|
 |
|
|
|
Gold Rebounds as Stocks Wobbleby Peter A. Grant
May 23, AM 
Gold jumped higher in overseas trading, spurred by a sharp drop in Asian stocks on concerns that the Chinese economy is slowing. Further weight was added to equities as it appears the European economy will contract again in Q2.China's HSBC flash PMI fell to 49.6 in May. It was the first sub-50 print, signalling contraction, in seven months. Amid concerns that the recovery in China is slowing, Japan's Nikkei 225 index plunged more than 7 percent. It was the biggest one day drop in two-years. The Nikkei has surged this year with the implementation on Abenomics, but another day like today and the Nikkei will be dangerously close to bear market territory. While one might argue that a correction was due, it will be interesting to see if Abe and Kuroda allow the correction to run it's course or if they come up with some new "arrow" to underpin shares. News out of Europe wasn't much better: PMI data for the eurozone as a whole, and its two biggest economies, remain firmly entrenched at levels signaling the contraction continues. An FT article today said "the broad-based downturn in France remained fierce." The second release of Q1 GDP data for the UK confirmed a tepid 0.6% annual growth rate. While BoE governor designate Carney has been understandably vague with regard to his policy plans, given the pending transition, it is widely expected that he will increase asset purchases in an effort to boost the moribund British economy. As for monetary policy, Fed chairman pretty much toed the line yesterday...except when he didn't. After reading a statement that pretty much reiterated his well established contingent policy position, he said during questioning that the pace of Fed bond buying could slow "in the next few meetings" if the economy improves. This caught the market off guard; everyone latched on to the "in the next few meetings" and ignored the contingency. The dollar jumped and stocks and gold slid. It's unclear whether this was a slip-up on Bernanke's part, or if he made a deliberate attempt to mimick his predecessor Alan Greenspan. The former Fed chairman was the master of opaqueness, talking in circles during testimony, delivering mixed messages that left everyone thoroughly confused. Maybe this whole clarity thing just isn't working for Bernanke anymore. I think the dovish gist of the written statement stands. I too stand by my assessment: The Fed isn't going to tighten as long as Bernanke is at the helm, unless of course there is such a miraculous recovery that it becomes glaringly obvious that the Fed needs to reign in its über-accommodative stance. That seems unlikely to happen any time soon. Here's the question I'll leave you with: After absolutely trillions employed globally in the form of stimulus, bailouts and central bank accommodations, this is all we can muster? NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thursday May 23
website support: sitemaster@usagold.com
Site Map - Privacy - Disclaimer
The USAGOLD logo and stylized gold coin pile are trademarks of
Michael J. Kosares.
© 1997-2012 Michael J. Kosares / USAGOLD All Rights Reserved
(from USAGOLD.com) --