1. Volatility continued this week ahead of the G20 meeting in Buenos Aires this coming weekend. Trade frictions continued between the U.S. and China and new developments between Russia and Ukraine added to further global unease.
2. The seasonally adjusted number of Americans filing initial claims for state unemployment increased by 10,000 claims to a new level of 234,000 for the week ending November 24. The previous week’s level was unrevised. The four-week moving average of claims increased by 4,750 to a new level of 223,250. The previous week’s moving average was unrevised. The aftermath of the wildfires in California and the continuing recovery efforts in Florida and along the U.S. east coast from hurricanes Florence and Michael may continue to affect unemployment claims reporting in those areas for the near term.
3. Russia severely escalated tensions with Ukraine over the weekend when it fired upon and then seized three Ukrainian vessels traveling through the Kerch Strait into the Azov Sea. Russia claimed that the vessels were “carrying out dangerous maneuvers” and “disobeying the Russian authorities’ demands.” U.S. President Donald Trump cancelled a planned meeting at the G20 summit that was to have taken place with Russian President Vladimir Putin ostensibly because Moscow has not yet released the ships and sailors that it seized. Ukrainian president Petro Poroshenko called on NATO to “relocate naval ships to the Sea of Azov in order to assist Ukraine and provide security.” Putin disputes the Ukrainian accusations and says that Ukraine provoked the seizure as part of a “dirty game” to introduce martial law ahead of upcoming elections in Ukraine.
4. Trade relations between the U.S. and China remained tense ahead of the expected meeting between President Trump and President Xi Jinping at the G20 summit in Buenos Aires this weekend. The U.S. is on track to raise tariffs to 25% on 200 billion dollars’ worth of Chinese goods by the end of the year if the two countries cannot reach an agreement over their trade disputes. Both sides are under heavy pressure to resolve the situation as prices for global goods have escalated under the tit-for-tat tariffs.
5. Stock analysts will be anxiously awaiting the November Non-Farm Payrolls Report, due out Friday, for indications on whether further inflation could be taking hold in the U.S. economy. The October wages and salaries number grew by 3.1 percent in the third quarter, which is the largest increase in the last 10 years. If wages show similar growth in the November jobs report, Wall Street could interpret that as an indication that inflation is accelerating. Accelerating inflation could limit the Federal Reserve’s ability to moderate the pace of its interest rate increases.
6. US President Donald Trump was asked about the current draft agreement that would govern the United Kingdom’s exit from the European Union this week and he commented “Sounds like a great deal for the EU.” Trump continued, talking with reporters outside the White House, saying “I think we have to take a look seriously whether or not the U.K. is allowed to trade because right now if you look at the deal, they may not be able to trade with us. And that wouldn’t be a good thing. I don’t think they meant that.” Downing Street responded by saying that it is “The political declaration we have agreed with the EU is very clear. We will have an independent trade policy so that the U.K. can sing trade deals with countries around the world – including with the U.S.”
7. Crude oil remained under pressure this week, weighed down by the ongoing trade issues between the U.S. and China. Concerns of further oversupply conditions also worked against Crude prices as the expected drop-off in oil out of Iran still has yet to be felt. Oil analysts are now looking towards the conclusion of the G20 meeting in Buenos Aires this week for indications of whether the expected meeting between President Trump and President Xi Jinping could lead to progress in trade discussions between the two countries.
8. The euro dipped briefly lower at the start of trading for the week, then popped higher before beginning a steady trend to the downside that lasted through late Wednesday. The euro found its floor for the week late Wednesday afternoon and then spiked sharply higher into positive territory. The euro bounced sideways in a fairly tight range through the rest of the week but late moves on Friday saw the euro move back into negative territory and it will close out the week slightly lower against the U.S. dollar. The Japanese yen began the week moving steadily downward against the U.S. dollar at the start of trading for the week. The downward trend lasted through late Wednesday, when the yen reversed course, but the upward momentum could not be maintained and the yen moved basically sideways through Friday. The yen will also close out the week lower against the U.S. dollar.
