Tariffs, Tension, and the Trade War

Bill Poulos began trading in the stock market in the early seventies. Today, he shares his expertise and opinion on finance related topics and current events. Poulos is co-founder and president of Profits Run, Inc. The company specializes in educating traders on making smart trades while minimizing risks. Poulos earned a bachelor’s degree in engineering from General Motors Institute and later attended the University of Michigan where he earned his MBA. Bill and Profits Run celebrate those that make a difference within their communities with the Profits Run Starfish Award. Poulos has been married for 50 years to his high school sweetheart, Karen.

Commodities: Gold, Silver, and Oil

Gold is trading positive for the last day of the week. This caps off another winning week, six weeks in a row. In fact, gold has been on quite a run not only for the last few weeks but as June finishes up, it has been the best month since 2016 with a monthly gain over 8%. This also ends the quarter, a positive finish as well. The month started just above $1320 per oz and looks to finish up right around $1410 per oz. This has been the second positive month in a row. What has been driving this bullish run? For the most part Gold and other precious metals prices are being driven by an aversion to risk or the “safe haven” effect due to economic concerns in the U.S. Data shows a potential slowing down of the growth in the economy. Uncertainty surrounds the market place, U.S. — China trade relations being one of the major sources of tension. We might be looking at more global tensions in the Middle East due to actions and potential reactions to Iranian aggression. Due to all of this uncertainty, the Federal Reserve has come out and hinted to a potential rate cut at next month’s FOMC meeting.

Silver opened the week at $15.32 and is trading right around that price midday Friday. Initially, the price ran up Monday, but Tuesday, Wednesday and Thursday reversed and dropped back to $15.20. This reversal tested 200 day Moving Average as a significant support level. This drop happened in conjunction with the same time the FED started to moderate its rate expectation. Trading on Friday is bounced off the lows of Wednesday and Thursday. As Friday finishes up the month of June, it has reversed the bearish trend with the first positive month this year. If the price holds and moves above $15.20 the next resistance level is at $15.50 and on up to $16.00 per oz.

This week Oil looks to finish on a positive but modest gain for the week. Price opened on Monday at $57.58 per barrel and is currently trading right around $58.00 late on Friday. As this is the last trading day of June, Oil will finish up after the big selloff in May. These gains could be weakened and reverse due to the uncertainty of Trade wars and economic slowdown could lower the demand even if OPEC in their meeting next week extends its out-put cuts. So the outcomes from the meetings this weekend between U.S President Trump and Chairman Xi Jingping of China over the trade negotiations, and the OPEC meeting next week could shed important light on whether Oil prices are headed higher or lower in the coming months.

Bill Poulos is an author, retired automotive executive (General Motors), and co-founder of Profits Run, Inc. Bill offers insight into the economy and trading.

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