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Recession Without Inflation = Deflation


With a broad-based risk off environment thrown off by equities again and another contract high in the dollar index, outside market forces favor the bear camp in gold and silver. Unfortunately for the bull camp, the dollar’s dominance is broad-based insinuating a sustainable uptrend. Obviously, the strength in the dollar is the direct result of a global rate hike environment which in turn has fostered deflation, inflation, soft landing, recession, and some residual inflation expectations, but apparently the gold market does not see the uncertainty lifting flight to quality buying.


The palladium market continues to maintain bullish resiliency with a sharply lower track early yesterday reject with a retest of psychological resistance of $2,200. As indicated yesterday, the palladium market remained net spec and fund short near record levels thereby likely contributing short covering buying into the trade. While we have not seen evidence of disrupted supply flow from Russia and or South Africa, supply issues are more credible than hope for improved physical and/or jewelry demand. The platinum market appeared to overextend itself at the end of last week particularly with classic supportive fundamentals not apparent to this analyst.


The trend remains down in copper despite recent attempts to track within a consolidation bound by $3.2730 on the downside and $3.58 the upside. However, media reports suggest hedge funds continue to turn more bearish which is not surprising given the trades expanding probability of recession. In our opinion, copper prices yesterday would have been sharply lower given the definitive outside market risk off vibe, but evidence of lower production from Chile and Peru likely discouraged some sellers.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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