1. This week’s volatility reached new levels. As if the coronavirus-second wave was not enough, politics have added even more unpredictability, to which markets have responded. As reported by A.P., misinformation spiked since the President tested positive for coronavirus. Tweets saying that the Democrats infected the President with the virus during the first presidential debate were shared thousands of times. Complicating things further, reports emerged this week counting up to 34 cases of COVID-19 among White House staff. The media speculated about the President’s actual medical condition after the Walter Reed National Military Medical Center discharged him on Monday evening. Trump’s decision to end the negotiations with Democrats about a new relief package increased uncertainty levels on Tuesday. On Friday, the markets happily welcomed his decision to resume the conversations.

The Precious Metals Week in Review - October 9th, 2020.
The Precious Metals Week in Review – October 9th, 2020.

2. Employment: For the week ending on October 3, the seasonally adjusted number of Americans filing for unemployment decreased vis-à-vis the previous week’s revised level. The number of initial claims totaled 840,000, a drop of 9,000 from 849,000. The revision of the adjusted initial claims for the week ending on September 26 added 12,000 claims more than estimated, for a total of 849,000. The four-week moving average for the week of October 3 was 857,000, a drop of 13,250 claims from the preceding week’s revised average. The revision of this average for the week ending September 26 added 3,000 more jobless claims than estimated for a new total of 870,250 claims. A backlog in processing and the need to implement fraud-prevention technology led California to announce a two-week pause in processing initial unemployment insurance claims last week. In the meantime, the Department of Labor’s weekly reports will use the previous report’s data corresponding to this state. Once the changes are complete, California will release pieces to inform of the unemployment claims that happened during the unreported weeks.

3. On Tuesday afternoon, President Donald Trump decided to end negotiations over more COVID-19 relief funding. In a Tweet, the President said the stimulus package sought to benefit Democrat and poorly-governed states with high crime and added that Nancy Pelosi, the Speaker of the House, was “as usual” negotiating in bad faith. In a continuation of the tweet, the President announced the following: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.” The news took political strategists and investors by surprise as Jerome Powell, the Fed’s Chairman, had stressed earlier that day the importance of more stimulus funding in a virtual meeting of the National Association for Business Economics. Markets were quick to react with a sell-off; the Dow Jones lost the day’s gains, and the S&P 500 fell 1.4 percentage points. However, Nancy Pelosi and the Secretary of Treasury, Steven Mnuchin, talked on Thursday about the possibility of agreeing on the stimulus bill. Pelosi and Mnuchin officially resumed conversations on Friday after President Trump announced he would raise his stimulus-bill offer to $1.8 trillion. The market responded quickly to the news, and indexes rose: The Nasdaq Composite and S&P 500 and picked up 0.8% and 1.1%, respectively, while the Dow Jones Industrial Average closed the week 160 points higher. These increases make this week the best one since August; market responses throughout the past seven days show that, as portfolio manager at GLOBALT Keith Buchanan opined, “Stimulus talks are really dictating the market action on a day-to-day basis.”

4. On Thursday, President Trump declared that he would not partake in the virtual T.V. debate with Joe Biden scheduled for next week after organizers announced the new virtual format. President Trump and his wife tested positive for COVID-19 last week, and the Commission on Presidential Debates took measures to prevent further spread. As a result, the said commission changed the format and said that candidates would participate “from separate remote locations… to protect the health and safety of all involved”. In a phone interview with Fox Business Channel, the President expressed his disagreement with the new format and said he would not waste his time and “sit behind a computer.” He also reassured his audience of his good health: “I’m back, because I am a perfect physical specimen and I’m extremely young. And so I’m lucky in that way.” The Trump campaign deemed the virtual format benefited Joe Biden, and said the President would instead hold a rally on October 15, the day of the second debate. In response, the Biden campaign agreed to postpone and have an in-person second debate on October 22. The debate negotiations between the two campaigns ended on Friday night with an agreement to cancel the Miami meeting and hold the last one in Nashville on October 22. President Trump’s unexpected actions and tweets this past week have given Democrats political ammunition. Congress Democrats declared they would create a commission to assess whether the President can continue with his duties or if he should be removed from office.

