Gold has traded between $1,252 and $1,262 so far today…as of 11:30 am Pacific, the yellow metal is up $12 an ounce at $1,255…Silver has added 33 cents to $18.07…Copper is flat at $2.61…Nickel is down slightly at $4.44…Crude Oil has slid 41 cents to $47.56 while the U.S. Dollar Index is off one-third of a point at 99.14…
Markets are reacting to Friday’s political developments when House Republican leaders, just prior to a scheduled vote, decided to abandon their bill on a healthcare plan amid a lack of support, leaving investors fretting about the likely success of other Trump administration efforts including major tax changes and infrastructure spending…
Many investors who dumped equities this morning may have taken the wrong cue from Trump’s healthcare legislative defeat by linking it with his chances of successfully pursuing a broader economic agenda. “We think linking this particularly difficult legislative undertaking with the rest of the Trump (agenda) is flawed,” stated Tom Porcelli, chief U.S. economist at RBC Capital Markets. “It actually presents a scenario where tax reform can potentially be accelerated.”
Small business optimism in the U.S. has broken out to its highest levels since 2004…on the graph below, note the surge in business/investor optimism following the Trump victory in November…while there is disappointment in many quarters that Republicans failed in their first attempt to repeal and replace a flawed healthcare program, this should not significantly erode the much stronger sense of optimism that now prevails among small businesses and investors thanks to the prospects for tax reform and an untangling of regulations that have restrained U.S. economic growth in recent years…it would also be a mistake to underestimate Trump’s ability to adapt and bounce back from the “political defeat” being exaggerated by many pundits in the mainstream media…
No matter which way things turn with the Trump Presidency – admittedly, there are a variety of possibilities – it’s our view that one has to be bullish with regard to the prospects for Gold short-term and longer term…John’s updated 2-year chart in today’s Morning Musings certainly supports the case for the yellow metal heading north of $1,300 this year, perhaps as early as Q2…
Silver Short-Term Chart
Silver backed off abruptly from its late February high around $18.50, not surprising as that was just below resistance pointed out by John on the short-term chart following an almost non-stop run from a low of $15.70 in late December…the metal needed to take a breather and it did, retracing 60% of its gains…
Note the inverted head-and-shoulders bottom late last year/early this year – very positive sign entering 2017!…
We indicated previously that where Silver needed to hold price support was somewhere between $17.25 and $16.50, and indeed that is what occurred…RSI(14) also bounced off traditional support at 30% and is currently gaining momentum above 50%…
Silver has also now pushed above its rising 50-day SMA ($17.45) and is nudging up against its 200-day at $18.07…
All of this has occurred during a period of weak sell pressure (CMF) on the short-term daily chart…
Outlook remains bullish with the ADX indicator suggesting the trend has ample room to strengthen…we should see Silver top last year’s high of $21.23 during Q2 or Q3…the long-term chart, included in today’s Morning Musings, actually shows that something quite profound is in store for the metal over the next couple of years…
Many Silver juniors, however, continue to trade at very favorable valuations…
In Today’s Morning Musings…
1. Bonterra Resources (BTR, TSX-V) raises $20 million this month as Gladiator and area gain momentum…
2. Cannabix jumps on preliminary live testing results of marijuana breathalyzer…
3. The inevitability of $1,300+ for Gold…
4. Daniel’s Den – a company with a quality land package the size of 78 countries!…
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