1. It was a shortened week due to the timing of New Year but 2019 got under way with a clear picture of just how dysfunctional and gridlocked the U.S. government is going to be over the remainder of President Trump’s term, now that the Democrats have control of the House of Representatives.

The Precious Metals Week in Review - January 4th, 2019
The Precious Metals Week in Review – January 4th, 2019

2. The seasonally adjusted number of Americans filing initial claims for state unemployment surged by 10,000 claims to a new level of 231,000 for the week ending December 29. The previous week’s level was revised higher by 5,000 claims. The four-week moving average of claims decreased by 500 to a new level of 218,750. The previous week’s moving average was revised higher by 1250 claims. We can expect continued volatility in the unemployment numbers as the temporary positions that many retailers advertised and filled in October and November to meet the expected holiday rush now begin to disappear.

3. The final Non-Farm Payrolls Report for 2018 was released on Friday and the numbers were far better than expected. The U.S. economy added 312,000 jobs in December, well beyond the 177,000 that economists expected, and the labor force participation rate rose to 63.1 percent. The report seems to contradict the December ISM manufacturing report which was released on Thursday and appeared to show a significant drop in manufacturing activity. Economists now expect the U.S. economy to slow down its pace of growth in the first half of 2019 and many analysts have begun to seriously question whether signs are indicating that a recession is imminent.

4. The first order of business after Democrats took control of the House of Representatives this week was to pass a spending bill aimed at ending the partial shutdown that has left 9 U.S. federal departments unfunded since just after Christmas. The bill was largely symbolic as it does not included funding for the wall at the Mexican border that has been one of President Trump’s largest sticking points during the near two-week ordeal. The failure to provide funding for his pet project means that Trump will likely veto the bill even if it makes it through the Senate and reaches his desk. Senate Majority Leader Mitch McConnel said on Thursday that the Republican controlled Senate “will not waste its time” passing the House proposal so the question of whether or not the bill will land on Trump’s desk may be moot.

5. Talks of impeaching President Trump had already begun by Thursday as the Democrats took control of the House of Representatives. Despite attempts by Democratic leaders to downplay the speculation on whether or not they would attempt to impeach Trump, one Democratic female representative from Michigan went off on a profanity laden tirade Thursday in front of a crowd clearly confirming how she feels about the matter. Trump was quick to respond to the jabs on Friday, saying in a tweet “We won the Senate, they won the House. Things will settle down. They only want to impeach me because they know they can’t win in 2020, too much success!” Trump followed up his initial tweet with another one 10 minutes later, saying “How do you impeach a president who has won perhaps the greatest election of all time, done nothing wrong (no Collusion with Russia, it was the Dems that Colluded), had the most successful two years of any president, and is the most popular Republican in party history 93%?”

6. Current Federal Reserve Chairman Jerome Powell, along with previous Fed Chairs Ben Bernanke and Janet Yellen, all spoke at the American Economic Association’s annual meeting in Atlanta, Georgia on Friday. Chairman Powell took the opportunity to reassure markets that the Fed is closely monitoring the economy, saying “As always, there is no preset path for policy. And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.” Powell noted that markets appear to be pricing in downside risks, such as the ongoing economic slowdown in China and said that the market is “obviously well ahead of the data” but that the Fed is “listening very carefully” to the signals that the market is sending.

7. Brexit concerns continue to plague the United Kingdom and the European Union. British lawmakers are set to resume debating the much-maligned draft Brexit deal next Tuesday with a vote on the document to take place the week after that. Prime Minister Theresa May continues to face stiff opposition to the plan since she has not been able to garner further assurances from EU leaders on the plan for the “Irish backstop” arrangement for the border between Northern Ireland and the U.K. If the draft agreement is rejected in the coming weeks then the likelihood that the U.K. will exit the E.U. without any arrangement governing the relationship between the two increases to nearly 100 percent.

8. U.S. crude jumped nearly 6% for the week on positive signs of progress in trade talks between the U.S. and China and supply cuts out of OPEC. Brent crude also jumped for the week, climbing about 9 percent. Gains were curtailed by a sharp rise in refined products like gasoline and other petroleum distillates.

