Gold Surges, Shares Fall – Déjà Vu?


Last night we saw a couple of recent records broken.  US shares fell more than 1% in a session for the first time in 110 days, ending its ‘bullet-proof’ run, one of the longest in decades.  Whilst most headlines are blaming the standoff in the GOP house on the health care bill flagging future problems ahead for Trump getting his tax cuts through likewise, it was probably also in part due to the spectacular fall of the USD, down the most in 2 years last night.  The Dow slumped 1.24% (and now 500 points lower than its recent high) and the S&P500 down 1.24% whilst the USD sank below 100 for the first time since the election.  

Gold jumped 1.6% (1.8% in AUD) and silver up 1.5% (1.7% in AUD) and back up through its 50 day MA.  

Whether it is the events of yesterday or just more of the repeat of financial market trouble and precious metal strength after a Fed rate hike we’ve seen before.  Reading our previous 2 articles you know full well the size of the debt issue and the effects of higher costs of debt (courtesy of rising rates) will have.  The last Fed rate hike was not unanimous by the way.  Minneapolis Fed President Kashkari dissented on the rate hike.  His dovish comments in the press yesterday no doubt added fuel to the uncertainty in the market.

Regardless today promises to be a hard day on the Aussie (and Asia more generally) sharemarkets and the actions after previous hikes could spell more trouble to come.