Safe Havens Regain Appeal As Volatility Continues

If you feel the skin on your face rippling backward, that’s the force of 2 or maybe 3Gs. But you’re feeling something entirely different in the economy right now. And it’s a bit scary.

The very intense, 7G ride in the markets is at hand.

The Dow, the S&P 500, and NASDAQ in particular, are plummeting. Call it approximately a drop of 2, 2-1/2 and 3 percent respectively.

Dragging down the equities was the price of crude oil, which is now madly flirting with the $30.00 per barrel mark. With Brent North Sea falling so precipitously, we’re wondering if it will hit that psychological level before West Texas Intermediate does.

Given that the equities were so weak and energy prices are falling into a bubbling pit, it’s no wonder that gold gained a nice chunk of change back from recent losses. It received a small assist from weakness in the U.S. dollar but most of the gain of close to $7.00 is due to regular trading. The safe haven-ites may be breathing shallowly but all hope is not lost.

There are all of a sudden many analysts in the inner circle who are saying this is going to be a very tough month and first quarter for equities. Perhaps some of that money will flow into gold and even silver, the latter of which was up 2.75% on the session.

We feel compelled to mention that the seemingly eternally price-challenged palladium gained about 3.00% today.

Reiterating the possible revival of safe haven bets, Treasury yields fell a bit more, with the 10-year yield hitting its lowest level since October and the 2-year yield falling to its lowest since mid-December. (Yield falls, face value/price rises, a signal that people will pay a premium for the safety of low-yield instruments.)

We have our eye on the next Fed meeting later this month. As the current volatility lingers and more fear ripples through the financial system concerning a world and/or U.S. slowdown, we’re leaning slightly against the odds that the Fed will raise rates immediately.

The curve up has to be lower and slower it seems – at the moment.

Wishing you as always, good trading,