Dollar Stronger on Fed Comments

The Market Gage - Dillon Gage's Precious Metals Newsletter

Friday’s comments by Federal Reserve Vice Chairman Stanley Fischer have strengthened the dollar and put pressure on the price of gold this morning.

He indicated that the U S economy has strengthen, with strong jobs data in the last three months. He had seemed to hedge his bet that rates will be on the table at the September meeting by saying, “the problem with this economy is there is so many numbers each day. You have to try and figure out what is the main thrust of what’s going on in the economy.”

St. Louis Fed President James Bullard said, “next month might be a good time to raise rates,” but refused to give a firm time table.

Since the precious metals markets are so dependent on the direction of interest rates, how can one make a smart decision on how to invest in this market after listening to these comments by the Fed participants?

A good indicator of what most people believe the direction of the gold market will be going forward is, to view the activity in the gold ETF market. If you look at a bar chart of the gold holdings, you can draw almost a straight line across the top indicating there has been very few additions or reductions in the holdings over the past few weeks.

It seems to me that it’s almost an impossible task for the FED to make a move now with the conflicting data released each week. I’m sure they have the right intentions in mind, but with more and more people in the media screaming, “let’s do something” it makes them reluctant
to raise rates unless they have compelling data to back them up.

So I have an idea. Since congress is on a well-deserved seven-week vacation, let’s all donate our air miles to the FED so that they can take a long break. This will give them a chance to clear their heads and take some pressure off. I believe a seven-week vacation is just what the doctor ordered. Then they will return a month before the election refreshed and ready to start again. Come to think of it, let’s send Donald and Hillary with them. I’m sure the country can use a vacation from them, too.

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.