Halloween-induced heart palpitations will prove to have been ‘junior league’ as the ‘mother-of-all-market-weeks’ gets underway today. Precious metals continued to benefit from the US dollar’s overnight weakness (it basically orbited around either side of the 77 mark on the index) and opened the first session of November on a fairly firm footing, not looking as if corrections of any significant size were in the making.
Spot gold bullion started the week off with a 90-cent decline and was quoted at $1,358.90 the ounce. Clearly, a wait-and-see attitude in advance of the Fed, but one that is not willing to give up the recently built-up ‘premium’ which brought the yellow metal back from the $1,320s up to the mid $1,360s during the past week.
Silver showed a 15-cent gain on the open, quoted at $24.90 on the bid side of spot trading. The white metal managed to vault above the $25 level ahead of the New York opening and there is some shop-talk of a potential $26 achievement if and when ‘conditions’ (the dollar) create that opportunity. The Fed-related anticipation in the commodities complex was also manifest in the prices of noble metals this morning. Platinum added $15 to open at $1718.00 while palladium climbed $3 to one dollar shy of the $650.00 per ounce level.
Crude oil was ahead by 63 cents at last check, and was quoted at $82.06 per barrel. An equal amount of contradictory punditry is on display in the black gold market at the moment. While Goldman Sachs envisions triple-digit oil before the end of next year, its colleagues (Barclays, SocGen, JP Morgan) do not see the commodity being able to climb past $90 a barrel.
The world’s largest independent oil trading firm (Vitol) on the other hand, projects crude oil values to remain within a $70 to $85 range next year. Sounds all too familiar, (with ‘minor’ adjustments for price) from what one can see in the gold market as well. For the moment, what is notable is the slow rise in the number of gurus who are willing to allow for a post-Fed correction in gold on the back of potential disappointment with the size of the central banks pre-Christmas ‘package.’ One Marc Faber, among them.
Others, like veteran observer Ned Schmidt, have warned that the change in the political landscape in the US (again, IF it comes) will make for a paradigm shift in precious metals’ trends. Well, that view was good only for an influx of less-than-kind e-mails directed at (otherwise long-term gold–bullish) Mr. Schmidt. Did he not know that it is not permitted to talk in Church? For every one of such cautious views, there are three that say: “Don’t Worry, Be Happy!” as corrections (IF they come) will be brief, shallow, and immaterial.
While financial column readers are (still) being regaled with visions of hyper-high gold price tags as a ‘more than certain’ outcome of all of this accommodation, some writers have gone out on a limb and are offering certain, more blunt, takes on the future of prices. By the way, this applies to certain other plays as well – the S&P 500 turned in quite the performance last month based on similar pre-Fed euphoria.
At any rate, MarketWatch’s Jim Lowell advises shorting gold after the election (wait, what happened to the Fed?). Even while allowing for the fact that gold has been “chief among the best in class [of assets] of Novembers past,” Mr. Lowell explains that [for him] the yellow metal “is a speculative bet that I’m not willing to make. I view gold as nothing more than a fear trade and even according to current confidence reports, the trade in fear has been very good.”