5. The Canadian economy experienced a fourth-consecutive respite in September and added 378,000 jobs, which exceeded economists’ expectations of 150,000. Statistics Canada reported on Friday that the unemployment rate dropped 1.2 percentage points to 9%. The jobs gained in September represent about 76% of the posts lost to the pandemic. The start of the school year clearly had an impact. Of the 378,000 new jobs, 334,000 were full-time, and 168,000 posts were created in Ontario. Educational services alone contributed 68,000 jobs; accommodation and food services, 72,000; and manufacturing 68,000 more; in contrast, the construction sector remained virtually unchanged at 8.1% below its pre-COVID employment levels. Statistics Canada also highlighted that both fathers and mothers’ employments levels returned to pre-pandemic magnitudes; nonetheless, it also noted that it is taking longer for mothers to return to their regular number of working hours. Royce Mendes, a senior economist at CIBC Capital Markets, echoed the concerns of politicians in a note to clients and warned in a letter to clients that “The country is now faced with new virus cases clearly trending in the wrong direction, threatening to upend the labor market recovery.”

6. The second wave has hit Canada, and the governments have issued new guidelines to counter the coronavirus spread. Across the country, schools are to remain open for now, as are essential businesses such as grocery stores and pharmacies. Restaurants are still allowed to offer takeout, but dine-in services are subject to provincial restrictions of hours and patrons’ number. Telework is encouraged, and each province has released measures detailing which businesses can operate in physical spaces, as well as a set of rules on how to maintain physical distancing. Directives on self-isolation in case one exhibits COVID-related symptoms, the use of face masks, and social distancing still apply. Entry to Canada is restricted to everyone, except for Canadian citizens, permanent residents, and exempted groups like international students and agricultural workers. All are required to quarantine for 14 days and make arrangements to have groceries and other essential goods delivered; federal law states that failure to do so can result in fines of up to six figures and jail. For domestic travel, people must wear face coverings over the nose and mouth and check the measures in place in the province of destination. Last but not least, the border remains open to goods like medicine, food, and fuel.

7. New Yorkers are fleeing the city. In September, the number of apartments for rent in Manhattan tripled and almost reached 16,000. According to the study’s authors, the vacancy rate is now at 6% from its usual 2% – 3% levels, and landlords are enticing renters with low rents and other incentives. Manhattan is the largest rental market in the country, with two-thirds of the total number of apartments on the island. COVID seems to be the driving force of this exodus: high rents in a city that could not continue to offer its usual attractions added to telework, high unemployment, and high crime rates, have prompted many to look for less expensive and bigger housing options in less crowded places. The decrease in rentals affects not just landowners, but could potentially impact banks, mortgage lenders, and the city’s revenue as property tax revenue is New York’s largest source of income

8. According to an internal government memo, the White-House COVID-19 outbreak has infected “34 … staffers and other contacts.” The memo, issued on Wednesday this week, said that a senior advisor to the President had contracted the virus. Senior aides to the President, Stephen Miller, and Hope Hicks tested positive. Hicks’ results came back positive on September 30 after having traveled with the President for the first presidential debate and one day before the President and the First Lady announced their test results. Chris Christie, the former governor of New Jersey, who worked with the President in the preparation for the first debate, was not spared, nor was Kayleigh McEnany, the White House Press Secretary. The White House outbreak also reached Trump campaign manager Bill Stepien, Former White House counselor Kellyanne Conway, Republican National Committee Chairwoman Ronna McDaniel, and Republican Senators Thom Tillis, Mike Lee, and Ron Johnson.

9. Brent crude oil and West Texas Intermediate posted close to 10% gains compared to last week. Brent crude opened the week below the $40 threshold, but since then remained above it and had mostly an upward-moving week. On Friday, Brent crude oil touched the high for the week and closed the week at $42.82. WTI followed an almost identical week, except that it took surpassed the $40 margin by Thursday. It also reached the high of the week by Friday and closed at $40.52. Hurricane Delta played a part in this rise as oil producers had evacuated 272 offshore platforms by Thursday, that is, 42% of the platforms in the Gulf and 92% of the current production in the region.

10. Right at the beginning of the trading week, the euro briefly dipped to the lows against the U.S. dollar and reached negative territory, however, it quickly left and did not return. From the early morning of Monday, the European currency undertook an upward trajectory that was only interrupted in Tuesday’s late hours until Wednesday’s early morning. The euro resumed its upward path but briefly fell again in the afternoon of Thursday. About two hours later, the currency rocketed, touched the highs for the week right before closure, and closed to the upside against the U.S. dollar. In contrast, the Japanese yen had an opposite week. The Japanese currency increased against the U.S. greenback at the trading week’s opening but started a downward trend that drove it to negative territory for the rest of the week. By Tuesday night, it seemed like the yen would at least stabilize, however, it dropped abruptly and reached the lows of the week in the early hours of Thursday. The Japanese yen steadied again, started an upward trend in the wee hours of Friday, and closed the week to the upside against the U.S. dollar.

