COMMENT ON THE DEBT CEILING and BRIEF UPDATES ON GOLD, SILVER, and CRUDE OIL (4:00 pm EDT)
Not surprisingly, financial markets are probably going to give us a bit of a roller coaster ride this week. Today the broad stock market was down in early morning trading based on fears that some House Republicans will prevent the passing of the legislation agreed upon by President Biden and House Speaker McCarthy last week-end to raise the debt ceiling. But equities recovered some of that loss in the afternoon when some Fed officials suggested the possibility of skipping any interest rate hike at the next FOMC meeting. The official House vote on the debt-ceiling legislation is tonight, and then it moves to the Senate where debate could extend into this week-end. While most analysts expect it to pass in the Senate, there are some Democrats that are also opposed to the bill, so debates could get heated. The bottom line here is that we won't know for sure if the bill is passed until Friday at the earliest, and maybe not even until Sunday - the day before the government may start to run out of money to pay its bills. We are remaining comfortably on the sidelines of equities this week as we watch to see how all of this plays out.
Gold and silver prices are rising today which is good news for our long positions in both, but we need to see them break through their 15-day moving averages before we can be comfortable that a significant rally is underway. Our current stop loss point for gold is set at yesterday's low of $1932, and silver's stop loss is at last week's low of $22.69.
Crude oil prices continue to fall steeply. A resolution of the debt ceiling crisis could turn crude back up, but will this be before prices break below the May 4 low at $63.89 (July contract chart)? If not, this market could turn bearish and be headed towards the $50 - $55 area. We are out of crude oil for now.
Not surprisingly, financial markets are probably going to give us a bit of a roller coaster ride this week. Today the broad stock market was down in early morning trading based on fears that some House Republicans will prevent the passing of the legislation agreed upon by President Biden and House Speaker McCarthy last week-end to raise the debt ceiling. But equities recovered some of that loss in the afternoon when some Fed officials suggested the possibility of skipping any interest rate hike at the next FOMC meeting. The official House vote on the debt-ceiling legislation is tonight, and then it moves to the Senate where debate could extend into this week-end. While most analysts expect it to pass in the Senate, there are some Democrats that are also opposed to the bill, so debates could get heated. The bottom line here is that we won't know for sure if the bill is passed until Friday at the earliest, and maybe not even until Sunday - the day before the government may start to run out of money to pay its bills. We are remaining comfortably on the sidelines of equities this week as we watch to see how all of this plays out.
Gold and silver prices are rising today which is good news for our long positions in both, but we need to see them break through their 15-day moving averages before we can be comfortable that a significant rally is underway. Our current stop loss point for gold is set at yesterday's low of $1932, and silver's stop loss is at last week's low of $22.69.
Crude oil prices continue to fall steeply. A resolution of the debt ceiling crisis could turn crude back up, but will this be before prices break below the May 4 low at $63.89 (July contract chart)? If not, this market could turn bearish and be headed towards the $50 - $55 area. We are out of crude oil for now.
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