Yesterday gold plunged by the most in a dozen years while silver had its biggest drop since 2021. Spot gold fell as much as 6.3% while spot silver dopped up to 8.7% before staging a nominal recovery.
Both metals have rallied significantly throughout the year leaving the metals in perceived overbought territory. An issue at hand is the weekly report from Commodity Futures Trading Commission that indicates how hedge funds and other money managers are positioned in gold and silver has not been published in three weeks because of the government shutdown,
There are other reports, but the absence of this top-tier positioning data has come at a delicate time given the large advance, making the metals prone to increased volatility.
As widely discussed, gold has rallied on the “debasement trade,” or the trade where sovereign debt and currencies have been sold, and gold is purchased to protect oneself from runaway deficits and fiscal recklessness. Additionally, a large amount of retail investing and hedge funds have taken a position in the precious metals.
Equites were generally mixed yesterday on trade concerns as the President stated that the much-anticipated meeting with China might not happen in the coming weeks. As one Bloomberg pundit stated, the President will make another remark stating the talks are back on if equities begin to swoon.
At some juncture will the markets begin to ignore such proclamations, viewing them in a similar manner as the comments made by Saddam Hussien’s legendary propagandist Bagdad Bob? The bully pulpit is very powerful, but as with all power, it does have its limits and could stop being a powerful conduit.
What will happen today? TSLA reports after the close. How will the report be interpreted?
Last night the foreign markets were down. London was up 0.93%, Paris down 0.16% and Frankfurt down 0.05%. China was down 0.07%, Japan down 0.02% and Hang Seng down 0.94%.
Dow and NASDAQ futures are flat and down 0.4% as NTFLX’s earnings did not meet expectations. The 10-year is up 3/32 to yield 3.97%. Gold is nominally lower.
