No Mercy – Part II May 31st, 2019 by John Gross

Most metals lost more value last week, weighed down by ongoing trade issues, military threats, and an overall sense of uncertainty, that is disrupting supply chains throughout the world.

Two weeks ago, it appeared that progress had been made in the North American trade / tariff issues.

Since then, it now looks like ‘one step forward and two steps back’, with Mexico being the target of new potential tariffs to stem the flow of migrants crossing the border.

And unfortunately, the situation with China seems to be deteriorating rather than getting better. The Middle East, Venezuela, North Korea, the list of trouble spots goes on.

Indeed, the world is becoming more worried, and the impact is being felt in metals, energy, and equity markets globally.

Copper just posted its 5th consecutive weekly loss, giving up 32¢, or 10% of its value since April 26th , aluminum, lead, nickel, tin, and zinc are approaching new recent lows; crude oil dropped almost 9% last week, and the S&P 500 fell below its 52 week moving average.

Conversely, gold gained $23 on the week, and is not far from testing recent highs – and not because of fears of inflation.

Given the deep rooted problems now present, one is hard pressed to think things will improve dramatically in the short term.

It is important and timely to review your hedging strategy - just in case.

Regards,
John

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