“[During] the last four years, once we got to mid-December and the tax loss selling, the December FOMC meeting was behind us, we had rallies in late December and into January. Looks like we are setting up for that again,” TF Metals Report's Craig Hemke said during Sprott’s weekly wrap-up segment with Eric Sprott, billionaire precious metals investor and founder of Sprott Inc.
Starting Wednesday, the December Comex gold futures began to climb, rising from just below the $1,200 an ounce level to above $1,220, as the precious metal benefitted from increased safe-haven demand amid falling U.S. dollar index. The December gold was last trading at $1,222.90, down 0.01% on the day.
With the possibility of the year-end rally, investors should be thinking about what is currently not priced into the market when making their holiday trading choices, Sprott and Hemke said.
And the more important factor likely being overlooked at the moment is the U.S. “housing Armageddon,” noted Sprott.
“The whole interest rate thing is by far the more important one. The fact that mortgage rates have gone from 3.6% to 5.2%. The last time I checked that, that is about a 45% increase in interest costs,” he said.
The U.S. housing market is also in the spotlight next week, with the U.S. housing data being released and analysts warning that the reports could add some volatility to an already skittish marketplace.
On top of that, there’s extra stress in the bond market that investors should be keeping an eye on, added Sprott.
“Some of the best commentators are suggesting there are fundamental weaknesses. In fact, one of the better ones say; ‘You know, we all knew it was phony. Zero interest rates and the printing of money.’ The whole nine-year rally from ’09 to today, we knew it was phony. It was the elephant in the room. But because the markets kept going up, we didn’t worry about it. Now, that we’ve reversed things, we see the elephant in the room, which is: higher interest rates and restricting money growth,” he explained. “We are seeing things that suggest that the market that we have been used to for the last nine years is not the market we are in today.”
- Source, Kitco News
