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Zài qiáng shàng fei

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As a market technician and analyst, it is days like today that I would really like to be “Zài qiáng shàng fei”, which is Chinese for “A fly on the wall”. In other words, to be able to hear what is being said, and see what is happening at the highly anticipated trade talks which began today in Washington, and will conclude tomorrow. This morning U.S. Trade Representative Robert E. Lighthizer. And Treasury Secretary Stephen Mnuchin met with Chinese Vice Premier Liu He and his delegation to resume negotiations on the ongoing trade war.

This meeting will be the 13th round of negotiations between the United States and China. It will be the 13th formal occurrence of talks to resolve a trade war that has been ongoing for approximately 15 months. One of the key highlights of this event will be a face-to-face meeting between President Trump and Chinese Vice Premier Liu He tomorrow.

Although there is been an optimistic tone that these highly anticipated talks will have some meaningful outcome, that was put in question after President Trump tweeted, “Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at the White House.”

In an interview on October 7th with NPR (National Public Radio), Peter Navarro, White House trade advisor said, “The big picture here, is any deal with China must comprehensively address what is called China's seven deadly sins. It's the intellectual property theft, the forced technology transfer, the killing of Americans in mainland China, fentanyl. I mean, the sins literally go on and on. And on this point, President Trump has steely resolve. It's either a big deal or no deal. That's been his posture from day one.”

As unknown as the outcome of this two-day negotiation will be, guarded optimism has put dynamic pressure on both gold and silver pricing, as well as being highly supportive of U.S. equities. Currently the Dow Jones industrial average closed up 150.66 points, closing at 26,496.67. Gold futures basis the most active December contract is currently trading down by $15 and fixed at $1497.80, a decline of almost a full percent. Whatever the outcome of negotiations taking place over the next two days one thing is almost a certainty and that is increased volatility as information and news of the outcome becomes more available.

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Wishing you as always, good trading,

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