1. It was a short trading week in the U.S. due to the Thanksgiving holiday. U.S. markets were closed on Thursday, and opened for a shortened day on Friday as retailers geared up for a hoped-for rush of shoppers to kick off the holiday shopping season.

The Precious Metals Week in Review - November 23rd, 2018
The Precious Metals Week in Review – November 23rd, 2018

2. The seasonally adjusted number of Americans filing initial claims for state unemployment increased by 3,000 claims to a new level of 224,000 for the week ending November 17. The previous week’s level was revised higher by 5,000 claims. The four-week moving average of claims increased by 2000 to a new level of 218,500. The previous week’s moving average was also revised higher by 1,250 claims. The ongoing wildfires in California and the recovery efforts in Florida and along the east coast from hurricanes Florence and Michael may continue to affect unemployment claims reporting in those areas for the near term.

3. California remained on high alert due to the ongoing battle against its raging wildfires this week. The fires are now largely contained thanks to rainfall which began earlier in the week and offered firefighters much-needed natural assistance in extinguishing the fires. The rainfall however, now poses a new threat in the form of mudslides. Mudslides are now much more likely if heavier rain continues to fall on the freshly burned areas that suffered near 100 percent loss of hillside vegetation. The plants whose roots normally act to keep the landscape in place during heavy rains are now nothing more than ash that will also likely move with the mud.

4. Tech stocks remained under pressure during this shortened week. Facebook, Apple and Google all continued their slides this week through Wednesday. Markets were closed Thursday, but reopened for an abbreviated trading day on Friday and the pain continued as the week came to a close. The damage in the tech sector also appeared to be spreading into the retail sector as well, despite the expected rush of customers as the holiday shopping season gets underway this weekend. Traditional “brick and mortar” retail storefronts continue to struggle to remain relevant and to maintain their profit margins in an increasingly online shopping landscape.

5. U.S. consumer sentiment fell more than expected as the final reading of the University of Michigan’s monthly survey of consumers came in for November. Despite the drop, the index remains near record highs at 97.5. Richard Curtin, the survey’s director, said “Although the data recorded a decline of 2.8 Index points following the [mid-term] election, the drop was related more to income than political party: among those with incomes in the bottom third, the Sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution.”

6. The U.S. and China remain deadlocked on the trade disputes between the two countries ahead of an expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the upcoming G20 summit at the end of the month. U.S. officials have already placed 10 percent tariffs on roughly $200 billion in Chinese goods and those tariffs are set to expand to 25 percent by the end of the year if some form of trade agreement is not reached. The G20 summit will be held in Buenos Aires, Argentina next week and, according to economist Bo Zhuang of TS Lombard, markets can expect nothing more than a “photo op” and a “mock deal” from the meeting.

7. Pressure is mounting on the U.S. Federal Reserve to slow the pace of its interest rate increases after its next expected hike in December takes place. The slide in both stock and oil markets has many analysts concerned that the global markets are beginning to slow. Five of the biggest names in the tech sector lost a combined value of over $1 trillion from their 52-week highs. Both the housing and hotel sectors in the U.S. have also plunged this year as home prices have skyrocketed and high travel costs seemed to curtail consumer travel.

8. U.K. Prime Minister Theresa May headed to Brussels this week to meet with European Commission President Jean-Claude Juncker to discuss the future relationship between the U.K. and the EU after it exits the block in March. The meeting was to prepare for a summit on Sunday where the other 27 leaders of the EU and Ms. May are all expected to sign off on the exit agreement and the document outlining their future relationship. Attention has primarily been focused on the Brexit agreement itself, with little mention being made of a separate document outlining the future relationship between the U.K. and the EU. Reports surfaced this week that other EU countries have begun to raise concerns over fishing rights and potential unfair advantages to U.K. businesses in the future.

9. The U.K. opposition Labour Party leader, Jeremy Corbyn, heavily criticized Theresa May’s Brexit deal this week in the House of Commons, saying “These 26 pages are a testament to the failure of the [Conservatives’] bungled negotiations. Nineteen extra pages but nothing has changed. It represents the worst of all worlds: no say over the rules that will continue to apply and no certainty for the future.” There is still a possibility that the U.K. will be leaving the EU with no exit deal in place if Ms. May cannot garner more support from parliament for the draft plan.

10. Elsewhere in Europe, the EU initiated disciplinary actions against Italy after the country refused to submit a new budget proposal as requested. The European Commission, the executive arm of the EU, said in a statement “With regret, that today we confirm our assessment that Italy’s draft budget plan is in particularly serious non-compliance with the Council recommendation of 13 July.” The statement went on to say that the Commission would now open a “debt-based Excessive Deficit Procedure (EDP)” which then gives EU member states two weeks to decide if they agree that an EDP against Italy is called for. If the other member states agree, Italy must state how it will alter its budget plan to bring it in line with EU rules. If Rome ignores the request for an altered plan then Italy could be sanctioned and asked to pay fines.

11. Crude oil plunged to its lowest level in over a year this week, losing nearly 7 percent on Friday alone. The plunge in prices will likely add pressure on OPEC to further cut production when it holds its next meeting in Vienna on December 6th. The ramp-up in oil production ahead of renewed U.S. sanctions on Iran triggered yet another state of over-supply when those sanctions failed to remove as much Iranian oil from the market place as feared.

