1. Global geopolitics and economic uncertainty continue to be the primary drivers for market volatility. This weekend’s election in France is the primary focus for the coming week.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment benefits plunged by 19,000 claims to a new level of 238,000 for the week ending April 29. The previous week’s data was unrevised. The four-week moving average of claims increased by 750 to a new level of 243,000 from the previous week’s unrevised average.

Week In Review May 5th 2017
Week In Review May 5th 2017

3. The U.S. Non-Farm Payrolls Report for April was released on Friday and it was a much-better-than-expected report. The U.S. created 211,000 jobs in April vs. economists’ projections for 185,000. According to the report, the official unemployment rate dipped to 4.4 percent, its lowest mark since May of 2007. Analysts seem to feel that this single, better-than-expected, report will lead the Federal Reserve to follow through with another interest rate hike in June, despite the March’s highly unimpressive report. The previous month’s Non-Farm Payrolls Report was revised down from 98,000 job additions to just 79,000.

4. The Senate narrowly avoided the threat of another government shutdown on Friday by passing a bipartisan compromise bill to fund the government through September. Had Congress continued to be deadlocked, the government would have been forced to shut down at midnight on Friday due to a lack of funding. President Trump said that he would sign the bill before the current emergency funding measures expire on Friday. The bill was approved by the House of Representatives on Wednesday, but was widely opposed by more than 100 Republicans. The bill passed the Senate with a margin of 79-18 and all of the “no” votes in the Senate were Republicans.

5. The House of Representatives also passed an amended health care bill this week that would begin repealing much of “Obamacare”, pushing the legislation through without even holding hearings on its impact or even waiting for a report from the Congressional Budget Office on how much the new legislation will cost. The bill now moves to the Senate for review and it will surely be a major point of contention that will likely trigger additional Congressional deadlock in the coming weeks.

6. North Korea accused the U.S. Central Intelligence Agency and South Korea’s intelligence service on Friday of plotting to assassinate its “supreme leadership” using bio-chemical weaponry. The reclusive state’s Ministry of State Security said in a statement on Friday that “The Central Intelligence Agency of the U.S. and the Intelligence Service (IS) of South Korea, hotbed of evils in the world, hatched a vicious plot to hurt the supreme leadership of the DPRK and those acts have been put into the extremely serious phase of implementation after crossing the threshold of the DPRK. A hideous terrorists’ group, which the CIA and the IS infiltrated into the DPRK on the basis of covert and meticulous preparations to commit state-sponsored terrorism against the supreme leadership of the DPRK by use of bio-chemical substance, has been recently detected”.  Both agencies, of course, deny any such claims.

7. The U.S. Pacific Command said on Tuesday that it sent a Los Angeles class attack submarine to the U.S. Naval base in Sasebo, Japan. The U.S. military also conducted its second test launch of an unarmed ICBM from Vandenberg Air Force Base in California within the last week, likely for the purposes of demonstrating the U.S.’ nuclear capabilities to North Korea. The U.S. military also confirmed on Wednesday that two B-1B bombers left Andersen Air Force Base in Guam on May 1st to hold training missions with forces from Japan and South Korea. The North said that the bombers “conducted a nuclear bomb dropping drill against major objects” within North Korea and that the “reckless military provocation is pushing the situation on the Korean peninsula closer to the brink of nuclear war”.

8. Centrist candidate Emmanuel Macron edged ahead in the polls over far-right Marine Le Pen Friday in the final day of campaigning ahead of this weekend’s second round of elections in France. Macron has been careful to keep making public statements that nothing should be taken for certainty and that he needs every vote to ensure that he does not suffer an unexpected defeat due to apathetic voters that might otherwise choose not to go to the polls on Sunday. Current polls have Macron winning with 62 percent of the vote, but Marine Le Pen is spending the final day heavily campaigning in an effort to garner more voter support.

9. Crude oil prices slipped below $46-a-barrel on Thursday for the first time since November 30th. The carnage continued overnight as oil slipped to $44-a-barrel in just minutes in what was being widely called a “flash crash” for oil. The crash appears to be due to the breaking news that OPEC would not likely extend its production cap further into the year despite a continued glut of oil across the world.

10. The euro started May off moving essentially sideways against the U.S. dollar through Thursday. Thursday morning, the euro took a near vertical surge to the upside which carried into Friday morning’s trading. There was a slight reversal late Friday morning, but the euro soon recovered and will close the week higher against the U.S. dollar. The Japanese yen began May by moving steadily lower against the U.S. dollar through Thursday. Late Thursday afternoon the yen began a slight recovery, but late Friday morning another reversal will ensure that the yen closes out the week lower against the U.S. dollar.

