The Precious Metals Week in Review – November 27th, 2020

1. Although short, this was an eventful week on Wall Street. Tuesday was a historic day. The Dow Jones topped the 30,000 mark for the first time, putting it on track for the biggest gain since January 1987. The main three benchmarks—S&P 500, Dow Jones, and Nasdaq Composite—posted weekly gains. Nevertheless, volatility remains high as the increase in COVID-19 cases threatens the economy with new lockdowns and more layoffs.

2. For the week ending on November 21, the seasonally adjusted number of Americans filing for unemployment increased again vis-à-vis the previous week’s revised level. The number of initial claims totaled 778,000, an increase of 30,000 from 748,000. The revised figure for the week ending on November 14 added 6,000 claims, for a total of 748,000. The four-week moving average for the week of November 21 was 748,500, an increase of 5,000 claims from the preceding week’s revised average. The revision of this average for the week ending November 14 added 1,500 more jobless claims than estimated for a new total of 743,500 claims.

3. Despite the warnings of the Centers for Disease Control and Prevention against traveling for Thanksgiving, the number of commercial airline users increased to new highs since mid-March. More than 1,070,000 travelers passed through airport security checkpoints the Wednesday before Thanksgiving. Although that figure is only 40% of last year’s volume for the same day, it marks a record since the beginning of the pandemic. About 6 million air travelers have passed through the Transportation Security Administration checkpoints since the Thursday before Thanksgiving when the CDC issued guidelines for the holiday. TSA spokesman Andy Post said that the data did not show sweeping cancellations in the days leading to the holiday. These numbers echo the results of a poll released this week by Axios-Ipsos inquiring Americans about their Thanksgiving plans. While 39% of the respondents said their plans had not changed, about one in ten respondents said they would not celebrate Thanksgiving at all. Of the 61% that changed their plans, 12% canceled travel plans, and only 1% opted for driving as an alternative to getting to their destinations.

4. Anti-lockdown protesters have taken the outside of Ontario Premier Doug Ford’s house to demonstrate against the latest measures meant to curb the upsurge in COVID-19 cases. In his response to demonstrators, Ford called demonstrators to “Stop acting like a bunch of buffoons out there and start respecting the people of Ontario.” In his daily briefing, Mr. Ford told protestors to “come down to Queen’s Park,” where they can “do cartwheels, […] [and] jump up and down” to protest the latest 28-day lockdown for Toronto and Peel. The Premier condemned the protests as “totally unacceptable” as his neighbors are being threatened and intimidated. Although unpopular, the current measures seem to be having an effect as the infection rate has slowed down, according to the latest data released by the School of Public Health of the University of Toronto. On a related note, federal health officials said on Thursday that Canada is on its way to approve the first COVID-19 vaccine by mid-December, around the same time the U.S. and the European Union plan to grant approvals. However, it seems that Canada will not get the vaccines simultaneously, which elicited criticisms from Conservatives. While Prime Minister Justin Trudeau said he estimated most Canadians will have received vaccines by September of next year, deputy chief public health officer Howard Njoo said December 2021 seemed a more realistic timeframe.

5. Experts think that the pandemic could be redefining holiday shopping. This year, Black Friday deals began much earlier than years past, a change that could become a practice in the years to come. Steve Sadove, former Saks CEO and chairman, said in an interview with CNBC’s Squawk Box that “retailers have done a brilliant job extending the season, and that will play out as we go into next year.” Sadove added that the earlier start of the shopping season should help to avoid delays for orders placed in the first two weeks of December. Although this is not the first-year retailers attempt to lengthen Black Friday sales, COVID-19 could end up imposing this shift, said former Walmart U.S. CEO Bill Simon. For large retailers, the challenge will be in improving their online sales while depending less on their physical stores. However, both Sadove and Simon warned about the adverse effects of e-commerce: retailers also need buyers visiting their storefronts so that people buy products at full prices as well, because “If you just sell the deals, you’re going to lose money […] You’ve got to sell the wrapping paper, and the Christmas lights and the candy canes and everything else that goes with it or you’re just not going to make it.” Sadove suggested that picking up online purchases at retail locations could do the trick: “That’s where you do get some of the margin enhancement […] When you get the buy-online, pickup-in-store—and the big boxes have done it well—that really does win.”

6. Changes to the Federal Reserve’s bond-buying program could be coming soon. On Wednesday, the Federal Reserve released the minutes of the last Federal Market Open Committee meeting in early November. Currently, the Fed is buying $120 billion of Treasury and mortgage-backed securities per month. The documents show that the Committee is considering taking measures to help further lower the interest rates on debt like mortgages: “The Committee could provide more accommodation […] by increasing the pace of purchases or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases.” Nevertheless, the minutes suggest this is a possibility rather than a plan, as the log does not detail when or how. The meeting records also express concern over the economic recovery pace, which remains well below pre-pandemic levels, and the slower pace of job gains. Since the meeting, the overall picture seems grimmer: jobless claims increased for the second consecutive week, offsetting previous gains, COVID-19 cases continue to rise at staggering rates, and governments are reimposing strict measures to curb the surge in coronavirus cases.

