Durable Goods Report Crushes Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

The 8:30 am durable goods figure came in at much better than expected at 4.8 percent after the street was looking for a 1.5 percent increase.

Immediately gold sold off from the $1,207 area in the December contract to a low of $1188.30. One happy Wall Street trader told me that this strong number takes out the chance of a one and done rate hike in the December. Previously the CME rate hike watch tool for future rate hikes in 2017 was relatively flat. Now looking at the rate curve, we see March with a 20 percent chance of the next rate hike.

The lack of liquidity in gold and silver below the previous support levels helped fuel the decline.

Also fueling the selloff is the stronger dollar. At the time of this report the dollar index is trading at the highs of the day at $101.76. One Wall street economist said he wouldn’t be surprised to see the dollar’s strength continue to the 107-108 area. I thought to myself, if he is correct we could be looking at $1,050 gold and $12.50 silver. I sure hope this guy is way off. I can’t comment on his prior predictions, I don’t have a track record on him.

If anyone is looking for support in the price of gold, my tech guys will refer you to October 15th of last year when we had a high spot price of $1,191. They tell me we have to hold that price today or lower we go.

Seems with all the increases in interest rates on the horizon one would expect this sell off to continue. I’m looking far and wide to dispute that last statement but with everyone cashing in ETF holdings in gold and silver and the crazy equity market loving the new administration, I don’t see anything that could support a rally in gold or silver.

I expect this sell off to be a little over done todayas Thanksgiving is tomorrow and a lot of traders have extended their 4-day holiday, because as one guy put it, “there is not a lot going on.” Well, he better call in because the activity in metal is brisk this morning.

Enough about the markets as we all take time off to give thanks for our families and friends, our job, and our great country. Whenever I see a service man or woman in uniform I make sure I go over to them and say, “Thank you for your service.” I hope you all will do the same.

And one more thing. We at Dillon Gage never take for granted our relationships with our clients. We appreciate your business and thank you for your support. In my 40 years in the business, I like to think I have no clients, none…only friends, as I know if we become friends we both will look out for each other knowing we will do whatever it takes to make us both successful.

On behalf of all the folks at Dillon Gage we want to wish you all a very happy Thanksgiving.

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.