Dollar Weakens But Gold And Silver Fall Nevertheless

Gold is off $8.40 in late afternoon trading while silver is down 18¢ or 0.90% per ounce. This is in spite of assistance from a weaker U.S. dollar, which drives prices up.

Earlier in the session, the dollar was up against the euro, but faded as developments in Turkey have tended more and more toward democratic stability. The British pound rose for similar reasons. On the other hand, the yen weakened versus the dollar well over 1.00% before falling back close to even.

"I think the big theme today is one of relief," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. Underscoring that was the recovery of the Turkish lira, which has gained back much of the ground lost against the dollar because of the failed coup.

Of courses gold did not have time to step up as a safe –haven play during the coup attempt in Turkey. Instead, but today, “risk on” was the watch-phrase of the start of the week.

Bonds in the U.S. and Germany were more or less unchanged, although the negative yield in Japan’s bond market moved up a bit so that it stands at -0.237%.

The big action of the day was in equities, which is not terribly surprising given the state of other potential investments.

We have record-low interest rates, seemingly directionless gold trends and currencies that are prey to international political fears. Simply put, the money has to go somewhere and there are some strong sectors out there that not only are offering decent growth prospects but have very good dividend yields – exactly what bonds are not offering. Precious metals, of course, offer no yield.

We feel as if there is a new boom yet about to happen in tech stocks, especially innovative hardware companies. They will join consumer staples and telecom as the high-yield grouping. Financial institutions may also be poised to join the group although there are still some storm clouds, including Brexit and global terrorism hanging over the sector.

Europe and Asia were mixed with the Nikkei and FTSE leading their regions on the day.

In the U.S., the three major indexes rose, with the Dow being weakest and NASDAQ strongest. The S&P 500 is hovering around fresh record highs with the tech component helping and the energy sector hurting it.

West Texas Intermediate feel 1.66% at regular settlement, came back, then fell to settlement pricing. The tumble came on higher-than-expected inventories.

Stung even more by fat inventories was gasoline, which dive-bombed down 2.35%. The summer of oil and gasoline price recovery has turned into a middle trough direction, with neither crude nor gasoline (nor natural gas for that matter) rising above a now-familiar range.

Wishing you as always, good trading,