7. Russia and Saudi Arabia have called for an informal meeting of the Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ for Saturday. The conference, which would precede the formal meetings scheduled for Monday and Tuesday next week, will seek to reach an agreement on whether to extend the current oil production cuts. Following last week’s monthly meeting, the JMMC did not provide any recommendations regarding oil supply to OPEC and OPEC+ members. However, the panel did state that “All participating countries need to be vigilant, proactive and be prepared to act, when necessary, to the requirements of the market.” Experts and analysts think that the OPEC+ will extend the production cuts—currently at 7.7 million barrels per day—until late March 2021. Despite the recent rally in prices, it is argued that the current upsurge in COVID-19 infections in major economies will weigh heavily on the decision. This week both Brent and West Texas Intermediate crude oil surpassed the $40 threshold and are now drawing closer to $50. Both prices steadily climbed throughout the week, although WTI oil had a shorter week because of Thanksgiving celebrations. Brent crude oil reached the week’s high on Thursday at $49.09 and is settling for the week at $48.27, while WTI crude attained the week’s high on Wednesday at $46.09 and is closing the week at $45.52.

8. At the start of the trading week, the euro slightly dipped against the U.S. dollar before initiating an ascent that lasted until Monday afternoon. However, a rapid fall took the European currency into negative territory and the week’s low. Immediately after, the currency set an upward trend and entered positive territory by Tuesday morning. On Tuesday afternoon, the euro touched negative ground for the last time and resumed the ascent that took it to the week’s high by Friday. During the climb, the European currency experienced two more dips on Wednesday morning and Thursday afternoon, the latter more profound than the former. The currency closed the week to the upside against the greenback. The Japanese yen opened the week with a slight ascent and sideway movements against the U.S. dollar that lasted until Monday afternoon, when the currency reached the week’s high. Right after, the Japanese currency took a deep dive into negative territory where it spent all week long. The yen tried to recuperate several times, and by Tuesday morning, it seemed well on its way to recovery. Nevertheless, the currency sank even lower and touched the week’s low in the afternoon. For the remainder of the week, the yen engaged in an upward ascent that led it to close the week to the upside against the greenback.

Chinese authorities are now blaming food imports for the first coronavirus outbreak in Wuhan. After controlling the first wave of the coronavirus, China has faced small outbreaks, many of them related to markets. Since supposedly pinning down one eruption to a cold-storage facility in Tianjin that stocks imported foods, officials have been musing on the possibility that the coronavirus originated somewhere else. The former chief of the Chinese Center for Disease Control, Zeng Guang, has gone as far to say that “Wuhan was where the coronavirus was first detected, but it was not where it originated.” Nevertheless, scientists outside China think differently and question the hypothesis that the Tianjin breakout was due to imported pig heads from North America. Taiwanese epidemiologists have studied cold chains as possible explanations for outbreaks that could not be linked to direct contact. However, results have not shown any links between frozen foods and coronavirus flare-ups. Therefore, Taiwanese scientists find more plausible explanations for these outbursts in food-handling facilities and ports’ working conditions. Notwithstanding, cold-chain reasonings, and arguments where other countries are to blame for the virus continue to gain traction in China. In recent weeks, media outlets have attributed 17 episodes to frozen imported goods, and Beijing continues to rebuke accusations for the pandemic.

This week, Brexit negotiations went through another hurdle as the European Union seemed to reach the end of its rope. On Wednesday, E.U.’s chief negotiator Michel Barnier warned his British counterpart David Frost that he would end the Brexit negotiations in London unless Downing Street were willing to compromise on the remaining issues. On Friday, Barnier reconsidered his threat to end the talks and announced that he would continue with the negotiations in London. It is said that Barnier thinks that the deal is entirely stuck; however, he agreed to travel to the U.K. to continue with the talks because it is the wish of the European Commission. Frost recently tweeted to express his will to continue negotiating until it is clear that it is impossible to strike a deal. Nevertheless, Prime Minister Boris Johnson claimed that the “likelihood of a deal is very much determined by our friends and partners in the E.U.” Regardless of Johnson’s stance, Europeans seem confident in having the upper hand. In the words of France’s European Affairs Minister, Clément Beaune, the European market is “eight times the size of the U.K. market,” which means that the British are at a disadvantage and “need a deal more than we do.” Only 34 days remain until the end of the transition period, and disagreements endure in two areas—fisheries and conflict-solving mechanisms.

Cautious investors continue taking steps to ensure that their portfolios remain well-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)

Previous year Comparisons

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

This is not a solicitation to purchase or sell.
© 2020, Precious Metals International, Ltd.