Gold dropped to its lowest level in over three weeks after the Fed meeting yesterday.
The Fed put their anticipated policy changes on a bulletin board for all to see and the Bond market overreacted to what the Fed is saying.
The Chairwoman expressed that the economy is performing well and letting the balance sheet mature without reinvestment are the steps they believe are justified. By being so transparent, the market has seemed to believe that their anticipated policy will be considered “Bible” for the next three years as reflected in the increase in Treasury yields. In turn, the price of gold has broken thru its support levels and now it seems everyone’s heading for the exits.
But we all know that there is no guarantee that things can’t change in the future, so the Fed is prepared to act accordingly, we hope. The Fed’s actions today just add to the country’s deficit and the proposed tax cuts seem even more of an issue for this nation. We just can’t afford it…
Entitlements continue to add to the debt and we really have no idea what the cost of healthcare will be. Infrastructure is not on the radar at this time.
Because interest rates continue to be historically low, many seniors in search of higher yields continue to take chances buying into risky investments.
No question the equity markets still believe we will see corporate and individual tax breaks this year. Yes we have seen 42 new highs in the Dow Industrials this year, but I believe the market is so blinded by the results that folks believe more advances in equities are only a bill away.
With the Democrats digging in and making sure the President will have not one win under his belt, you can be sure that it’s desperation time for the Republicans and most will be willing to pass anything, and I mean anything, to claim they accomplished something. Even a watered-down tax and Healthcare bill accomplishing nothing could be on the table. Even the President biting his tongue and selling his soul has gone where no one ever expected, to the other side of the aisle to get his agenda passed.
As I am writing this piece, I can hear President Trump campaigning that America will “Win again.” So far all we have won is more confusion and higher debt. The smart money will be buying Gold on any dips, cost averaging their holdings, as the future for gold looks bright as Washington continues to fall into further darkness.
I know we are going against the trend, but until we see all these promises in writing, there are some in our camp that believe Washington is not capable of getting ANYTHING done.
Have a wonderful Thursday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.