In case of sending the messages with changes in the SL levels, the timing was critical, so we didn’t want to elaborate on the likely reason behind today’s rally and how it affects the technical factors and in particular, the analogy to 2013.

But, since we have already sent you details regarding the positions, we can now discuss the situation more thoroughly. The most likely reason behind today’s rallies are Trump’s comments on interest rates.

You can read more details here, but the key information is in the title: “Trump: ‘The Fed has gone crazy’ with interest rate hikes”. The President of the most powerful country on Earth calls the decisions of the most important monetary official “crazy”. That’s definitely enough to shock the markets and to trigger a substantial move. But did anything change because of that? No.

Some may say that it indicates changes and thus the markets are correct to discount it in the price today. But does it really do so? We disagree. Trump is known to change his mind quickly (how long did it take for the North Korean nuclear threat to become a handshake?) and to say what he doesn’t mean to trigger certain actions. Stock are declining? What does it hurt to say something that will put the blame on somebody else, while appearing to be the one that cares for people’s stock returns? Exactly - nothing. And Trump could personally gain by appearing as the one that cares about the people, while simultaneously making other people make the necessary, but unpopular decisions. That’s simply politics.

But, what does it change in our technical outlook? Not much. Geopolitical events tend to have temporary impact on prices and the current rally may already be over. You can read more about it here.

The market will sooner or later realize (likely sooner) that nothing really happened, and that Trump has actually nominated moderate - hawkish members. Consequently, whatever was gained today, is likely to be given back and the trends are likely to be resumed. In case of the precious metals market, the main trend is down.

We discussed the issue of Trumps potential influence on the Fed in the latest Market Overview report and even if your subscription plan doesn’t normally cover access to them, we made sure that you’ll be able to access it at this time. The above Trump-Fed link is discussed in the final part of the report. Please use the following link to access it:

Gold One Year after QT and Ten Years after Lehman

As far as the analogy to 2013 is concerned, we may simply have longer delay before the decline starts, but it’s likely to start soon anyway. Perhaps tomorrow, perhaps next week, perhaps later this month. But it’s very likely to happen and thus we are keeping our positions intact.

As always, we’ll keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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