Basel III celebrations, serving Turkey, Brexit, and a heaping side order of commotion …
Thank God it’s Friday Folks!
The Good Morning Report is brought to you by a higher price in Gold with the June contract at $1,298.30, up $2.90 and right beside the high of $1,298.70. Silver seems to be leading at present with its trade at $15.08, up 10.7 cents making the ratio 86 to 1, with the inevitable and positive sign post just ahead. Of course the high is right here at $15.085 with the low below the Maginot line at $14.95. The US Dollar is still the run to fiat with the trade sitting at 96.69, down 7.4 points and close to the low of 96.665 with the high up at 96.91. All this was done while we sleep and before Comex starts with the probability of much higher prices coming down the pipeline soon enough. Venezuela’s economic situation isn't improving much, but their politics might be, with the price of Gold now pegged at 12,966.77 Bolivar, losing a whopping 105.87 overnight with Silver losing .948 Bolivar with its value pegged at 150.612.
Aprils First Notice Day is here with the Physical Demand for Silver at 706 obligations waiting for receipts with a Volume of 9 up on the board so far this morning. It’s seems the best directional indicators so far to trade Silver is the Overall Open Interest and the dropping of dollar requirements in the Margins as the shorts get encouraged to add more positions as the Overnight count for Silver jumped 3,236 contracts so far (this morning) even as the Basel III festivities begin as the unexpected “emerging” main course for their dinner wound up being Turkey with a side order of Pepto-Dismal for those who are short Turkish debt instruments. Of course the dinner guests never talk about who cooked the turkey as JP Morgan remains as quiet as a church mouse during the service.
It seems Teresa May found a way to delay into May the Brexit (for now) as the world is getting tired of it all. The European Union is still the problem for everyone as it seems they may be gaining one nation but losing several others at the same time. Proving what the world is seeing in the currencies and the swapping of debts, is the problem. Debt cannot be paid unless they print. If they don’t print, they are the ones that go out of business bringing everything else down with them. The game of debt always ends with the precious metals and everything tied to it being the absolute “go to”, “run to”, “must have”, when the world economies start to lock out other nations like Turkey did to the international traders of its debt. Will this be the starting point or will there be another extend and pretend play?
More stories surround the issues regarding the future volatility within the primary currencies as even a portfolio manager is claiming “…that the UK already resembles an "emerging economy" and that the situation will only get worse once it finally departs the EU - particularly if it does so without a deal.” I never thought of it that way, where a leading currency would drop to a lower level called “emerging”. I thought it should be called "failing" but that’s me and my issues with language. Terming it this way is the exact opposite meaning of “emerging” and since the market talk is always the opposite of normal language skills, it kinda fits. Then there’s Italy’s issues and a whole host of others nations who hate what they are seeing as they watch for more shut outs during all this commotion. Turkey may be the starting point as we wait and watch to see if this shut out cascades.
Holding precious metals during times like these is exactly why we hold them. Things couldn't be riper for this serving of Turkish Debt Shutout as Basel III finally puts the precious metals at the same value as its debt holdings. Now we watch for debt values to be dropped to Tier 3, as more and more debt holders find out their highly rated debt instruments may never get paid. Enjoy the day and weekend, keep a positive attitude no matter what, and as always …
Stay Strong!
J. Johnson