In my last note, we talked about some pro-liquidity fiscal and monetary news late last week that was favorable for asset prices.
The FOMC Vice Chair, John Williams, signaled to markets that the Fed would be prepared to expand the balance sheet again in the near future, to avert any 2019-like liquidity shock (only days after announcing the end of balance sheet contraction). Add to that the Fed's Miran had more dovish comments Friday, and Trump floated a plan for $2,000 government checks over the weekend.
These types of comments tend to be good for financial asset prices. With that, stocks had a nice bounce from the Friday morning lows.
But the bigger move has come in hard asset prices. Gold is up 6% from Friday's lows. Palladium is up 9%, and silver is up 12%.
Remember, just two weeks ago, we looked at this technical break down in the price of gold after trading as high as $4,358 in mid-October (record levels).
And we followed this parabolic move in gold over the prior six weeks (a nearly 30% rise in two months).
Importantly, the timeline of that price surge mapped closely to the EU’s plan to send €140 billion of frozen Russian assets to Ukraine.
Not coincidentally, the top in gold aligned with reports that the Trump administration would NOT support the EU’s plan to use (confiscate) Russian assets. Trump later reiterated that stance.
That reduces the “confiscation/distrust premium” being priced into gold — the price fell 10% in about a week.
And then on this past Friday, we get this …
And we get this price response …
The “confiscation/distrust premium” in gold ramps, again.