Daily Gold & Silver Market Report – 12/30/2016

Cassie Bastien

12/30/2016 9:37:00 AM

GOLD PRICES SURGE TO FRESH TWO-WEEK HIGHS

Gold prices increased yesterday causing them to reach their highest level in two weeks as bullions recovery from 11-month lows continued. Sam Bourgi with EconomicCalendar.com reports February Gold futures rose 1.6 percent, to close at $1,159.00 a troy ounce at 4:59 pm ET. The yellow metal traded within a daily range of $1,142.60 and $1,160.60. Amid lower trading volumes in the futures market, bullion has been on the rise for the past five days. As markets recalibrated following consecutive record peaks earlier this month, demand for equities has softened in recent days. Bourgi said, “The US dollar has reigned supreme since the November 8 US presidential election, as investors doubled down on bets that stronger economic growth would produce higher inflation that could force the Federal Reserve to tighten monetary policy faster than previously expected.” A separate report from the Commerce Department also showed that wholesale inventories climbed 0.9 percent last month, following a 0.1 percent decline in October. Bourgi said that “trading activity will return to normal after the new year holiday”.

WILL SILVER SOAR TO 1,000 PERCENT?

Moe Zulfiqar with Lombardi Letter says to not ignore the grey metal, that Silver prices could rise up to 1,000 percent all in relation to the S&P 500. Zulfiqar provided a chart showing that whenever the correlation between Silver and the S&P 500 becomes extremely negative, we see bottoms fall into place. Whenever this correlation becomes extremely positive, we see tops made in the Precious Metal. Looking back a few years, Zulfiqar reports that “in 1976, the five-year correlation between Silver prices and the S&P 500 hit negative 0.90. This is close to when a bottom in Silver prices was formed. A few years later, the gray Precious Metal prices had increased roughly 1,000 percent.” The correlation between Silver prices and the S&P 500 currently stands at negative 0.90 again. He questions if the price of Silver could see another move to the upside, just like it did in 1976. With that being said, if we see a move of 1,000 percent, it would mean prices going to over $160.00 an ounce of Silver. But that isn’t the only thing that shows the possibility of Silver showing a massive upside move; despite declines in Precious Metal prices, buyers are coming in regardless, and it doesn’t look like that’s stopping anytime soon. Also, Silver is a substitute of Gold as well; as Gold prices and Gold demand improves, it’s going to have an impact on the Silver market well. Finally, low Precious Metal prices have really questioned mining production. We already hear major Silver-producing regions reporting dismal production. Zulfiqar said that “if prices remain suppressed, the supply in the Silver market could really be an issue.” However, keep in mind that it took many years for the entire more to take place; when the bottom was placed in 1976, the top wasn’t placed in until 1981. For now, Zulfiqar says to look out for mining companies; if Silver prices do increase 1,000 percent, some mining companies could provide investors with five to ten times those returns.

WHY STOCKS LOOK TO FALL IN 2017

MarketWatch reporter Victor Reklaitis said that 2016 is finishing strong with “the almighty dollar briefly and mysteriously” plunging against the euro EURUSD, +0.5242 percent, while the USDRUB, +1.2787 percent has been taking a hit as Russia hits back at the US. Technical analyst Mark Arbeter from Arbeter Investments says he is bearish in the short term and expects stocks will retreat in 2017’s first half. He writes, “Areas likely to do the best in the near term: consumer staples XLP, +0.46 percent, utilities XLU, +1.56 percent. Once this mean reversion ends, it’s very possible that financials and industrials will take us higher.” Arbeter sees a rather modest pullback for the S&P 500, predicting it falls to 2,200 or 2,230 before rallying to 2,400 or 2,500 and beyond. The Dow DJIA, -0.07 percent, S&P SPX, -0.03 percent and Nasdaq Composite COMP, -0.12 percent are all down 0.6 percent for the holiday-shortened week as of yesterday’s close. The three indexes are on track for December rises from 2 to 3.6 percent, handing them 2016 gains from 8 to 14 percent. In addition to that, the euro jumped to around $1.07, but the gains faded and the shared currency was recently changing hands around $1.0555. “Whether somebody accidentally pressed a button or algo trades were triggered, nobody knows,” said National Australia Bank strategist Ray Attrill.

At 10:37 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,159.10 Down $0.60
• Silver, $16.20 Down $0.04
• Platinum, $905.50 Down $4.10
• Palladium, $683.30 Up $6.70

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