European and U.S. stocks are lower this morning, on news that Japan's decline in third quarter GDP was worse than expected, and growth in Chinese exports was the worst since the Lehman Brothers crash. Adding to the gloom was the assessment by an ECB official that the EU economy was experiencing a "massive weakening" after Italy's sovereign debt was downgraded to just one step above junk status. Gold, palladium, and silver are all near-unchanged this morning in New York, while platinum is riding moderate overnight support. Crude oil futures are down over 2%, on the slowdown in Asia and Europe. The dollar was volatile in last afternoon trading in Europe, easing from multi-year highs.
Yesterday in the Markets
A HUGE beat in non-farm payrolls on Friday was the big news, lifting stocks and pressuring precious metals as the dollar hit a 5-year high. After a volatile start, Wall St. settled down and was hitting the daily highs by early afternoon.
Friday's closing numbers:
Economic News Affecting Gold
The slowdown in Chinese export growth, recession in Japan, and economic storm clouds over the EU combined to push crude oil even lower. West Texas Intermediate was close to $64 a barrel and Brent crude was close to $66 a barrel in early New York trading. Concerns are starting to be expressed that several large hedge funds are on the wrong side of the oil trade, and may exacerbate the bear market by liquidating their positions.
Today's dour assessment of the EU economy has traders more hopeful that Mario Draghi and the ECB will ring in the new year with some Fed-style government bond buying.
Bloomberg is reporting something of a "Weimar Effect" in Russia, as the public are rushing to buy cars in the face of a devaluing ruble and spiking inflation. Russians of all economic strata are gobbling up autos, from family sedans to luxury cars. Porsche demand is up 55% and Lexus sales up 63%. During the hyperinflation of the Weimar Republic, farmers were buying grand pianos and expensive furniture, to lock in value as the mark plummeted in value.
Of course, cars depreciate, and grand pianos really have no liquidity at all. There's a far better alternative for preserving wealth.
The U.S. Mint has announced that it has ceased production of 2014 American Silver Eagle coins. It estimates it has enough stock to last until next Monday. After that, it will be January 12, 2015 before the 2015 Silver Eagles are released to distributors. The U.S. Mint will continue rationing silver bullion coins in 2015. I suppose that's one way to make sure demand doesn't keep breaking records every year...
Geopolitical News Affecting Gold
Saudi security forces have arrested 135 people in a nationwide sweep they claim are affiliated with the terrorist army that calls itself Islamic State. Also known as ISIS or Daesh, the group has been exhorting supporters and admirers to attack foreigners, infrastructure, and Shiite citizens in Saudi Arabia.
The U.S. government runs out of money on Thursday, and MarketWatch reports that House and Senate negotiators are close to finalizing a budget deal that would prevent a government shutdown. Tea Party Republicans are demanding linking the budget deal with reversing President Obama's executive order suspending the deportation of certain illegal aliens, but it seems Congressional leaders would rather that be its own fight, rather than suffer the political backlash of holding the budget hostage again. With expanded majorities in the House, and control of the Senate in January, the GOP should have an easier time of rolling back Obama's action than they would in the present Congress.