Precious Metals Are Still Sliding
Gold is down another 4 percent and silver roughly 6 percent on the CAD charts going into Monday. Even the stock market is down about 1 percent. This kind of continued weakness is actually good for me. I want the market to settle and find its footing before stepping back in.
The recent selloff also fits into the larger backdrop I discussed in my article the calm before the next storm, where I explained why falling oil would eventually pull rates lower and create a strong setup for precious metals.
Oil Down 5 Percent and Rates Easing
Oil is down around 5 percent this morning. This matters because declining oil usually leads to declining rates. The 10-year Treasury is already starting to slip. If oil stays weak, I expect rates to continue trending lower.
Lower rates historically support metals. This is important for anyone accumulating positions in gold or silver, as the rate environment drives a lot of long-term capital flows.
Waiting for the Market to Find Its Legs
If tomorrow morning looks the same—oil down, rates down, precious metals stabilizing, and equities finding support—I will likely be a buyer again. Stability is key here. I don’t want to buy into a falling knife. I want to see buyers show up.
The Complication: Central Banks Holding Rates
A big challenge in this environment is that many government banks are still holding rates high. That raises the question: can the economy actually sustain these elevated levels?
I don’t think so.
Friday’s core PPI came in hotter than expected, which made people nervous. But I believe the underlying economy is weak. There isn’t enough consumption, and without people buying things, GDP growth can’t hold.
This creates slow deflationary pressure beneath the surface.
What I’m Watching Next: ISM Manufacturing
The next key data point for me is the ISM Manufacturing Employment Index.
Investors react hard to this number, and it will reveal a lot about the health of the economy. With the release coming at 10am Monday, Feb 2, it should be an interesting morning.
Final Thoughts
If the market steadies and conditions line up, I expect to start buying again soon. Until then, I’m watching closely and letting the volatility play out.
Catch you later.
Leave a Reply