Risk On Includes U.S. Dollar – Ep. 283

A Huge Risk-On Day

The markets rallied all over the world.  Everything was up. All the foreign markets – European markets, Asian markets, rallied.  It was a huge risk-on day. Stocks went up and bonds got clobbered. Yields rose on government bonds, the 10-yr. out to the 30-yr.

Insurance Rates Going Up

There will be a lot of pressure on insurance companies to pay claims for both recent hurricanes and where’s that money coming from? It’s got to come from the markets.  It is just not sitting there in a piggy bank. It is invested in stocks and bonds, so if they are going to pay claims, you would think that is a negative for the financial market as the insurance companies have to liquidate some of their portfolios, but not today!

Big Move Down for Gold

Risk-on, so you get rid of your safe assets, although I don’t know why anyone would consider Treasuries safe, but everybody sold treasuries and bought U.S. stocks. They sold gold.  Gold was down $19 today. This is the biggest one day move I’ve seen in a while.  In fact, this $19 down move – gold has been moving up steadily to $1350 last week. I don’t think I have ever seen a $19 up day.

Gold’s Steady Climb

Gold’s been going up slowly.  $5, $7, $3; maybe there was one $10 day, I think, but it has been a very slow, steady climb on a wall of worry.  And now, all of a sudden, we have a day where everybody is excited because the hurricane didn’t do as much damage as it could have, and they all buy stocks. They dump gold and it goes down $19 in one day. Gold had been climbing before the hurricanes came around. and I don’t think any of that gain was necessarily the result of the hurricanes.  Had none of these hurricanes happened, gold could have been exactly where it was before today.  Gold was rallying anyway.

Peter Schiff is an economist, financial broker/dealer, author, frequent guest on national news, and host of the Peter Schiff Show Podcast.



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