Gold has traded between $1,230 and $1,243 so far today…as of 9:00 am Pacific, bullion is unchanged at $1,234 an ounce…Silver is up a penny at $16.23…Copper has added 2 cents to $2.20…Crude Oil is off its lows, down just 41 cents at $39.95 a barrel after major Oil producers failed to come to an agreement over the weekend on an output freeze, while the U.S. dollar has retreated one-fifth of a point to 94.47…
Assets in SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, rose 5.64 tonnes to 812.46 tonnes on Friday, the first increase in a week…meanwhile, hedge funds and money managers raised their bullish bets on Gold and Silver in the week to April 12, according to U.S. Commodity Futures Trading Commission data released Friday…
Citigroup said today what the charts have been telling us for several months – commodities have passed the worst of a rout amid brighter prospects for Chinese demand, a weaker dollar and signs of tighter supplies…
Silver has overtaken Gold as the year’s best performing precious metal, Bloomberg confirms, extending its gains to 17% on the back of a stabilizing Chinese economy…the precious metal, which is used in a variety of industrial products, is now trading at a 6-month high (updated charts this morning)…
Anemic U.S. Growth
Another signal that the U.S. economy has stalled or is slowing down…sales and profits are falling at more of America’s biggest companies, according to the latest quarterly survey carried out by the National Association for Business Economics…the share of those reporting stronger sales has dropped to the lowest level in 7 years…and, for only the second time since the end of the Great Recession, more respondents said profits were falling than those who said profits were rising at their companies…the pace of hiring has slowed in the last three months…
All the monetary “stimulus” possible from the Fed would do far less to kick-start the American economy than a comprehensive package from Washington that dramatically reduces the Obama double burdens of over-regulation and excessive taxation that’s choking the U.S. business sector…such a change can only come in November when Americans go to the polls…
Citigroup today downgraded its outlook for the U.S. economy for 2016–2017, saying “the risks are very evident”…William Lee, head of North America economics at Citigroup, said in a research note: “Our outlook has little potential to be surprised on the upside, but the risks are very evident on the downside.” Recently revised and incoming data imply GDP will grow by only 0.9% in the 1st quarter and 1.7% for the year, the report noted, adding that inflation is projected to remain subdued…that’s not exactly an environment within which the Fed is about to increase interest rates…
Brazil’s Lower House Impeaches President
Brazil’s political crisis has deepened as a motion to impeach leftist President Dilma Rousseff overwhelmingly passed in the lower house last night and will now go to the upper house, the Senate, which is expected to suspend the President next month while it carries out a formal trial…the problem is, while Rousseff needs to be ousted, about 60% of the 594 members of Congress are facing corruption and other charges…this is a country in a severe economic, moral, social and political mess – and it’s hosting the summer Olympics…
Oil Update
The lack of “Doha deal” over the weekend among 16 global OPEC and non-OPEC producers is actually positive for the Oil market looking out over the final 6 months of this year…any artificial jump now in Oil prices would likely bring more Crude back onto the market and delay the critical supply/demand rebalancing process which needs to come to its natural conclusion…declining supply and improving demand should benefit Oil prices during the 2nd half of this year…
The collapse of talks also underscores the intense rivalry between Saudi Arabia and Iran, though it’s strange that the Saudis commented yesterday that they couldn’t support an output freeze at the moment because Iran wasn’t willing to participate…Iran made it clear beforehand that they would not even attend the talks, and they also stated that they were unwilling to freeze production as they seek to regain market share which was lost during years of economic sanctions…what was the meeting in Doha all about, then?…the Saudis obviously don’t want to do the Iranians any favors, which is understandable, and they’re also determined to inflict more pain if they can on North American producers…
Last week, ahead of the Doha talks and not trusting these Middle Eastern countries or the Russians who were also at the table, we closed out our HOU ETF position with a profit of 40% in less than 2 months…hedge funds and other money managers expanded their net-long position in U.S. Crude by 11% in the week ended Tuesday, according to the latest COT data…Crude prices could slip back to the mid-$30’s if investors start unwinding those bullish positions…
We continue to maintain a 100% accuracy rate on our ETF trades for subscribers with short-term gains of 60%, 35%, 47% and 40%…stay tuned for our next pick…there will likely be an opportunity to re-enter the HOU at a strategic time later this quarter…
In today’s Morning Musings…
1. Updates and new charts on Lithium plays on the move again this morning…
2. A must-own Gold explorer in Nevada gearing up for a huge drill program…
3. What’s in store this last half of April for the TSX Gold Index? – you may be surprised…
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