12. The euro began the week moving higher after a brief dip at the start of trading. The euro had hit its high for the week by Tuesday afternoon, when it reversed direction and moved sharply lower. The euro had halted its plunge by late Tuesday and began to drift higher through Friday’s trading. On Friday, as reports surfaced that other EU member states might have issues with the U.K.’s future relationship with the EU after it exits, the euro took another steep plunge lower and finished out the week lower against the U.S. dollar. The Japanese yen began the week bouncing sideways in a tight range before spiking higher around mid-afternoon on Monday. The yen bounced higher through Tuesday and then reversed course, moving lower through early Thursday trading. The yen reversed course again on Thursday and drifted higher through the close of trading on Friday. The yen will finish the week out nearly even against the U.S. dollar.

The apparent slowing of the global economy will likely be the major concern as we approach the final month of 2018. The stock selloffs continued this week in the tech sector and began spilling over into the retail sector as the annual holiday shopping season kicked off in earnest following the Thanksgiving holiday in the United States.

The Dow Jones Industrial Average had plummeted over 1100 points by the end of Friday’s trading for the shortened holiday week. The tension between the U.K. and the EU took a turn higher this week as Prime Minister Theresa May headed to Brussels to meet with the European Commission to try and secure their approval of the draft “Brexit” agreement in addition to a framework for the U.K.’s future relationship with the EU after its exit.

It appears that EU member states France and Spain, among others, have concerns over how the U.K.’s future relationship with the EU will be handled. Fishing rights, the potential for an unfair advantage for U.K. businesses, and the fate of Gibraltar – a U.K. territory which Spain still maintains a claim on – are all what appears to be a growing list of concerns that other EU member states have over the future relationship with the U.K.

It is still uncertain whether the U.K. will actually have an agreement in place to govern its exit from the EU. In a survey conducted by CNBC, nearly half of global CFO’s surveyed either have no idea what to think about a post-Brexit world, with some firmly believing that the U.K. will leave the bloc with no deal in place.

The Middle East also remains an area of elevated uncertainty following the killing of U.S.-based journalist Jamal Khashoggi. Reuters reported on Monday, citing three anonymous sources “close to the royal court” that some members of Saudi Arabia’s ruling family now want to prevent Crown Prince Mohammed bin Salman from becoming King. CNBC asked Saudi’s Foreign Minister Adel al-Jubeir about the potential for a regime change in his country, to which he said “I say that’s ridiculous. That’s way out of line. The leadership of Saudi Arabia represented in the king and the crown prince is a red line for every Saudi – man or woman. The country is totally supportive of them. Every Saudi feels represented by his leadership, and every Saudi represents his leadership. These are outrageous comments that are being made and are totally unacceptable.”

The trade dispute between the U.S. and China also remains a top concern as we move towards the end of the year. At the Asia-Pacific Economic Cooperation summit (APEC) over the weekend in Papua New Guinea, leaders failed to agree on a joint communique for the first time in the summit’s history. APEC was established in 1989 to foster cooperation and communication among the countries that make up the Asian region of the globe. Growing Chinese military positions in the Pacific and the ongoing trade battle with the U.S. have strained the very relationships that APEC was formed to protect.

When asked which members of the 21-strong group could not come to agreement, Papua New Guinea’s Prime Minister Peter O’Neill said “You know the two big giants in the room.” O’Neill, who chaired the meeting, said the point of contention among the group was whether mention of the World Trade Organization and the possibility of its reform should be in the communique. O’Neill said “APEC has got no charter over World Trade Organization, that is a fact. Those matters can be raised at the World Trade Organization.”

While President Trump did not attend the meeting, Vice President Mike Pence did and he gave thinly veiled criticism of China’s much-publicized “Belt and Road” initiative by saying that the U.S. did not “offer a constricting belt or a one-way road” with its policies. Pence said, in a speech on Saturday, that there would be no end of the U.S. tariffs on Chinese goods until China changed its ways. On Sunday, Pence told reporters as he was leaving the conference that the differences between China and the U.S. “begin with trade practices, with tariffs and quotas, forced technology transfers, the theft of intellectual property. It goes beyond that to freedom of navigation in the seas, concerns about human rights.”

As stocks have continued their selloffs, interest in precious metals as a means to diversify investment portfolios appears to be on the rise again. Savvy investors have continued acquiring precious metals for diversification purposes when price dips have allowed them the opportunity to do so at a discount.

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)

Nov. 16th2018Nov. 23rd2018Net Change
Gold$1223.00$1223.500.50 + 0.04%
Silver$14.38$14.31(0.07) – 0.49%
Platinum$846.60$842.10(4.50) – 0.53%
Palladium$1154.40$1122.90(31.50) – 2.73%
Dow Jones25413.2224285.95(1127.27) – 4.44%

Previous Year Comparisons

Nov 24th2017Nov. 23rd2018Net Change
Gold$1288.69$1223.50(65.19) – 5.06%
Silver$17.04$14.31(2.73) – 16.02%
Platinum$945.00$842.10 (102.90) – 10.89%
Palladium$999.00$1122.90123.90 + 12.40%
Dow Jones23557.9924285.95727.96 + 3.09%

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

GoldSilver
Support1200/1180/116014.30/14.10/13.90
Resistance1230/1240/126014.50/14.75/15.00
PlatinumPalladium
Support840/810/7901095/1080/1065
Resistance865/880/10001180/1195/1210

This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

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