1. As President Trump began his tour of Asia this week, stocks continued to surge higher into bubble territory despite heavy increases in tensions in the Middle East, signs of gridlock in Washington, D.C., and continued geopolitical turmoil across Europe. On Thursday, world stock markets began a pullback that looks set to continue into Friday’s trading sessions.
2. The seasonally adjusted number of Americans filing initial claims for state unemployment jumped by 10,000 claims to a new level of 239,000 for the week ending November 4, from the previous week’s unrevised level. The four-week moving average of claims decreased by 1,250 to a new level of 231,250 from the previous week’s average. This is the lowest level for the four-week moving average since March 31, 1973. The ability to process unemployment claims in the Virgin Islands continues to be seriously disrupted, but Puerto Rico appears to have begun processing some of its backlogged claims. Both territories suffered catastrophic infrastructure damage in back to back storms at the height of this year’s violent hurricane season.
3. Senate Republicans spooked markets this week by announcing a plan that would push proposed cuts to corporate taxes out to 2019. The Senate and House of Representatives are pushing separate tax reform proposals through their respective legislative bodies, hoping to come up with two individual plans that can be reconciled with each other. The House tax reform bill would move to cut corporate taxes earlier than the Senate’s version. The conflict between the two bills increases the possibility that the legislation could stall in the final stages of its move through Congress in yet another example of political gridlock.
4. President Trump’s unannounced visit to the infamous Demilitarized Zone (DMZ) between North and South Korea was called off on Wednesday due to heavy fog that would have prevented his helicopter from landing in the area. South Korean President Moon Jae-in was also apparently going to join Trump on the visit in a “show of strength” for the U.S.-South Korean alliance. The aborted visit likely staved off further provocation of North Korea, who would have almost certainly pointed to the joint appearance as further evidence of overt U.S. and South Korean aggression towards the hermit nation.
5. In an address to South Korea’s National Assembly on Wednesday, President Trump warned North Korea not to underestimate the U.S. Mr. Trump said that the North Korean regime “has interpreted America’s past restraint as weakness. This would be a fatal miscalculation. This is a very different administration than the United States has had in the past”. Mr. Trump continued, saying “Do not underestimate us, and do not try us”. In remarks clearly directed personally towards Kim Jong Un, Trump said “The weapons you are acquiring are not making you safer, they are putting your regime in grave danger. Every step you take down this dark path increases the peril you face”.
6. China appears to be testing a new deep-sea dredger that dramatically increases its speed and ability to create artificial islands and reefs. Ostensibly, the dredger would be used in some of the many land-reclamation projects that China conducts along its coast, but the previous incidents in which China has created artificial, and clearly militarized, islands in disputed areas of the South China Sea has its neighbors concerned over the increased capabilities of the new vessel.
7. In the Middle East this week, tensions increased significantly as Saudi Arabia, at the behest of Crown Prince Mohammed bin Salman, began arresting numerous potentates and powerful Saudi businessmen in a campaign billed as an anti-corruption push. Most analysts view the arrests as a move by bin Salman to consolidate his hold on power in Saudi Arabia more than a move to purge corruption from the system. Salman is looking to push some reforms through and appears to be eliminating the dissenters from positions of power which would allow them to oppose the reforms.
8. On Saturday, Lebanese Prime Minister Saad al-Hariri shocked his home country’s political establishment when he announced his resignation while in Riyadh, Saudi Arabia. Al-Hariri said he was stepping down over concerns that there was a plot afoot to have him assassinated. Al-Hariri criticized Iran and Hezbollah for inciting conflict in the region. Saudi Arabia escalated tensions with Lebanon further when it said that Lebanon “would be dealt with as a government declaring war on Saudi Arabia” due to aggression from Hezbollah. As the aforementioned was playing out, and on the back of Saudi Arabia making its numerous arrests in an “anti-corruption” push, ballistic missiles targeting Riyadh were apparently launched from Yemen. The projectiles were rapidly brought down by Saudi defenses and analysis of the wreckage determined that the missiles were supplied by Iran, escalating tensions in the region even more.
9. Catalonia’s former leader Carles Puigdemont and the four members of his former cabinet that fled with him to Belgium following their failed bid for independence, turned themselves in to Belgian police on Sunday after Madrid issued a European warrant for their arrests. The group faces charges for rebellion and sedition for their role in Catalan’s push to secede from Spain. New elections are slated for December 21 and it is likely, after Madrid’s handling of the incident, that pro-independent parties could capture a large margin of the voters again, leaving the whole situation filled with uncertainty, with nothing having been resolved.
10. The European Union’s chief Brexit negotiator has given the U.K. two weeks to clarify its positions on its “exit bill”, how much it needs to pay to fulfill its obligations to the EU before it can leave the bloc, and other issues before they can move on to trade negotiations. Talks on trade were initially supposed to have begun in October, but disagreements over the “exit bill”, the border between the U.K.’s Northern Ireland and the EU’s Republic of Ireland, and what rights EU citizens will be guaranteed if they reside and work in the U.K. have delayed the trade negotiation process significantly. As the negotiations continue to drag out, many corporations that do business in the U.K. are apparently making plans to trigger “contingency plans”, such as possible relocation, in the event that the entire negotiation process grinds to a halt, leaving them essentially in limbo when the date of the proposed exit arrives.
