Stocks in the US finished last week mostly lower as investors braced for impact from Hurricane Irma in Florida and eyed a renewed missile threat from North Korea.

The S&P 500 booked a weekly loss of 0.58%, with nine of its 11 sectors trading in negative territory on Friday alone. Dow Jones Industrial Average futures declined 0.86% for the week. Trailing behind the pack was the Nasdaq 100, which closed 1.29% lower for the week.

Despite slowly declining stock prices, the real talk of Wall Street was the continuing weakness in the US dollar. The US Dollar Index, which measures the greenback against a basket of 6 rival currencies, closed 1.54% lower for the week. This stout weekly loss brings the US dollar’s 3-month performance to -5.53% and its 6-month performance to -10.36%, putting it in correction territory.

During Friday’s trading session, the US Dollar Index briefly touched 91.06, which put it on track for the largest weekly decline since May 19, according to data compiled by Factset.

Generally speaking, a weak US dollar is a direct benefit to commodities that are primarily traded in US dollars, because US dollar denominated commodities become cheaper to purchase for foreign investors. The extremely weak US dollar certainly aided gold last week, as gold soared to $1,362.40 per troy ounce during Friday’s trading; a level not seen in two years.

Similarly, spot silver traded above $18.10 per ounce for the first time in seventeen weeks, marking its third consecutive weekly gain.

Analysts noted last week that a strong rally in precious metals is not unusual amid lingering North Korean missile tensions and a string of unprecedented natural disasters in the US.

“Risk aversion is creeping back into the markets on Friday as traders prepare for what could be another troubling weekend in the continuing standoff between the U.S. and North Korea,” said Craig Erlam, senior market analyst at Oanda Corporation, a foreign exchange data company.

When looking at the market from a macro perspective, the US dollar is in free fall, North Korea is still loosely threatening to launch nuclear warheads, the stock market has lost most of its momentum, and gold is absolutely soaring.

Moreover, as earnings season is officially over, there seems to be a lack of fundamental bullish market events that have the possibility of pushing the market higher in the next couple of months.

With this said, all of the ingredients seem to be present for a big spike in precious metals. Natural disasters, potential nuclear war, a flat stock market running on fumes, and Washington in political deadlock are all significant factors to market participants around the world.

Additionally, gold analysts noted last week that many institutional investors are not heavily invested in risk-averse assets.

“Wall Street is heavily under invested in precious metals, and even a little bit of capital flowing into these markets can spark a much larger price run,” said Peter Spina, president and CEO of precious-metals data firm Gold Seek.

This is truly fantastic news to gold bulls, because institutional investors on the Street arguably have the most influence on market prices. And if even one of the current issues facing the market takes a turn for the worse, an institutional flight to safety could easily send gold soaring even more than it already has.

Stocks in the US closed out the final week of August with a bang. Major stock indices rose the most on a weekly basis for all of 2017 amid signs of a strengthening economy and favorable economic data.

Although stocks initially sold off on Tuesday of last week, markets quickly rebounded on an intraday basis and managed to close positive for the entire week.

The Nasdaq Composite Index had its best weekly rise of the whole year as it finished with a weekly gain of 2.7%. Most of the Nasdaq’s gains came from the biotech sector. The Nasdaq Biotechnology Index finished the week nearly 8% higher following groundbreaking FDA approvals and bullish industry merger news involving one of the largest biotech companies, Gilead Sciences (GLD).

Following in the footsteps of the Nasdaq, the S&P 500 closed the week with a nice gain of 1.4%. The Dow Jones Industrial Average, however, trailed behind with a weekly gain of 0.8%.

Many analysts were impressed yet equally cautious with last week’s gains because of the extremely low liquidity ahead of Labor Day weekend.

“It’s hard to draw any real conclusions on the activity in the market this week because volumes are just so low,” said Art Hogan, chief market strategist at Wunderlich. He went on to note how “you could basically see volume decrease by the hour,” when referring to last week’s gains coupled unusually light trading volume.

Since economic data was the primary focus of last week’s market moves, gains weren’t just limited to stocks.

Although the hiring pace slowed and the unemployment rate rose slightly, job wages rose less than expected. According to the Labor Department, hourly average earnings ticked up just 0.1% from the prior month. Market participants were expecting a wage increase of 0.2%.

Slower than expected wage growth is particularly bullish for stocks, but it’s also bullish for precious metals. This is primarily due to the fact that wages are still rising at what seems to be a perfect rate.

