Could Gold Head Over $1300?

The Market Gage - Dillon Gage's Precious Metals Newsletter

The price of Gold hitting some resistance around the $1,300 dollar level. We believe that will this continue for a short period of time before heading higher once again.

A weaker dollar and softer treasury yields helping fuel the rally in Gold.

Some Wall Street Gold Traders indicated that if the price of Gold can settle today above the $1,300 dollar level they might consider taking on a position. But knowing those guys like I do, since it’s Friday, they might be a little hesitant carrying a position over the weekend.


Some might say the Palladium market is on fire, but who’s or what’s moving the price?

At the time of this report the price of Palladium is trading at $ 989 dollars and has passed the price of Platinum by over $ 43 dollars.

The price of Palladium is within a hundred dollars of its all-time high price of $1,090 that was reached in 2001.

How Markets Change

Back in 2001, the price of Gold was trading below $300 dollars and Platinum was trading at a high of $639 per ounce. (By the way, the price of Platinum hit its all-time high at $2,308.80 back in early 2008.)

So where is all the interest coming from?

First there seems to be a shortage of Palladium sponge. Yesterday Malvern sponge was trading at a 4 to 5 dollar premium over Zurich.

The other factor seems to be active fund buying in the futures contract. Palladium being a relatively small market compared to other metals showing open interest in December to be only 30,000 contracts. Compared to December Gold at almost 400,000 contracts, December silver at 142,000 contracts and January Platinum at over 70,000 contracts.

So with any type of substantial investment and a story to back it up, movement in price can occur without too much difficulty.

So for those who understand spreads which tell the true story of what’s going on one just has to look at the December 2017 / June 2018 Palladium switch.

Thursday if you needed to roll 50 lots it would have cost you $ 21 dollars per ounce back, to execute that trade.( Buy Dec/ Sell June )

CME Warehouse stocks holdings which always seem to be a concern for the exchange is showing 17,000 ounces registered and 36,000 ounces eligible. Just a small amount of deliverable material compared to the open interest.

Currently the Palladium EFP is quoted -$ 5 -$ 2 back. We will be watching these levels closely.

As I’ve said in “The Market Gage” numerous times, the CME has some options to curtail a major squeeze on the
metal but it’s not 100 percent foolproof.

Washington: Tax Reform vs. Tax Cuts

Very few people in Washington and around the country expect Congress to debate tax reform any time in the near future.

Tax reform is a broad-based restructuring of the system. A tax cut is a tax cut. Two completely different animals.

The tax cut that is on everyone’s mind is a corporate tax cut. Most GOP lawmakers want to cut taxes across the board. But there are some that are unwilling to add any more money to the countries debt.

In order to get a corporate tax cut, something Mnunchin, Cohn and their buddies on Wall Street have been pushing for, all “loopholes” would need to be closed. These guys realize that the only way to pay for a corporate tax cut is to get rid of the state and local tax deductions, mortgage interest, retirement savings and employer-sponsored health insurance deductions.

However, they need to stop addressing these deductions as “loopholes.” They are not! Stop trying to put lipstick on a pig and call her Miss. America.

With the equity markets, S&P and the Nasdaq breaking records every day and the release of strong corporate earnings starting yesterday, why do we need a corporate tax cut?

It all boils down to the Washington and Wall Street elite wanting to control the whole ball of wax. In the end, once more, the average Joe is getting just enough money to add a small bag of chips to his lunch box each day and the Wall Street executives will be enjoying a $ 800 bottle of wine and a 80 dollar steak on taxpayers’ dollars.

The President is now calling for a tax holiday hoping to repatriate dollars from overseas, but will the jobs come with the money?

Repatriate dollars and bring back those $5 an hour jobs currently being utilized by corporations all over the globe? Anyone expect that to happen? No chance unless the corporations get a free tax ride on those dollars.
Even if the corporations get the opportunity to bring the dollars back, because corporations love the cheap labor from overseas, you can bet that those jobs will stay right there; thank you very much.

Have a wonderful Friday.

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.