GOLD

Today’s escalation in the Chinese trade war is turning into an economic boom in China. As our president threatens our European allies with trade tariffs, the Chinese Premier Li Keqiang is aggressively making deals. The Chinese Premier and Germany’s Chancellor Angela Merkel signed a $23.5 billion trade deal yesterday. If this is the sign of things to come I would expect to see the U.S. trade deficit skyrocket, while consumers pay the price. The announcement of $200 billion in new tariffs on a wide range of Chinese imports just escalates the problem more and will be highly inflationary by year end. This short-term news has rallied the U.S. Dollar Index back above 94, which has driven Gold under $1,250 per ounce and the Dow/Jones by 185 points. Gold should rally back above the $1,250 level by weekend. At 11am PDT today, Gold is trading at $1,244, down $12 per ounce on excellent volume.

SILVER

Silver got hit hard when Gold dropped below the $1,250 level. Silver reached a low of $15.75 before finding bargain buyers. Demand for physical Silver investment products (coins and bars) picks-up dramatically every time Silver drops below $16. At 11am PDT today, Silver is trading at $15.82 per ounce, down $0.28 on good volume.