Continued wage growth will likely cause more consumer spending, which is a direct boon to the economy, but this level of low wage growth may alter the Federal Reserve’s rate-hike agenda.

“It’s right now in the sweet spot where it’s enough to drive consumption but not enough to lead inflation jumping up so the Fed feels it needs to be more aggressive. It’s also not affecting profit margins yet,” said Sameer Samana a global quantitative analysts at Wells Fargo Investment Institute.

Lingering nuclear drama from North Korea and a plausible delayed rate-hike path was enough to send gold for September delivery soaring 2.5% for the week; it’s largest weekly rise in well over a year. September gold futures traded as high as $1,334.5 per ounce on Friday before closing at $1,329.90 to make a new YTD high.

Besides the perfect amount of wage growth, other economic data also points to a likely delayed rate hike. August’s job creation of 156,000 with an unemployment rate of 4.4% is leading many analysts to speculate that the Fed might actually hold off on rising rates another time in 2017.

The current consensus is that the Fed will hike rates one more time in 2017. However, if this doesn’t happen due to economic data that has the perfect balance of helping the overall economy but causing the Fed to hold off on interest hikes, it will likely be a direct boon to both stocks and everybody’s favorite precious metal – gold.

After an ominous sell-off on Monday of last week, markets in the US mostly recovered from two consecutive weeks of losses. S&P 500 futures made a three-week low of $2,215.75 on Monday morning, and market participants were evidently waiting to buy the dip.

After all three major benchmark indices made their respective low points on Monday, prices immediately started climbing again. The rally carried into Tuesday, where the Dow Jones Industrial Average had its best one-day rally in months. The Dow, Nasdaq, and S&P 500 all closed with more than a 1% gain. This rally gave stocks the boost they needed to snap a two-week losing streak.

Despite the very strong gains in stocks, there were also several sharp sell-offs last week that caught investors off guard. And although stocks finished largely higher for the week, the significant sell-offs that came after the sharp rallies resulted in a lack of clear direction and an overall mixed trend in the markets.

Volume on the on the New York Stock Exchange and Nasdaq fell to the lowest level of 2017 on Wednesday. Analysts attributed the lower than usual volume to the lack of economic events and the end of summer. The lower than usual volume provides a possible explanation for the gyrating market moves last week.

“Most people are away, so moves tend to be amplified for no good reason. Technical analysts may point to the 50-day moving average of the S&P 500, which the index keeps failing to break through,” said Michael Antonello, an equity sales trader at Robert W. Baird & Co.

Despite the lack of economic reports last week, the were a few speeches and key events that influenced the markets. The annual central bank symposium in Jackson Hole caused a somewhat mixed reaction. Most of the gains that came immediately after Federal Reserve Chair Janet Yellen’s speech at Jackson Hole, which was supposed to outline monetary policy.

However, Yellen refrained from talking bout fiscal policy and the economy and instead focused on the substantial progress towards full employment and improved banking regulations. With a lack of additional bullish drivers, stocks pulled back shortly after Yellen’s vague comments.

Yellen was not the only Federal Reserve member to influence the markets last week. Remarks from Dallas Fed President Robert Kaplan regarding the effect a stock market correction would have on the economy instigated a huge spike in safe haven assets.

Gold rapidly spiked to $1301.40 per ounce before declining to $1,282.30 and then recovering just below the $1,300 level. 

Although nobody truly knows if a stock market correction is looming around the corner, the mere mention of a market correction by a Fed President was enough to cause gold to surge.

Since 1975, Blanchard has successfully helped 450,000+ clients invest wisely in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653

Stock market volatility screamed higher last week as the CBOE Volatility Index (popularly known as the Fear Index) soared over 30% in just one day.

Political turmoil in Washington D.C., combined with a lack of any substantial policy achievements are taking a toll on the stock market.

After all, a large part of the optimism that drove the stock market sharply higher in the months after the November 2016 U.S. presidential election were expectations that the new White House, combined with the Republican Congress would be able to push through significant economic-stimulating legislation.

Let’s look at what’s happened so far in Congress:

• Health care legislation has stalled.

• A major infrastructure spending bill is on the back-burner.

• Tax reform remains a possibility, but likely at a lower scale than previously expected.

Q: What does this mean for investors?

A: Brace for a correction

The Stock Tide Is Turning: It’s Official

The stock market took it on the chin last week. The S&P 500 closed lower on the week and fell below its early August swing low. In technical trading terms – the sell-off broke the daily uptrend pattern. A new minor downtrend is evolving on the daily chart and it is only a matter of time before investors know how deep the correction will become.

