The Precious Metals Week in Review
June 2nd, 2017
1. President Trump and his continued use of twitter and his controversial views and actions continues to be the primary focus of nearly every news outlet. Stock markets seem to be blissfully ignoring the growing uncertainty, continually making record highs despite what seems to be a genuine lack of real fundamentals that support such gains.
Week In Review – June 2nd, 2017
2. The seasonally adjusted number of Americans filing initial claims for state unemployment benefits surged by 13,000 claims to a new level of 248,000 for the week ending May 27. The previous week’s data was revised higher by 1,000 claims. The four-week moving average of claims also increased by 2,500 to a new level of 238,000 from the previous week’s revised average.
3. The Non-Farm Payrolls report for May was released on Friday and the data was worse than expected. U.S. job creation in May plunged even though the unemployment rate edged lower. The U.S. economy created just 138,000 jobs in May vs. economists’ expectations for 185,000. Wage growth was also relatively weak, with average hourly earnings rising at an annualized pace of just 2.5 percent. Data from previous months also saw downward revisions, with March’s already abysmal 79,000 jobs being cut to just 50,000 and April also getting a significant cut from 211,000 to 174,000. Douglas Holtz-Eakin, president of the American Action Forum, said “The May report was a disappointment. Taken with the downward revisions, it suggests a continuation of the combination of slow GDP growth and weak productivity growth, emphasizing the need for structural reforms in tax, regulatory, and entitlement policies.”
4. Given the recent weak data for both housing and auto sales, Friday’s weak Non-Farm Payrolls report could leave the door open for the Federal Reserve to hold off on increasing interest rates when it conducts its next Federal Open Market Committee meeting to set monetary policy this month. The marginal decline in the unemployment rate to 4.3 percent could largely be explained away by the sheer number of people that exited the labor pool. Austan Goolsbee, former chairman of President Obama’s Council of Economic Advisors said on CNBC’s “Squawk Box” program that “The economy is still recovering from the Great Recession and it’s going to take more time.” Goolsbee continued, saying Fed policy makers have gotten “ahead of themselves” in their projections for three rate hikes in 2017.
5. North Korea was busy this past weekend, with leader Kim Jong Un supervising the test of a new anti-aircraft weapon system on Sunday and the firing another short-range ballistic missile into the sea off its east coast on Monday. According to KCNA, the state run official news agency for North Korea, quoted Kim as saying “Whenever news of our valuable victory is broadcast recently, the Yankees would be very much worried about it and the gangsters of the South Korean puppet army would be dispirited more and more.” The news outlet said that Monday’s missile launch was designed to test a new type of precision guidance system and the reliability of a new mobile launch vehicle. KCNA did not report the specifics of the anti-aircraft system that was tested on Sunday, but noted that Kim ordered its mass production and deployment “throughout the country.”
6. The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) in China fell to 49.6 in May, according to the latest private survey. A reading below 50 indicates contraction in manufacturing. The private survey’s reading however, conflicted with an official reading that was released by Beijing later in the week, which listed the PMI at 51.2. The Caixin/Markit survey primarily focuses on small and mid-size manufacturers, so it may be indicating that smaller businesses in China are experiencing a more significant drop in output than their larger counterparts.
7. In light of North Korea’s continued missile tests and their belligerent rhetoric towards the U.S., the U.S. military announced on Tuesday that it had successfully intercepted a “mock-up” of an intercontinental ballistic missile fired from the Reagan Test Site in the Marshall Islands. The successful test was a “first-of-its-kind” and Admiral Jim Syring,the director of the U.S. Missile Defense Agency, was quoted as saying “This system is vitally important to the defense of our homeland, and this test demonstrates that we have a capable, credible deterrent against a very real threat.” Pentagon spokesman, Navy Captain Jeff Davis, said that Tuesday’s test was not timed to coincide with any of North Korea’s provocations, but noted “in a broad sense, North Korea is one of the reasons why we have this capability. They continue to conduct test launches, as we saw this weekend, while also using dangerous rhetoric that suggests they would strike the United States homeland.”
8. The United Kingdom (UK) lowered its threat level from Critical to Severe on Saturday as police continued to make arrests in their search for the suspected terror network behind the attacker who killed 22 people last week in a suicide bombing at a concert in Manchester. Prime minister Theresa May said, following the downgrade, “The public should be clear about what this means. A threat level of severe means an attack is highly likely. The country should remain vigilant.”
9. Prime Minister May is apparently facing a growing risk of losing control of parliament in Britain’s upcoming elections on June 8, according to polling company YouGov. If their poll is correct, Ms. May would lose 20 seats, costing her party the current 17-seat working majority she now enjoys in parliament. Other polls show her Conservative Party much farther ahead of the opposition Labour Party, so the world faces the very real possibility of yet another highly uncertain European election.
10. Crude oil dropped below $50 on Friday on its way to a second straight week of losses as the Baker Hughes rig count report showed the addition of another 11 oil rigs. The Trump administration’s decision to have the U.S. withdraw from the Paris Climate Accords also appears to have sparked fears that the U.S. may be considering expanding its fossil fuel production, adding to the ongoing global glut of crude oil and putting downward pressure on prices.