11. In Germany, Chancellor Angela Merkel still has not been able to form a coalition government after winning re-election to her post in September. Her Christian Democratic Union party was not able to garner enough seats in the election to secure a majority, and disagreements over immigration, eurozone reforms, and how to battle climate change appear to be hampering her ability to form a coalition with any of the other political parties that similarly align with her own. Ms. Merkel has called for talks to begin within the next 10 days in an attempt to establish a government and begin moving forward.
12. Oil prices surged this week on expectations for an extension to the current production cuts agreed to between OPEC and non-OPEC oil producing countries. Oil was also heavily affected by the clear signs of power consolidation taking place in Saudi Arabia this week. Brent crude crossed into the low $60-a-barrel range as West Texas Intermediate (WTI) moved into the mid-to-upper $50’s.
13. The euro began the week trending basically sideways, but saw a near vertical plunge on Tuesday that sent it into negative territory against the U.S. dollar. The plunge was brief and the euro immediately began recovering ground. On Thursday, in a series of sharp peaks, the euro crossed its way back into positive territory, where it remained through Friday. The euro will close the week out higher against the U.S. dollar. The Japanese yen began the week with a sharp plunge lower against the U.S. dollar, but quickly recovered ground. The overall trend for the yen was to drift higher against the dollar through late Thursday trading. The yen had reached its peak by late Thursday night and saw a slight drop and then a sideways move into Friday trading. The yen appears set to close the week higher against the U.S. dollar.
Saudi Arabia’s shocking mass arrests in a supposed anti-corruption purge this week seemed to have been oddly glossed over by most markets. The back-to-back events of the arrests, the Lebanese prime minister announcing his resignation in the Saudi capital of Riyadh, and the launch of Iranian-built missiles fired from Yemen all seemed to have only marginal effect as investors continued plowing money into what increasingly appears to be one of the largest stock market bubbles ever seen.
Crown Prince Mohammed bin Salman oversaw the purge in Saudi Arabia that included even some of the royal family, prominent businessmen and former and current government ministers. The Crown Prince has an agenda of reform and many analysts view the purge as an effort to consolidate power so that he will more easily be able to implement those reforms without much of a challenge.
Oil climbed higher on the escalating tensions and as markets anticipated an extension to the previously agreed to production cuts between OPEC and non-OPEC oil nations.
As President Trump begins the final leg of his tour of Asia, information is beginning to trickle out in regards to what has been accomplished thus far on the tour. The U.S. Commerce Department revealed a list of 37 major deals that were signed between U.S. and Chinese companies around President Trump’s Asian tour. Commerce Secretary Wilbur Ross noted that the deals were a prime example of Trump being able to build bilateral trade relations between the U.S. and China. Thus far, Mr. Trump’s Asian tour has gone startlingly well.
North Korea has remained relatively quiet, throughout the first part of the tour and an aborted visit to the DMZ by Mr. Trump and South Korean President Moon Jae-in on Wednesday due to inclement weather was likely a blessing in disguise as far as keeping North Korea from becoming even more belligerent than usual.
In Europe, the constitutional crisis in Spain continued as former Catalonian leader Carles Puigdemont surrendered himself to authorities in Brussels, Belgium along with four of his former cabinet members. The group will be facing charges of sedition and inciting rebellion in Catalan’s failed bid for independence from the rest of Spain. The events surrounding Catalan’s declaration of independence are being closely watched by other regions across Europe, such as Scotland and regions in Italy, that also are leaning towards independence and autonomy.
In Germany, Chancellor Angela Merkel has still been unable to form a coalition government despite winning re-appointment to her post in elections held back in September. Her Christian Democratic Union party was not able to secure enough votes to carry a majority, so she is forced to attempt to get other similarly aligned political parties to form a coalition government with her own party.
In the U.S., possible delays in the much-publicized tax reform legislation that Republicans are working on could be a huge setback, particularly if planned corporate tax cuts are pushed back into the year 2019. Stocks dropped as news of the possibility of delay emerged, seeming to prove that much of the recent dramatic moves higher have been on nothing more than pure speculation that Congress might finally actually manage to pass a piece of legislation under President Trump.
As investors watch geopolitical tensions in the Middle East escalate once more, and see that continued political gridlock in Washington, D.C. could potentially derail more legislation, they wisely look for ways to diversify their portfolios away from what seems to be the ever-growing risk of a stock (and other asset) bubble collapse.
These savvy investors look for buying opportunities, using temporary price dips to add proven hard assets into their portfolios which tend to hold their value in times of crisis. As Stocks climb further into bubble territory and Bitcoin continues its surge into its own bubble, wise investors look to acquire more physical precious metals for the purpose of portfolio diversification.
Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.
Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
Nov 3rd2017 Nov 10th2017 Net Change Gold $1268.54 $1274.50 5.96 + 0.47% Silver $16.86 $16.89 0.03 + 0.18% Platinum $922.00 $930.50 8.50 + 0.92% Palladium $1000.50 $998.00 (2.50) — 0.25% Dow Jones 23539.19 23422.21 (116.98) — 0.50%
Previous year Comparisons
Nov. 11th2016 Nov 10th2017 Net Change Gold $1225.40 $1274.50 49.10 + 4.01% Silver $17.42 $16.89 (0.53) — 3.04% Platinum $943.00 $ 930.50 (12.50) — 1.33% Palladium $684.50 $998.00 313.50 + 45.80% Dow Jones 18847.66 23422.21 4574.55 + 24.27%
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver Support 1260/1240/1230 16.50/16.25/16.00 Resistance 1310/1340/1360 16.90/17.20/17.50 Platinum Palladium Support 900/885/865 975/950/925 Resistance 935/955/970 1010/1035/1050 This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.