“hi David always enjoy listening to your friday audio. by the way for me it is never too long. Following, i was wondering what could have been the trigger for oil/ gold /silver etc to reverse and go up this Friday? the first warning sign you mentioned was the reversal on nov 7 but today was an impressive reversal. So my question is: Could it be that the lower yield on the US 10yr Treasury Bond Yield which started to go lower on thursday and again yesterday caused the usd to weaken and therefore caused commodities to go up? i know the interest rate change looks minor but if i look at your charts the commodities were at their lows in the beginning of the trading day and went up when the interest rate went lower. would appreciate your expert opinion . On European autonomies, despite the fact valuations might be low for companies. The high energy costs for companies and consumers hardly decreased because of the stronger usd and the high percentage of taxes. That destroyed the advantage of lower Brent prices almost completely ironically the lower energy costs give US companies and consumers a huge and even greater advantage over European companies and consumers. i rather buy shares of Dow Chemical than Basf and probably also enjoy an additional advantage of an appreciating usd versus the euro. In this beauty contest it is hard to favor European shares over US shares or Asian shares. best regards”

David Fuller's view

Thanks for your comments and perspective.  Living in the Eurozone, I can certainly understand why you prefer Dollar-denominated investments. 

Re commodities, many of them have been technically oversold and I agree that when the USD weakened from an intraday new recovery high, that led to some short covering of depressed resources on Friday.

More importantly, I believe, gold (weekly & daily) and silver (weekly & daily) have fallen to levels where long-term value buyers are more interested, despite the lack of a yield and the ongoing strong performance of most stock and bond markets.  Additionally, I think institutional bear traders of gold futures, who have done very well in recent years, are now aware that they could be ‘selling into a bag’ at these prices.  In other words, they are now more vulnerable to a short squeeze.  Switzerland’s November 30^th referendum on holding more gold is a further reminder that the yellow metal is generally regarded as a hard asset. 

Lastly, your points on investing in European stock markets are widely shared and also reflected by the relative underperformances of their indices.  For this reason, I remain wary, with the possible exception of European Autonomies which sell at lower multiples and have been able to outsource much of their production.