Gold Opened November Up $15 – Then Another Rapid Up & Down on the Fed Announcement

Gold closed October at $1,636 per ounce, down in advance of this week’s Federal Reserve monetary policy meeting and interest rate announcement.  Then, on Tuesday, gold traders got tired of just waiting and bid the metal up $20 in morning trading to $1,657 before closing at $1,652.  This rise came in the face of the U.S. Dollar Index rising 2% in six days, from 109.6 last Wednesday to 111.7 at noon on Tuesday, so gold faced the strong-dollar headwind it has been fighting all year. Meanwhile, the world was waiting to see if the Fed will give investors any indication of an end to this interest rate increase cycle. Most pundits say that rate hikes hurt gold but historically gold has risen in times of rising inflation and high-interest rates.

The immediate reaction to the Fed’s 0.75% interest rate increase on Wednesday at 2:00 pm EST was a jump in most markets, with gold shooting up $20, from $1,650 to $1,670. Silver rose from $19.60 to $19.90 in the same few minutes. Stocks rose almost 1% in two or three minutes, with the Dow rising almost 300 points. The excitement did not come from the rate change itself, which was expected, but the big news was that the Fed’s Statement indicated a possible slowdown in future rate increases, to 0.5% in December instead of 0.75% and then perhaps a pause before any future increases. The benchmark 10-year Treasury rate declined from 4.04% to under 4% on the news, which is also a bullish move for bonds.

But the Fed statement is only half the battle. Next comes the Chairman’s press conference, where he often says something that scuttles the rally. As often happens, the Chairman is downbeat and pessimistic in giving the press clear answers about his statement, so the bubble burst.  Nearly all of the investments came back down as he was talking. Gold fell from $1,670 back to $1,650 but stocks fell further. The Dow went from +415 at 2:34 pm to -275 at 2:52 pm – down 690 points (2.1%) in 18 minutes – such is Mr. Powell’s power to pop bubbles. The other indexes fell even further in the same 18 minutes. The S&P 500 fell 2.4% and NASDAQ was down 2.7%. By comparison, gold’s drop was just 1%, making gold net flat for the day.

10-Month U.S. Mint Sales Summary for 2022 – a Down Year for Most Investments

Silver American Eagles are finally up, year-over-year, for October, with 1,258,500 ounces sold in October 2022 vs. 1,076,000 ounces sold last October.  For the year-to-date, however, sales of Silver American Eagles are down 46%, with 26,752,000 ounces sold last year, through October 31, vs. 14,497,000 oz. this year. Total gold ounces sold are almost identical this year and last, at 1,375,000 for the combined total of American Gold Eagles and Buffalo coins sold for the first 10 months of each year.  Call an account representative today to find out how to get the most “bang for your buck” whenever you buy precious metals.

Elections Are Six Days Away – and the Betting Line is Expanding for a Republican Sweep

Those who place bets on political outcomes have no bias for either party – they just want to make money. The real-money polls in recent years have been far closer to the actual outcome than the public polls. The public polls in recent elections have often been far off the actual outcome – usually underestimating the Republican or conservative vote – partly because conservatives tend to hang up on pollsters. Basically, they don’t look to the government for solutions. They basically want to be left alone.  For whatever reason, most polls since 2016 have underestimated the votes of Republicans or conservatives by 5-10 points.

Dan Clifton, head of policy research for Strategas Research, monitors free market betting on the current election and another, far more important “money poll,” the investment in Republican-based stock sectors. In the Kudlow program on Fox Business News on October 31, Clifton said that the House has been secure for a Republican reversal in all betting polls all year long, but a mid-October betting pool showed only a 35% chance of Republicans winning back the Senate – until a “red wave” began surfacing recently, as partly reflected in the stock market surge since October 14. Now, Clifton says, there is a 72% probability of a Republican sweep of both Houses of Congress. In addition to betting pools, he says, the stocks and sectors favored by a Republican Congress are rallying strongly now, which tells us that the billion-dollar Wall Street investors are betting on a Republican Congress.  Look at the rising charts for defense stocks, or border enforcement, or fossil-fuel energy, and you will see that Wall Street is betting on a “red wave.”

There are 435 races up for grabs in the House every two years and the House seems to be leaning toward a Republican reversal.  If you want to watch just 10 key Senate races (out of 34), realize that the Republicans still have an uphill battle. They are up for re-election in 20 out of 34 races, and six GOP Senators are retiring (Shelby, Blunt, Burr, Portman, Imhofe and Toomey), so there are no “coattails” in those races. Republicans must win at least 21 of 34 Senate races to take back control of the upper house.

In order of the betting odds, the longest shot is Tiffany Smiley in the deep-blue state of Washington, but she has pulled even with five-term (30-year) incumbent, Democrat Patty Murray. Republicans are “sure things” in 15 races and Democrats are a lock in eight, so the Republicans to watch are in Washington (Smiley), Colorado (O’Dea), New Hampshire (Bolduc), Pennsylvania (Oz), Arizona (Masters), Georgia (Walker), Nevada (Laxalt), Ohio (J.D. Vance over Paul Ryan), North Carolina (Ted Budd) and two incumbents: Wisconsin (Ron Johnson’s re-election) and perhaps a runoff in Louisiana for John Kennedy.

Enjoy your evening of election watching next Tuesday.