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Gold has moved higher as the week has progressed, most likely in anticipation of a slowing economy and potential interest rate cuts. I continue to believe any interest rate cuts will not occur until later this year or into early next year. Joe Biden will be leaving Donald Trump a recession. As Jimmy Carter did with Ronald Reagan.
Silver is lower this week. A cooling economy may portend a lower silver demand. The gold/silver ratio has dropped into the high 70s and has been lower since it’s recent peak about three weeks ago matching the decline in the silver price. When the gold/silver ratio gets into the 80s and 90s silver usually increases. For buyers on a price dip, here is an opportunity.
The employment picture is pointing to a cooling economy. Job openings have fallen to a three-year low, and this week’s initial jobless claims have climbed to a four-week high. The economic indicator to watch this week is tomorrow’s employment report. The European Central Bank lowered interest rates today. Seeing the writing on the wall?
The Dow Jones Industrial Average made an all-time high a few weeks ago. The Dow Jones Transportation Index last made an all-time high in November of 2021. Followers of Dow Theory say that when the Dow Jones Industrial Average makes a new high and the Dow Jones Transportation Index does not, that portends an economic downturn and a stock market decline. Gold usually increases when these occur.
