My view has been that crude oil and metals prices are set for more gains. Investors have crowded into a handful of tech stocks which have powered the stock market. Interest rates are subdued for the time being. Let’s see how these predictions are working out.
After retreating to the low 70s, crude oil prices are back to $82.10 this Friday morning. ExxonMobil (XOM) has rebounded and momentum is turning up. Chevron Texaco (CVX) lags but momentum is also turning up. The Energy Service ETF is XES. It has rallied but like Chevron, it has yet to break above its downtrend line.
Critical to Team Biden’s re-election hopes is the price of gasoline. July futures have risen from $2.30 to $2.53. Gasoline traded at $2.80 in early April. A return to those levels will be a difficult obstacle for the re-election of Team Biden. Given the poor performance of the president in last night’s debate, it may be Team Someone Else in the near future.
America is now spending more on interest on the debt than on the defense budget. No large nation in history has survived such a situation. And with interest rates headed higher, this will only get worse. China’s real estate crisis is getting worse not better.
Given that situation it is not surprising that gold and silver are rallying. Gold rose over $20 Thursday and is up $11.60 this morning. Gold may be completing a correction from the May high of $2,450, now trading at $2,336. Silver has been sideways since its high of $32 in May. It appears a rounded bottom chart wise is occurring. The ETF of silver bullion SLV is doing the same but has not generated a momentum buy signal yet.
The safest bet for your hard earned savings is the three month Treasury Bill. These can be purchased easily through any brokerage account. Bills trade on a discount basis and mature at 100%, For example one might pay $980 for a bill maturing at $1,000 in three months. Notice that the three month bill rate is a full point higher at 5.3% than the ten year note at 4.3%. This is called an inverted yield curve with short rates higher than longer rates. This combination has near always led to a recession. That has yet to occur. But unemployment rates edged higher just this month.
Predictions seem on track. Safety is the best bet at this time. The dividend yield on the SPX is only 1.5%. This is why 5.3% Treasury Bills look allot better.
