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Are the Tides Turning for Gold, Equities and the US Dollar?

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For the first time since the presidential elections were held on November 8 we are seeing a distinct reversal of the trends which developed immediately following the election results.

For the last two weeks, we have seen US equities rally on multiple occasions and close at a new all-time record high.

Over the same period of time we have seen the US dollar gain tremendous strength and moving to a high which has not been seen since 2003.

This risk on environment put tremendous pressure on the precious metals markets with gold losing well over $100 in value since the conclusion of this month’s presidential election.

The direction we have seen these three markets move in have been based upon what I believe is a short-term optimism.

This optimism is based upon unknown factors, but it is grounded on the belief that there is a real possibility that the economic environment in the United States will begin to flourish.

It is President-elect Trump’s pro-business stance, as well as his pledge to reduce personal and corporate taxes that has fueled this rally.

Have these trends reversed, or are we simply witnessing a small consolidation prior to resuming in the direction initiated just following the elections.

Only time will tell but for the first time in two weeks we have seen a distinct turnaround with gold trading to a four-week high, the US dollar trading under pressure and moving to a four-week low, and US equities trading off of their historical and record highs.

According to Bloomberg “Trump trade Falters as stocks Fall, Treasuries Rally with Gold” The Donald Trump effect lost its sway over global financial markets as investors shifted to new threats including the future of Italy’s government and fled to the safety of bonds and gold.

Bill Lee Senior Economist for Fed Bank of New York says: “Markets are ahead of itself on fiscal policy”.

Only time will tell the net result of this recent presidential election and its effects not only on the United States but globally.

As I discussed on Friday’s letter, regardless of who you voted for in this most recent presidential election, it is time for a nation to heal and to wish great success to President-elect Trump. Because the underlying truth is that a successful Trump presidency is part and parcel of your success.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer