Gold Continues Slide, Equities Slow Their Ascent, Oil Weakens Further

It’s understandable that gold would continue to slide as we celebrate not so much Donald Trump’s victory as we do the end of the election itself.

It allows us to get back to normal, which in July-Aug-Sept was typified by a pretty robust stock market and a slow but steady overall economy. A slow but shallow decline began in September and bled over into October. It ended with a bang the day after the election was decided.

The 19,000 mark on the Dow Jones Industrial Average is within hailing distance. The S&P 500 can see 2200 in the not so distant future, having followed more or less the same pattern as did the Dow.

It goes without saying that gold was again hammered as stocks rocket upward. Gold was off about $31 per ounce, or 2.50%. Silver was murdered. It is off 6.55%. At the moment, there is no haven demand for precious metals. Silver’s recent quick ride up was limited by rumors that said the industrial powers were not in need of as much of the gray metal. The base metals complex also tumbled on the whispers.

Speaking of not needing much, oil continues to trade under pressure due to a number of factors. There is too much supply. OPEC cannot agree on a strategy to curtail or at least freeze production. There is too much supply. There is an enormous abundance of oil already in land storage or in offshore tankers awaiting a chance to unload. And, did we mention? There is too much supply.

At settlement, West Texas Intermediate was down about 2.80% to $43.44 per barrel while Brent North Sea crude was down just a little less, 2.65%.

OPEC said October output reached yet another record, casting doubt on whether its plan to pare down output is achievable or could be enough to ease the persistent glut.

Nevertheless, the rig count in the U.S. went up by two. That’s interesting.

Bond yields fell slightly, but are generally staying robust and will continue that way.

A little bit of crystal ball gazing. We think we are in a honeymoon period with the political situation. We think that this would have been true regardless of who won.

However, we think as we move toward the FOMC meeting in mid-December and the novelty of Mr. Trump wears off, we will experience a sobering up. And, unlike Vegas, what happens in Washington doesn’t stay in Washington, but generally comes to New York and the financial markets.

Keeping a steady eye on gold fundamentally and marrying those daily viewpoints with our strong technical analysis could yield a wonderful first part of the year.

Wishing you as always, good trading,