Gold Revives Along with Many Other Investments

Gold and the other precious metals found support via regular trading momentum as well as from a much-needed boost due to a weaker dollar.

Gold is up more than $12.00 in mid-afternoon. Silver is up 57 cents per ounce or 3.20%. Platinum and palladium also rocketed upward, 3.25% and 3.50% respectively. 

(Spot gold finished up about $7.00 per ounce, entirely on dollar weakness.)

The U.S. dollar was down against a broad basket of currencies. Against the euro, it was down about 0.40%. The greenback was off most against the British pound, lower by almost 0.70% on the day.

As much as we want the world economy to strengthen and for everybody to make lots of money, we think the Brexit fallout effect is not over with. Right now, at the very least the economy of Great Britain is in the midst of a major economic problem without really believing such.

Indeed, the London FTSE index leaped up by 3.60%, erasing all losses experienced during immediately after the Brexit vote.

The French CAC and German DAX were up but not nearly as robustly as the FTSE. The CAC rose 2.60% and the DAX by 1.75%. The gains represent a smaller drop after the Brexit debacle and thus less room for “recovery.”

U.S. equities are rallying as well, led by energy issues and to a lesser extent, financials. West Texas Intermediate crude was up over 4.00% at regular settlement but has since backed off.

Airlines were impressive as well, all the majors taking a jump up. The Dow has now made up about half of the losses it experienced due to the Brexit, which is good but still leaves some distance to go. It may be the one red flag in the relief rally. 

Over on the NASDAQ, some major tech issues – Microsoft, Apple and Alphabet (Google) – rose smartly, although they were somewhat constrained by worries over the European market.

Investors are hoping that we are not seeing the proverbial “dead cat bounce” in today’s markets in which a sudden rebound proves to be a bringer of false hope and markets move lower at the first chance.

However, some big-time analysts think the rally is for real. "What I think people are grasping here is [that] this is a disaster for the U.K., but it's a big splash with small ripples," said David Kelly, chief global strategist at JPMorgan Funds.

Asian markets were also up early in the day/overnight.

We understand the “turnaround now” mentality but we are more concerned with the long-term ramifications for GB and its trading and political partners.

Most of all we worry that the City of London, Britain’s financial hub, will turn its eyes and money elsewhere, such as the continent or North America. That would leave whatever might remain of Great Britain exhausted and depleted.

Wishing you as always, good trading,