11. The euro traded essentially sideways against the U.S. dollar until Tuesday when it went through a brief dip before beginning to climb back to the upside. The euro appeared to have found a peak late Wednesday, but after Friday’s weak U.S. Non-Farm Payrolls report was released, a vertical surge to the upside will ensure that the euro will close out the week higher against the U.S. dollar. The Japanese yen drifted sideways against the U.S. dollar, but began moving higher by Tuesday morning. The yen also appeared to have found its peak by Wednesday, when it began steadily moving to the downside. Friday’s release of the U.S. Non-Farm Payrolls report also sent the yen surging vertically higher against the U.S. dollar and it will close the week out to the upside as well.
CNBC’s Robert Frank noted in his “Inside Wealth” column on CNBC’s web site that millionaire confidence, as measured by “The Spectrem Millionaire Investor Confidence Index” fell by 17 points from its April value. That marks the largest month-to-month drop in confidence ever recorded by the Chicago-based group that created the index. According to Mr. Frank’s article, the survey found that 39 percent of millionaires plan to avoid investing in the coming month due mainly to politics and the constant turmoil surrounding the Trump administration. May’s weaker-than-expected Non-Farm Payrolls report, combined with a surge in weekly unemployment could mean that when the Federal Reserve meets this month to determine its next monetary policy move, it may be forced to hold off on its desire to conduct another interest rate hike. The release of the report coincided with a surge in both the Japanese yen and the euro against the dollar and an apparently correlated increase in precious metals prices, but the stock market chose to ignore the data and continued climbing higher. In Asia, tensions continue to escalate as North Korea conducts a missile/weapons system test seemingly each and every weekend now. The pace at which the North appears to be solving the technological problems that were previously apparent in its missile program has become alarming to its neighbors in the Asian region, as well as to the U.S. which is the primary target of its belligerent rhetoric. The U.S. carried out a test demonstration of its anti-missile defense system on Tuesday, successfully intercepting a “mock-up” of an intercontinental ballistic missile in the upper atmosphere for the first time. Military officials claim that the demonstration was not in response to the elevated level of missile launches North Korea has been carrying out recently, but did note “in a broad sense, North Korea is one of the reasons that we have this capability.” North Korea did not publicly acknowledge the U.S.’ test, and we will likely have to wait through the weekend to see if they conduct further test launches in retaliation. German Chancellor Angela Merkel caused some shockwaves this week when she noted that “Recent days have shown me that the times when we could rely completely on others are over to a certain extent. We also know that we Europeans must really take our fate into our own hands.” Merkel continued, clearly criticizing President Donald Trump after his recent visit to the G7 summit, saying “Anyone who today puts on national blinkers and no longer has eyes for the world around him is, I am convinced, ultimately out on a limb.” Juergen Hardt, the German government’s coordinator for transatlantic policies, told Reuters that “Never before has there been so much uncertainty about the political course, and so many contradictions in the president’s statements, four months after the inauguration of a new U.S. president. That weakens America and irritates its partners.” As global geopolitical uncertainty continues, savvy investors have stuck to their plans to accumulate physical precious metals as part of a well-diversified investment portfolio whenever temporary price dips have presented them with the opportunity to do so. As always, it will be paramount to monitor global news outlets for events that continue to affect markets and may send precious metals prices higher. North Korea has become almost steadfast in its desire to conduct weapons demonstrations each weekend and their continued provocation has already resulted in Japan expressing a willingness to work with China to “strongly urge North Korea to avoid further provocative actions and obey things like United Nations resolutions.” If the north conducts further tests over the weekend, it will likely result in a rapid escalation of international discussions on how to address the growing problem. 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)
|May 26th2017||June 2nd2017||Net Change|
|Gold||$1268.58||$1278.14||22.84 + 1.82%|
|Silver||$17.35||$17.57||0.73 + 4.33%|
|Platinum||$963.00||$955.00||10.00 + 1.06%|
|Palladium||$792.50||$843.00||80.05 + 10.56%|
|Dow Jones||21080.28||21206.29||401.45 + 1.93%|
Month End to Month End Close
|Apr. 28th2017||May 31st 2017||Net Change|
|Gold||$1267.20||$1273.00||5.80 + 0.46%|
|Silver||$17.24||$17.42||0.18 + 1.04%|
|Platinum||$947.50||$949.80||2.30 + 0.24%|
|Palladium||$829.70||$821.45||(8.25) + 0.99%|
|Dow Jones||20940.51||21008.65||68.14 + 0.33%|
Previous Year Comparison
|June 3rd 2016||June 2nd 2017||Net Change|
|Gold||$1242.90||$1278.14||35.24 + 2.84%|
|Silver||$ 16.37||$ 17.57||1.20 + 7.33%|
|Platinum||$ 981.90||$ 955.00||(26.90) – 2.74%|
|Palladium||$ 549.35||$ 843.00||293.65+ 53.45%|
|Dow Jones||17807.20||21206.29||3399.09 + 19.09%|
Here are your Short Term Support and Resistance Levels for the upcoming week
Support 1265/1245/1230 17.40/17.10/16.80
Resistance 1295/1310/1350 17.75/18.00/18.45
Support 950/930/885 825/800/770
Resistance 975/995/1025 850/880/910
This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.