Financial storms ahead
Financial instability is about to get much worse making the short-term outlook for gold and silver uncertain, but long-term being reaffirmed. It is a buying opportunity for the brave.
Following Trump’s presidential statement last night, it is clear that the US is holding back from retaking Hormuz. This means that oil, LNG, and more importantly restrictions of downstream products and their knock-on price effects will worsen for an indefinite time. In the short-term, prospects for gold and silver markets are clouded by the consequences for global bond yields and market participants’ reactions.
This week’s market action
Until this morning, gold and silver were enjoying a reasonable rally while the broader markets appeared to be under the impression that in the war against Iran America’s proposals to end it would get some traction. But markets appeared to be ignoring Iran’s denials that any talks were taking place.
Consequently, President Trump’s address to the nation last night was a disappointment for markets still adjusting to the inflationary implications of a likely prolonged closure of the Hormuz Straits, and Houthi statements that the Bab el-Mandeb straits at the entrance to the Red Sea and therefore Suez would be closed as well.
In early European trading this morning, most of this week’s rally in gold and silver were wiped out. Gold was at $4620, up a net $130 from last Friday’s close and silver at $71.20 was up $1.45. Trade on Comex was subdued ahead of the Good Friday holiday in Western Europe.
