The latest US PMI reading was not good and China was poor as well.
If the US unemployment rate update due I think next week (may be wrong on timing) shows an increase again then we may see further falls in the stock market as more so called ‘expert‘ economists change their view from soft landing to recession. Steep falls in the sharemarket may send POG lower in the very short term but it will recover to higher highs. POG may go lower as margin calls get called in and they sell gold to fund the margin call.
Watch the economic data very closely as we maybe close to a very important inflexion point for a possible recession, the sharemarket and POG (timing is unclear).The yen carry trade may blow up again especially if the Fed drops rates by 50bp’s in September which can’t be ruled out if unemployment rises - currently the market has a 39% chance of such a rate drop.
If significant sustained falls in the sharemarket occur (the early August fall was not sustained) it will have an interesting impact - so many Americans own shares that any sustained fall will result in more falls in consumer spending (ie by the more well do to) and make a recession worse. The very high sharemarket has a ‘wealth effect’ and contributes to those investors with gains spending more but that will go into reverse in any sustained pullback.
It maybe a very good time to have cash on the sideline to buy more shares if we see a significant and sustained sharemarket fall - gold normally does well in a recession and a pullback in the sharemarket after it dips lower - has happened all the time in the past. If it happens again SPR and other gold stocks may fall a lot so be ready to buy more SPR at a lower price!
SPR Price at posting:
$1.37 Sentiment: Hold Disclosure: Held
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