USAGOLD/Peter A. Grant/04-03-17
Gold has rebounded to trade back above the $1250 level, helped by ongoing concerns about the underlying health of the U.S. economy and the resulting risk aversion. Political uncertainty, both in the U.S. and Europe, along with rising geopolitical tensions are contributing factors as well.
We made note of this in this morning’s Snapshot, but a Zerohedge article has a nice chart from Bloomberg that shows the total return performance of major global financial assets for Q1. Silver leads the pack, with gold either fifth or eight, depending on the currency calculation. Both lead the benchmark for U.S. equities, the S&P 500.
During the corrective/consolidative phase last week, silver held firmly above $18. This bodes well for the underlying uptrend. I wouldn’t be surprised to see silver drag gold through its key resistance level, with rather bullish longer-term implications.
Today’s metro bombing in St. Petersburg Russia further ratchets-up geopolitical tensions. Saber rattling between the U.S. and North Korea should come as no surprise, but how about between the UK and Spain?
In the midst of Brexit, Spain is apparently trying to exert greater influence over Gilbraltar. That’s not sitting well with the Brits. Spain has pulled its opposition to Scottish independence. Might the UK somehow offer support to Catalan separatists? There are also rumblings that Spain could veto any free trade agreement between the UK and Europe.
We’re also seeing rising tensions on the trade front, culminating with last week’s executive orders addressing “cheaters”. “They’re cheaters! From now on, those who break the rules will face the consequences and they’ll be very severe consequences,” said President Trump.
The President is demanding a detailed reports within 90-days on the cause of significant trade deficits with the following countries: China, Japan, Germany, Mexico, Ireland, Vietnam, Italy, Korea, Malaysia, India, Thailand, France, Switzerland, Taiwan, Indonesia and Canada. One has to wonder if a trade war is brewing.