9. The euro drifted higher against the U.S. dollar through the start of the New Year but peaked and then reversed course as markets reopened for trading in Europe on Wednesday. The euro had dropped to its lows by late Wednesday night and then began drifting higher, with short-lived dips to the downside through Friday. The euro will close out the shortened week slightly lower against the U.S. dollar. The Japanese yen drifted higher against the U.S. dollar through late Wednesday when it spiked suddenly to its highs for the week. The yen drifted lower through trading on Thursday and Friday but will still finish out the week to the upside against the U.S.

2019 began with the expected political fireworks in the United States as the Democratic Party gained control of the House of Representatives. Talk of beginning impeachment proceedings against President Trump has already started among the lower ranking members of the party, though the leadership of the Democratic Party is trying hard to contain the enthusiasm for it. The Republicans remain in control of the Senate so it is unlikely, unless the long-running Mueller investigation actually manages to come up with some concrete evidence of wrong-doing, that impeachment proceedings will go anywhere at all.

The gridlock that has plagued Washington, D.C. for years however, can be expected to grow immediately worse, just as it did when the Republicans took control under President Obama. The first thing the House of Representatives did as the new members took over was to pass a spending bill that flies directly in the face of everything Trump has said he wants accomplished to end the partial government shutdown that is now nearly two weeks old. It is highly unlikely that the bill will reach Trumps desk for a signature, but even if it does, he will likely veto it as written. Trump appears set to allow the shutdown to go on for a prolonged period in order to get funding for “the wall”.

The final Non-Farm Payrolls report for 2018 was far better than any economists projected, showing that the U.S. economy added well over 300,000 jobs in December and a surge in the labor force participation rate that has been largely missing for years. The NFP report did little to assuage fears of an impending recession however since earlier in the week the ISM manufacturing data was released and showed a marked slowdown in the U.S. manufacturing sector. Many of the job additions shown in the NFP were in the manufacturing sector so if a slowdown is imminent then those numbers could easily be reversed in the coming months as manufacturing corporations trim back their work forces.

In Europe, the big news remains the upcoming divorce between the United Kingdom and the European Union. Debate will resume in the U.K. on the draft Brexit document next week, with a vote supposedly to be held the following week on whether the existing agreement will stand. Support remains questionable and if parliament votes down the document then it becomes a near-certainty that the U.K. will exit the E.U. with no agreement in place to govern the interaction between the two. That could throw many companies that call the U.K. home, particularly the financials, into complete chaos.  The E.U. appears dead set against offering any further concessions or assurances to the U.K. in the matter so if the agreement is voted down it is unlikely another will be drafted to replace it before the exit date.

2019 began with additional sharp selloffs in global stock markets but price spikes for precious metals. Analysts appeared to resume their long-dormant view that precious metals may once again represent a safe-haven and viable alternative investment in times of economic turmoil. Savvy investors who have always believed this to be true have continued to acquire physical precious metals as prices have remained suppressed in an effort to help keep their investment portfolios well-diversified against downturns in the equity markets or further geopolitical turmoil.

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)

Dec. 28th2018Jan. 4th2019Net Change
Gold$1280.00$1284.004.00 + 0.31%
Silver$15.35$15.730.38 + 2.48%
Platinum$791.50$822.1530.65 + 3.87%
Palladium$1254.00$1299.4045.40 + 3.62%
Dow Jones23062.4023433.16370.76 + 1.61%

Month End to Month End Close

Nov. 30th2018Dec. 31st2018Net Change
Gold$1226.00$1279.0053.00 + 4.32%
Silver$14.22$15.431.21 + 8.51%
Platinum$799.80$794.50(5.30) – 0.66%
Palladium$1144.60$1262.00117.40 + 10.26%
Dow Jones25538.4623327.46(2211.00) – 8.66%

Previous Year Comparisons

Jan 5th2018Jan. 4th2019Net Change
Gold$1321.50$1284.00(37.50) – 2.84%
Silver$17.28$15.73(1.55) – 8.97%
Platinum$973.00$822.15 (150.85) – 15.50%
Palladium$1091.50$1299.40207.90 + 19.05%
Dow Jones25295.8723433.16(1862.71) – 7.36%

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

GoldSilver
Support1260/1240/120015.60/15.25/15.00
Resistance1290/1320/136015.80/16.00/16.25
PlatinumPalladium
Support810/790/7601280/1260/1230
Resistance840/880/9001300/1325/1350

This is not a solicitation to purchase or sell.
© 2019, Precious Metals International, Ltd.

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