Are Funds Exiting Gold and Silver?

The Market Gage - Dillon Gage's Precious Metals Newsletter

Have the funds exited the gold and silver market looking for a better opportunity?

The Net Long Fund Position (NLFP) had a significant decline last week due to more and more Fed Presidents
expressing a hawkish tone.

In gold, the NLFP fell 46,396 contracts or 16 percent indicating a quick exit from holding their long positions. Once all the levels of support in the price of gold were compromised last week, the commodity fund managers quickly liquidated their long gold holdings. This morning a few Wall Street Gold traders indicated that fund managers are concerned that interest will rise this year, as indicated by the CME Watch tool that giving the possibility of a rate hike in December at 64 percent.

The Silver NLFP is suffering the same fate as gold, down 9,059 contracts which is down 11 percent from the previous week.

What I find interesting is the number of Wall Street traders indicating that they are playing in large numbers in the gold silver ratio. The gold silver ratio is currently at 71.3 percent, up from 68 a few weeks ago and some are indicating they expect it to hit 78 in the near future. I don’t think that will happen because an interest rate hike should have a more profound decline in the gold price, whereas I believe a decline in silver will only be viewed as a buying opportunity.

Columbus discovered America and it seems the rest of the world is discovering America once again as more and
more financial advisors are indicating they are seeing more over-the-pond investments than ever before.
Negative interests rates, declining currency values overseas only fuel our equity markets. This only begs the question that, if the whole world views the United States as the only remaining safe haven, how safe are we really with a 21 trillion dollar debt, out of control costs in health care and the ever increasing costs of entitlements? And let’s not forget a congress that refuses to come together for the sake of our nation. We all know that they will have to address the issues someday. The question is, will it be too late?

Have a wonderful Monday.

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 advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.