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November 26th Early Week Silver Market Update

Gold and silver are hovering around even in the early parts of Tuesday after a Monday full of ups and downs. Today is going to yield a few economic reports, but in all reality they probably will not affect the spot values of gold and silver all that much. The biggest talking point of the week thus far took place on Sunday when the United States along with 5 of its closest allies sat down with Iranian leaders in an attempt to draft a deal with regard to Iran's nuclear ambitions. This unexpected bit of news shocked the marketplace yesterday and is continuing to catch the attention of investors the world over.

With the Thanksgiving holiday only 2 days away, more and more Americans are checking out of the office and gearing up for holiday celebrations. For this reason it is not expected that the duration of the week will yield any major market news capable of moving gold or silver too drastically in one direction or another.

Iran Nuclear Deal a Sign of Progress to Some

This past weekend, leaders from Iran, Germany, Britain, Russia, China, France, and the United States convened in Geneva to discuss Iran's nuclear ambitions. Over the years, Iran has pursued the enrichment of uranium for what it has labelled peaceful purposes. Unfortunately for Iran, their saying that uranium enrichment is for peaceful purposes is not something the West, especially the US, has been so quick to believe. For this reason, the EU and the US among other countries have levied economic sanctions against Iran as punishment for their continued pursuit of nuclear energy. These sanctions, which include a total embargo on Iranian oil, have worked to cripple the Iranian economy and hurt the livelihood of the average Iranian citizen. In search of some sort of resolution that does not see Iran be the victim of endless sanctions, newly elected President Rouhani has repeatedly called for a sit-down discussion with Western leaders about Iran's nuclear ambitions.

This weekend, Rouhani got exactly that when leaders sat down in Geneva to engage in discussions. The result of this past weekend's meeting was surprising due to the fact that it did not end in frustration by all parties involved. Instead, it seems as though the meeting allowed cooler heads to prevail in the drafting of a temporary deal that will see economic sanctions on Iran lifted in exchange for the nation's cooperation with regard to uranium enrichment restrictions and international inspections. The lifted sanctions will see over $7 billion in frozen cash assets returned to Iran while also allowing the aviation and automotive industries in the country freedoms they have not experienced in years. The lifted sanctions will likely improve the ailing Iranian economy, at least temporarily. It must be noted, however, that the deal reached this Sunday is only temporary and will expire in 6 months if the 7 nations involved cannot draft a permanent, long-term deal.

How does this deal affect the outlook on precious metals? The answer to that is not a simple one, but in the immediate wake of the deal being reached the spot values of gold and silver declined at a rapid pace. Gold and silver's decline was due to the fact that high tensions in the Middle East seemingly disappeared once the deal was reached. As anyone who is familiar with the precious metals industry will tell you, a decline in Middle Eastern tensions almost always translates into a decline in safe-haven demand for gold and silver. Though gold sank to a 5-month low in the early morning hours of Monday, the market has since corrected itself and while gold and silver are not sitting pretty, they are not as devalued as they were about 24 hours ago.

Another piece of information worth mentioning is that this is the first time in multiple decades that Iran and the United States are seeing eye to eye on an issue. Over the past 30 years, any talks between the West and Iran almost always ended in frustration by both sides. Could President Rouhani be ushering in a new era of cooperation and collaboration between the Middle East and the West, or is this just another charade? That is something we will likely find out over the course of the next half year.

Posted in Market Updates

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