Monday May 20, 2013 09:01
Canada looks forward to a long weekend to celebrate a long ago Queen’s birthday. That is unless you work for Kitco, where our desk will be active to service our non-Canuck clients. This is the weekend , for those unfamiliar with Canada, where the recognition that spring has arrived is evidenced everywhere, as Canadians fold their igloos and we set up our summer tents.
Back to business. We got what I can only describe as an anemic bounce yesterday after some disappointing economic numbers indicated that the Fed may not tighten soon. This is getting really stale. I suggest before the Fed tightens, there will be a myriad of Fed speak first, almost a warning that they are getting ready. This will be followed with carefully crafted language that will signal, probably in advance, that the Fed will go from $85 to let’s say $60 billion a month, always with the proviso that they can, and will, increase the purchase size if warranted. Then they’ll wait. Let the equity markets absorb the hit, which if done with enough notice should be minor. Then the next orderly round will occur. This process, once it begins, which I believe is still a 2014 event, will most likely take six months to complete.
In the short term, UNLESS, there is a geo-political event, this market is trading purely on supply/demand. As I suggested yesterday, this renewed downward move may not result in the frenetic buying we saw in April. Ask yourselves, did anyone get a busy signal at their dealers yesterday.
Its Friday, and unless a surprise hits, I expect the range to be $1,372-$1,388
By Peter Hug
Global Trading Director
Kitco Metals Inc.