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Debt Ceiling Approaches (Again)

  • Wed, Oct 16, 2013 - 06:45am



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    Debt Ceiling Approaches (Again)


I know you prefer to let price and volume do the real talking, but there is a big story out there that needs to be considered. The US still hasn't agreed on a fiscal budget to fund the government AND we're closing in on the deadline where monetary shenanigans can't be used to cover our debt obligations (debt ceiling.)

If things were normal, I'd expect quite a bit of safe haven buying of precious metals. Given the wacky markets this year, I don't know what I should expect. Could the enhanced buying today be triggered by some safe haven buying followed by momentum players closing shorts? The rally will be short lived if DC gets a compromise on the debt ceiling and/or the budget.

Brinksmanship will continue as long as it can. Both sides know that they both lose if a compromise isn't found. They may push the game into Friday (and allow a default for part of the day,) but they will come to their senses then and pass something to allow us to get deeper in debt. They may continue the government shutdown a while longer; however, a grand deal wouldn't surprise me either.

After everything is "back to normal," the same forces that have driven PM pricing down this year will show themselves again. The safe haven won't seem as necessary or as attractive as it does now. Until the threat of effective bear raids is gone, trepidation will be the order of the day. My powder is still dry.