Issue 39 – The week of November 7th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note

Tuesday

• US Redbook index. A private analysis of retail sales is used to help verify government retail sales reports. Strong sales are a sign the economy is healthy but could put upward pressure on inflation and is bullish for precious metals.
• USA Weekly Crude Oil Stocks. API’s Weekly Statistical Bulletin (WSB) has reported total U.S. and regional data relating to refinery operations and the production of the four major petroleum products: motor gasoline, kerosene jet fuel, distillate (by sulphur content), and residual fuel oil. These products represent more than 85% of the total petroleum industry. Stocks down are good for precious metals.

Wednesday

• No reports of note

Thursday

• USA Consumer Price Index. The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of the USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish

Friday

• USA Michigan Consumer Confidence. a survey of personal consumer confidence in economic activity. It shows a picture of whether consumers are willing to spend money. A high reading anticipates positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).
• USA CFTC Net Gold Positions. The weekly Commitments of Traders (COT) report provides information on the size and the direction of the positions taken, across all maturities, with participants primarily based in Chicago and New York futures markets. Forex trades focus on “non-commercial” or speculative positions, to determine whether a trend remains healthy and market sentiment towards a certain asset.

Geopolitics

The most important event this week is the US midterm elections for the House of Representatives and the Senate. The Democrats are in peril of losing control of both bodies. This will be one of the most important elections in US history. It is almost given now that any Republican candidates that lose will deny their loss claiming fraud and vote rigging. Meanwhile, the Democrats have been ineffective in presenting a counterargument that will win over the electorate. After Tuesday the US will be a country even more polarized than it is today.

If republicans win there is a growing chorus in the party to remove financial and military support for Ukraine. This begs many unpleasant questions to be asked. Why? Have Republican candidates received Russian campaign contributions? If the US removes support, will the UK and other western allies follow suit? What damage will be done to the international reputation of the US that it stands by allies? There is a lot on the line in this election. Not just domestic but also international implications.

Covid lockdowns in China continue to grow as does resentment toward them. Workers at Foxconn plant, where iPhones are made, have been locked in the plant. Apple is now warning of delays in the delivery of phones. Visitors to an amusement park were locked in after the gates were locked in the middle of the day due to a contact-positive test result. Continuous lockdowns exacerbate supply chain disruptions and are becoming a significant burden to the Chinese economy.

The Call

Markets will be on edge until the US midterm election results are in. Expect a fair bit of volatility in Tuesday night trading as election results are reported. Precious metals look poised to make further gains from a technical perspective. At the end of the week, US CPI and Consumer sentiment reports will help decide if metals have a positive or negative week. A Republican win could result in a US dollar sell-off as markets look to two years of no policy being passed as President Biden has indicated he is ready to veto Republican bills that are put on his desk. It will be two years of no discussion just vilification and division. This could be the catalyst to significantly higher precious metals prices over the next few years.

Last Week in Review

• Precious metals prices moved higher last week in strong moves. Silver is looking technically better than gold so could be said to be leading the way.
• Russia abruptly reversed their decision to cancel the agreement to allow Ukrainian grain to ship through the Black Sea, saying now the agreement is on again

	Gold	Silver
Open	1643	19.20
High	1681	20.89
Low	1616	18.81
Close	1672	20.51