Bear Market Basics

When stocks are going up, it is all too easy to forget about the down market cycles.           

• A Pullback = 5-10% decline in the stock market

• A Correction = 10-20% decline in the stock market

• A Bear Market = 20%+ decline in the stock market

Here are some important historical points or “bear market basics” from Sam Stovall, chief investment strategist at CFRA. 

In the stock market, since WWII, there have been:

• 56 Pullbacks
• 21 Corrections
• 12 Bear Markets

Recent History

A 50% decline in the U.S. stock market occurred from 2000-2002 and again in 2007-2009.

Is Your Portfolio Prepared? 

Gold has historically performed the best, when the stock market cycle is at its worst.

The average gold return hit 14.2%, when the S&P 500 fell 20% or more – going back to 1968, according to a recent Wells Fargo Investment Institute report.

Now Is the Time to Act

Gold prices are already rising. If you are looking for a way to hedge your portfolio against a stock market correction or even worse, historically gold rises when equities fall.

Call Blanchard today at 1-800-880-4653 to speak with a portfolio manager about personalized recommendations that make sense for you and your financial future.

Marking only the fourth occurrence this year, the S&P 500 index closed negative for the second week in a row amid mounting political worries and a devastating terror attack in Barcelona.

From Japan to the United States, markets across the world sold off in unison on Thursday of last week. In addition to the S&P 500 trading broadly lower, the Dow Jones Industrial Average and Nasdaq 100 index both had their worst one-day dive in three months.

The S&P 500 was off more than 1.50% during Thursday’s trading, while the Nasdaq was down more than 1.90% and the Dow Jones was down 1.20%, respectively.

Analysts attributed Thursday’s stark losses to the combination of the Barcelona terrorist attack and unsettling rumors that, Gary Cohn, the director of the National Economic Council appointed by Trump was mulling resignation. 

“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr. Trump’s strategy for the economy and business is falling apart,” said analysts at Deutsche Bank.

Many market participants believe Gary Cohn plays an integral role in much of Trump’s economic plan and view him as a direct boon to the stock market. Having been the president of Goldman Sachs, one of the largest and most prominent investment banks in the world, investors see Cohn as someone who understands the markets and is willing and able to set favorable policies for investors.

Although the White House refuted claims Cohn is planning to resign, pundits on Wall Street were already speculating how devastating it would be if he left his position.

“I don’t want to be an alarmist, but there is a lot of faith that he is going to help carry through the tax reform that people are looking for,” said Jeffrey Sonnenfeld, the Senior Associate Dean of Yale.

“I think if he steps away, it would crash the markets,” Sonnenfeld said. Regardless if Cohn plans on terminating his employment, just a vague rumor was enough to send markets into a free-fall last week. 

Evidently, markets are thinly-traded and notably weak in the summer months, especially in August. Moreover, one stock market indicator is sending a flashing warning sign that an ominous sell-off might be lurking around the corner.

Something known as the Hindenburg Omen, which got its name from the infamous fiery blimp crash some 80 years ago, has just surfaced in the markets with a pattern not seen since 2007.

Even though the S&P 500 gained on Wednesday of last week, there were more stocks hitting 52-week lows than 52-week highs. On it’s own, this is not of major concern. However, as of Friday of last week, the Hindenburg Omen occurred during five of the last six trading sessions.

The last time there were more stocks touching 52-week lows than 52-week highs for five days in a row, even with a rising broader market, was in November of 2007. Stocks went on to fall 1.60% the following week and ultimately ended up about 40% lower a year later as one of the worst global financial crises in history ensued.

Out of all of the technical analysis patterns and signals, analysts seem to take the Hindenburg Omen rather seriously because it has a demonstrable history of portending stock market crashes.

Having said that, the only thing that is certain in the markets is uncertainty. And as uncertainty unequivocally rose last week amid the Gary Cohn resignation rumors and the horrific Barcelona attack, investors once again flocked to the safety of gold.

Gold reached a new year-to-date high on Thursday as it finally traded above the critical point of $1,300 per ounce. Gold futures for September delivery traded as high as $1,306.90 per troy ounce during Friday’s trading before the rally slightly fizzled and prices hovered in the $1,295 range.

Gold is always appealing in times of grave uncertainty, and with the possibility of Trump’s Senior Economic Advisor outright quitting, it’s safe to say markets are not at ease.

Since 1975, Blanchard has successfully helped 450,000+ clients invest wisely in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653