Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Coronavirus Doesn’t Matter Either… We Have the Federal Reserve!

Commodities / Gold & Silver 2020 Feb 01, 2020 - 12:51 PM GMT

By: MoneyMetals

Commodities

As the coronavirus continues to spread, global financial markets are showing the symptoms of investor unease.

Chinese and emerging markets stocks have taken a big hit over the past several days, as have commodities. Crude oil prices have dropped 13% over the past two weeks while copper has seen a 12% drop on concerns about the impact of the China virus on global demand.


Gold is faring much better as some investors seek out the precious metals for safe-haven protection, up 1% for the week.

Markets brushed off the Federal Reserve’s policy announcement on Wednesday. The Fed kept rates unchanged as expected.

Chairman Jerome Powell reiterated the central bank’s policy of “symmetric” inflation targeting. That translates into allowing inflation rates to rise above the Fed’s 2% target for a sustained period to make up for recent periods where it ran below 2%.

Obviously, the central planners on the Federal Reserve Board remain unsatisfied with the level of price increases consumers face. Food and fuel are still too cheap, they say. Medical care and college tuitions are too affordable for too many people.

And it’s all because the dollar isn’t depreciating fast enough for the Fed’s arbitrary inflation target to be hit.
 
The U.S. Dollar Index is firming so far this year. And the threat of a global pandemic has policymakers concerned that consumers and businesses will hunker down and further depress price levels in dollar terms.

The mainstream media and political correctness police have other concerns as top priorities. No, it isn’t about the risk of Americans being infected from international travel into the U.S. It’s about the risk of Chinese people being stereotyped and subjected to “racism” and “sinophobia.”

Meanwhile, CNN alerted Americans to the alarming fact that President Donald Trump’s Coronavirus Task Force isn’t “diverse” enough. Badgering people about what they look like is apparently helpful in fighting the spread of a deadly disease. Thank goodness there are journalists willing to do such brave and heroic work!

And thank goodness the Fed stands ready during any potential national emergency to pump limitless amounts of cash into the repo market and banking system…

On Thursday, the Federal Reserve Bank of New York pumped another $83 billion in new liquidity into short-term lending markets. The move saved the banks from having to sort out their own illiquidity issues for another week.

Unfortunately for other industries – automakers in particular – the Fed can’t liquify the markets for palladium and rhodium by injecting fresh supplies of metals.

The markets for these critical metals used in catalytic converters remain beset by physical supply deficits. This in turn is causing unusual spikes in leasing rates and distortions in pricing mechanisms as bid/ask spreads widen.

According to Refnitiv GFMS, the palladium market will operate under a supply deficit of 883,000 ounces this year. Prices may have to rise even higher for the already pricey metal before supply and demand reach an equilibrium.

We would caution that it’s pretty late in the cycle to be a buyer of palladium here. The good news is that it’s still very early in the cycle for other metals, including lagging platinum and dirt-cheap silver.

Consider that in 2016, palladium began the year trading around $500/oz. Prices have since quintupled.

Silver bottomed in at the very end of 2015 just below $14/oz. Prices advanced strongly that year before falling back into a major trading range. Silver has managed to make only modest net progress.

A mere quadrupling from its late 2015 low would take silver over $50 – and that would likely just be the warm-up phase that finally establishes new all-time highs. Then the explosive phase could begin that sees new high after new high, week after week – just like we’ve seen in palladium over the past year.

When silver and gold prices are making new records, perhaps the Fed will finally have the inflation it so desperately wishes for. Pushing inflation rates back down, though, won’t be so easy. Once the genie is out of the bottle, it can’t exactly be put back in.

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Mike Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in