Dillon Gage is proud to offer the following insights into the precious metals market from Roy Friedman. Roy has over 3o years of in-depth experience in all facets of precious metals. We will offer Roy’s comments several times each week.
Precious metals, the energy complex, most commodities and global equities are down again this morning as global uncertainty from both the political and economic fronts continue to weigh heavily. Yesterday morning saw our markets take a day off from the down trend, as physical demand and short covering lifted the markets throughout Europe and the US, but as volume began to wane in the afternoon prices began to drift lower.
The shock of the day came in the late afternoon, when news began to leak that one of JP Morgan Chase’s risk management units had lost $2 billion with a further $1 billion possibly still needed to be written down. Chase confirmed the leak shortly thereafter with its CEO Jamie Dimon calling it an “egregious failure.” This set the stage for a “risk off” close to the trading week, as U.S. stocks were sold heavily in the “aftermarket” as just about every other market followed with the exception of US treasuries which rallied sharply.
As trading opened in the Asia Pacific region this morning, volume increased as the selling pressure continued in metals trading and then further pressure came out of China. Data released overnight showed that the Chinese demand for gold in the first quarter of 2012 slowed to its lowest level since 2008. In addition, weaker than expected readings on Chinese inflation, industrial production and retail sales all reinforce that the Chinese economy continues to weaken and is unlikely to be the catalyst for a global economic recovery. Today should prove to be a volatile day for precious metals, as physical demand is likely to increase with buyers taking advantage of lower prices.
Good luck and have a good weekend,
Roy Friedman has a degree in economics and political science from the State University of New York at Binghamton. For more than 30 years, he has worked at all levels of he industry including as a trader for major Metals firms and international banks. For more information on Mr. Friedman, please click here.