Wednesday, June 25, 2014
Final 1st quarter GDP of -2.9% showed that the US economy contracted much more than previously estimated. Personal consumption of 1% was also much lower than the previously reported 2.4%. The consensus is that the US economy have since bottomed and is recovering at a healthy pace despite lingering employment weakness. May durable goods orders were also lower at -1% vs. estimated 0%. Durable ex transportation was down 0.1% compared to surveyed 0.3% growth. The US economy still looks shaky as the FED is trying to remove the crutches that we’ve been on since the financial crisis of 2008. Gold and silver have been quietly holding onto gains of last week. Platinum and palladium continue in directionless trading as investors and funds are stubbornly reluctant to get of their long positions despite the end of the mining strike and Russian/Ukraine threat.
Wednesday, June 18, 2014
FOMC decided at this meeting to continue tapering their bond buying by $10 billion for a 5th straight meeting to $35 billion
FOMC decided at this meeting to continue tapering their bond buying by $10 billion for a 5th straight meeting to $35 billion and on pace to end the program this year. The bond purchase will be $20 billion in treasuries and $15 billion in mortgage back securities. Fed left interest rate near zero and cut its GDP outlook from between 2.8%-3% down to 2.1%-2.3%. Fed chair Yellen reiterated that the pace of tapering will depend on future economic and employment data and not set at the $10 billion. The Fed said inflation continues to be lower than the 2% target rate. There is nothing new in the FOMC decision or the Q&A afterwards so the market reaction is muted with gold and silver up slightly and platinum and palladium up on noise coming out of South Africa that the Union leadership are putting in additional demands than what was agreed in the settlement framework. We would maintain our long position in gold and silver and look to sell half the position at around $1290 and $20.05 and sell the other half above $1300 and $20.25 respectively. We would be cautious of platinum and palladium as any more negative news regarding the settlement framework will cause the price to spike in the near term while long term outlook remains bearish, as investors and funds look to liquidate their long positions will cause the prices to fall sharply. Sit back, relax, and watch the stocks move higher would be the conventional wisdom. Have a wonderful evening.