The joys of the latest “Labour Force Survey”—the unemployment report issued by Statics Canada—were short-lived. The job gains from September may soon disappear with Friday’s announcement of new restrictions for Toronto, Ottawa, and Peel region. In the afternoon, Ontario’s Premier Doug Ford declared the province counted 939 new cases and determined to follow Quebec’s lead with a new set of restrictions that close casinos, movie theaters, and gyms to counter the advance of the coronavirus. Indoor dining at restaurants and bars is also banned; the new set of measures will go into effect on Saturday. The increasing number of coronavirus cases across the country could entail a second wave of layoffs and hit hardly, again, industries like restaurants, which now face a difficult winter if indoor dining restrictions remain in place. Indeed, the second wave of coronavirus endangers not only the momentum in job gains but imperils the recovery of the entire economy. A sector like information, culture, and recreation, which added 56,000 positions in September, is also under threat with the new measures; and the boost from the new jobs created in the educational sector most likely will not repeat in October as the start of the school year will be behind. As stated by Statistics Canada, accommodation and restaurants; retail; construction; and transportation and warehousing are all critical industries for Canadian economic recovery, and all four face an even more uncertain future with the second wave and the coming winter.

Federal and state authorities thwarted a kidnapping plan against Michigan Governor Gretchen Whitmer. The plot’s development began in June and continued to gain momentum into October until Wednesday, when police arrested thirteen men. Some face charges for planning her abduction, others for terrorism, and others for plotting to capture the Capitol and start a civil war. In the affidavit released on Thursday, the FBI says it started monitoring a “group of individuals” in early 2020, after it found information regarding discussions to violently “overthrow [a] certain government and law-enforcement components.” According to the document, the schemers surveilled Governor Whitmer’s vacation home twice, discussed bombing a bridge leading to the residence, and planned to flee by boat with the governor. The statement revealed that the plotters had considered murdering the governor instead of kidnapping her; it also disclosed the links between these men and the right-wing group “Wolverine Watchmen.” This is the second time the actions of Michigan right-wing groups make the national news. In May, the conservative group “Michigan United for Liberty” organized a rally that took its Capitol. Some protesters entered the building with guns to protest the governor’s stay-at-home orders issued to slow the coronavirus spread.

Hurricane Delta, now category 2, made landfall on Friday in Louisiana and Texas six weeks after hurricane Laura hit. More than 453,000 homes and businesses are without electricity, and more than 5 million people living in Louisiana and Southwest Tennessee are under flash flood warning. More than 9,500 people have evacuated ahead of the storm; for many of them, this their second time in shelters this year. Weather experts have forecasted 5 to 10 inches of rain; in some places, it might reach 15.

Investors continue taking steps to ensure that their portfolios remain diversified against the current uncertainties, and many continue to use physical precious metals for that very purpose. Savvy investors continue to watch the precious metals markets for opportunities to buy at a discount. Nevertheless, precious metals should always be viewed as a long-term investment; the key to profitability through the ownership of physical precious metals is to acquire the physical product and hold on to it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Oct. 2, 2020 Oct. 9, 2020 Net Change
Gold $1,902.98 $1,921.20 18.22 0.96%
Silver $23.90 $24.96 1.06 4.44%
Platinum 885.40 889.30 3.90 0.44%
Palladium 2,327.50 2,448.20 120.70 5.19%
Dow 27682.81 28586.90 904.09 3.27%

Previous year Comparisons

Oct. 11, 2019 Oct. 9, 2020 Net Change
Gold 1,484.40 1,921.20 436.80 29.43%
Silver 17.52 24.96 7.44 42.47%
Platinum 895.50 889.30 -6.20 -0.69%
Palladium 1,700.10 2,448.20 748.10 44.00%
Dow 26816.59 28586.90 1770.31 6.60%

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

Gold Silver
Support 1920/1860/1800 24.00/22.50/21.00
Resistance 1980/2000/2050 25.00/26.00/27.00
Platinum Palladium
Support 880/860/800 2300/2250/2100
Resistance 900/960/1000 2450/2550/2700
This is not a solicitation to purchase or sell.
© 2020, Precious Metals International, Ltd.

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