The primary news item to watch for next week will be any sign of positive progress between the U.S. and China on their trade issues from the expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires, Argentina over the weekend. The two are expected to have dinner on Saturday, and the two countries reportedly remain far apart on their trade differences.
White House economic adviser Larry Kudlow told reporters on Tuesday that China has yet to agree to any of the requests that the U.S. has made in their trade talks. Kudlow told reporters “Look, we’ve had so much trouble with China regarding their response, which they never make. Technology transfers. IP (Intellectual Property) theft. We just had a new one this is unbelievable – cybersecurity in China, they just passed a law about three weeks ago – it didn’t get the attention it deserves because of the Judge Kavanaugh hearings. They are now permitted – Chinese police are permitted – to go in and hack American companies if they think something’s wrong, whereabout they would steal our technology. That’s really kind of unbelievable.” Kudlow continued, saying “So you add that to the trade imbalance and the tariffs and the non-tariff barriers, they won’t let us own our businesses and they won’t give licenses. They’ve got a lot. Our asks are on the table. I’d love to see them respond. Thus far they haven’t. The two presidents will meet for a bit in Buenos Aires, Argentina, at the G20. Other than that, nothing I can say.” It is highly doubtful that any real agreements can be reached between the two over dinner, but any progress at all in moving talks forward could be seen as a positive for markets.
In Europe, Prime Minister Theresa May continues to face hurdles to the acceptance of the draft Brexit agreement that would govern the U.K.’s exit from the European Union. Ms. May has been touring the country trying to garner support for the draft deal. The Labour Party is putting her under heavy pressure to publish the full legal advice received during the drafting of the Brexit deal, saying that if the government refuses to publish the full advice that they will start contempt of Parliament proceedings. Such a move could eventually result in a call for new general elections just as the country should be primarily focused on finalizing its exit plans.
The coming week will be rich in news, with much focus on the results of the G20 summit and the upcoming Non Farm Payrolls report in the U.S. As concerns over slowing global economic growth continue to mount, ensuring that an investment portfolio is properly diversified becomes even more important.
Many contrarian investors, looking for asset classes that have become unloved among their fellow investors, have begun to renew their interest in physical precious metals as a means of diversification against sudden downturns in the equity markets. Many of these contrarian investors have used the recent price smashes in physical precious metals as buying opportunities to add more product to their investment portfolios 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.
Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
|Nov. 23rd2018||Nov. 30th2018||Net Change|
|Gold||$1223.50||$1226.00||2.50 + 0.20%|
|Silver||$14.31||$14.22||(0.09) – 0.63%|
|Platinum||$842.10||$799.80||(42.30) – 5.02%|
|Palladium||$1122.90||$1144.60||21.70 + 1.93%|
|Dow Jones||24285.95||25538.46||1252.51 + 5.16%|
Month End to Month End Close
|Oct. 31st2018||Nov. 30th2018||Net Change|
|Gold||$1215.20||$1226.00||10.80 + 0.89%|
|Silver||$14.28||$14.22||(0.06) – 0.42%|
|Platinum||$843.00||$799.80||(43.20) – 5.12%|
|Palladium||$1068.50||$1144.60||76.10 + 7.12%|
|Dow Jones||25115.76||25538.46||422.70 + 1.68%|
Previous Year Comparisons
|Nov 30th2017||Nov. 30th2018||Net Change|
|Gold||$1273.95||$1226.00||(47.95) – 3.76%|
|Silver||$16.44||$14.22||(2.22) – 13.50%|
|Platinum||$941.00||$799.80||(141.20) – 15.01%|
|Palladium||$1013.55||$1144.60||131.05 + 12.93%|
|Dow Jones||24272.35||25538.46||1266.11 + 5.22%|
Here are your Short Term Support and Resistance Levels for the upcoming week.
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© 2018, Precious Metals International, Ltd.