China Market Continues Unstable

The Shanghai stock exchange starts off the week down 5 percent as retail investors there continue to sell equities. China’s central bank intervened today trying to strengthen the yuan with hopes this will create some stability in the region. One trader told me that he expects the sell off to continue as the market is already down 15 percent in the first week of the year.

One would think as the Shanghai market continues to fall we would see a rotation into gold as a safe haven for the Chinese retail investor. “Not so fast” said a broker I spoke with this morning, as you look at the pricing landscape of other commodities still retreating. This morning we witness all base metals lower and who could ignore oil down to a 32 handle with no one standing up to support the oil market at this time.

After Friday’s strong employment numbers we see the dollar index slightly higher at the moment against the other major currencies.

Wall Street traders still smiling over Friday’s job numbers as they continue to maintain their bearish stance in the Gold and Silver market. Friday’s job number could help the Fed Governors keep their promise of multiple rate hikes in 2016. Higher interest rates would
make the dollar more attractive to yield seeking investors, but in turn will put pressure on gold and silver prices as most Wall Street traders are predicting.

Early Wednesday morning I will be traveling to see my friends in our Dallas office, so I will unable to give a live market commentary. So instead of asking for coverage, I created what think is an informative and educational piece explaining the workings of the “US Dollar Index.” I hope you will tune in.

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.