Europe, France in particular, will be the region to watch this weekend as Emmanuel Macron faces off against far-right Marine Le Pen for the leadership of France. If Ms. Le Pen manages to garner enough votes to win the election, markets are likely to open to massive turmoil next week. Ms. Le Pen has been very clear in her intention to hold a referendum on France’s exit from the EU if she is victorious. The election will be held on Sunday, and Asia will likely be the first market to react when its market opens at 6PM Eastern Standard Time on Sunday evening.

In the United Kingdom, Prime Minister Theresa May has accused the European Union of stalling on Brexit negotiations, saying “The events of the last few days have shown that – whatever our wishes, and however reasonable the positions of Europe’s other leaders – there are some in Brussels who do not want these talks to succeed”.  Ms. May’s comments may have been directed at EU Commission President Jean-Claude Juncker who said he was “10 times more skeptical” of the U.K.’s wish to leave the EU after holding a dinner meeting with Prime Minister May last week. The British press has described that meeting as “a disaster” that apparently had both leaders arguing over key negotiation points. Ms. May is also accusing the EU of interfering with the upcoming general election that she has called for June 8, saying “Britain’s negotiating position in Europe has been misrepresented in the continental press. The European Commission’s negotiating stance has hardened. Threats against Britain have been issued by European politicians and officials. All of these acts have been deliberately timed to affect the result of the general election that will take place on 8 June”.

Prime Minister May called the June snap election in hopes of increasing her party’s majority in parliament, thus giving a boost to her powers to negotiate with the EU. The EU’s negotiator, in response to the growing tensions over the situation, said “Some have created the illusion that Brexit will have no material impact on our lives or that negotiations can be concluded quickly and painlessly. This is not the case. We need sound solutions, legal precision and this will take time”.

North Korea also remains an area to watch over the weekend as it ramped up its rhetoric again on Friday, accusing the U.S. and South Korea both of colluding to assassinate their “supreme leadership”, Kim Jong Un. In South Korea, anger also appears to be growing over the deployment of the U.S.-made Terminal High Altitude Defense (THAAD) system. Many of the local populace feel that the very presence of the anti-missile system in South Korea is essentially an invitation for Kim Jong Un to fire missiles at them just to see if the system functions.

As we head into a weekend that is filled with escalating geopolitical tensions, it is wise to monitor global news outlets and keep a close watch on markets as they begin to open next week, starting with Asia on what will be Sunday evening in New York. If markets experience an unexpected shock event that drives sudden investor demand straight into precious metals then the recent price pullbacks, which may be presenting a serious buying opportunity, could reverse to the upside in a rapid and dramatic fashion.

Savvy investors have prepared for such pullbacks, and are poised to acquire additional physical precious metals for their investment portfolios as part of a plan to diversify them away from overexposure to any single asset class.

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)

Apr. 28th 2017 May 5th 2017 Net Change
Gold $1267.20 $1228.30 (38.90) – 3.07%
Silver $17.24 $16.30 (0.94) – 5.45%
Platinum $  947.50 $  911.00 (36.50) – 3.85%
Palladium $829.70 $817.50 (12.20) – 1.47%
Dow Jones 20940.51 21006.94 66.43 + 0.32%

Month End to Month End Close

Mar. 31st 2017 Apr. 28th 2017  Net Change
Gold $1249.20 $1267.20 18.00 + 1.44%
Silver $18.24 $17.24 (1.00) – 5.48%
Platinum $949.70 $947.50  (2.20) – 0.23%
Palladium $798.50 $829.70 31.20 + 3.91%
Dow Jones 20663.22 20940.51 277.29 + 1.34%

Previous year Comparisons

May. 6th 2016 May 5th 2017 Net Change
Gold $1294.00 $1228.30 (65.70) – 5.08%
Silver $17.53 $16.30 (1.23) – 7.02%
Platinum $1085.00 $911.00  (174) – 16.04%
Palladium $  607.00 $  817.50 210.50 + 34.68%
Dow Jones 17740.63 21006.94 3266.31 + 18.41%

Here are your Short Term Support and Resistance Levels for the upcoming week.

                                            Gold                            Silver

Support                       1220/1195/1170          16.15/15.90/15.50

Resistance                   1240/1260/1290          16.60/16.80/17.10

                                      Platinum                    Palladium

Support                       880/860/840                815/790/740

Resistance                   930/975/995                840/855/875

This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.

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