Uncertainty is the theme surrounding commodity and equity markets as the US Government shutdown continues into day 2.

Uncertainty is the theme surrounding commodity and equity markets as the US Government shutdown continues into day 2. Global equity markets initially shrugged off the shutdown and moved higher yesterday but the potential of a longer shutdown is causing some fears in the markets today. Longer US shutdown will certainly impact the US GDP and the fragile housing and labor market recoveries. The US ADP nonfarm employment data showed a creation of 166k jobs which is less than the expected 180k. The US dollar weakened against the Euro on the employment news and the European Central Bank keeping interest steady at 0.50%. The gold and silver market recovered most of yesterday’s losses as short covering caused markets to move higher. Banks and Hedge Funds who sold into the technical breach in the gold market yesterday quickly covered their position as gold crossed back above $1300. We expect more technical trading from the banks and funds to cause short term volatility in the commodity markets. In the long run, we see US government shutdown to end in days and not weeks and Fed tapering to be back in the discussion for the December meeting. The recovery in Asia and Europe will offset any lingering effects of the US shutdown. We believe that gold will continue to drift lower towards the end of the year and the gold/silver ratio to tighten back to the historical norm. Platinum and palladium will most likely trade in a range as industrial demand will well supplied. We are advising our industrial customers to buy metals except gold on the dip and buy gold as needed. Thanks and have a wonderful day.