Fed Chair Yellen Back on the Hill Today

The Market Gage - Dillon Gage's Precious Metals Newsletter

Fed Chairwomen Janet Yellen is back on the hill today for her second day of testimony. She’s taking a hawkish stance on future rate hikes and putting pressure on the price of gold this morning. It seems that the future track of the price of gold is in her hands. Yesterday she indicated that it would be unwise to wait too long before raising rates. The possibility of multiple rate hikes this year is driving the dollar higher which in turn hurting the price of gold.

Some Wall Street Gold traders I spoke with are indicating that “IF” the 100-day moving average at $1,214.25 (spot) is violated they will reverse their long position and play this market from the short side. I expect if that happens, the selling will accelerate the decline in the price as we head back and test the $1,200 dollar level again.

BUT one can’t give up on gold yet. Yes, we are feeling the pressure and are extremely vulnerable to any negative news, but the price of gold has held up pretty well even with the equity markets and the S&P setting new all-time highs almost every day. Also the inflows by commodity funds into the Gold ETFs has helped the price from trading lower. What do they know that we don’t?

We have all heard the saying “talk is cheap,” well I’m still waiting for a tax plan that everyone will be extremely happy with, a wonderful the new Health Care Program and the data on how well the economy is doing. But until then we need to clear out all the “smoke and mirrors” and put your money where your mouth is, because if this doesn’t materialize sometime soon, the Trump honeymoon rally in equities will run out of gas and a significant correction will be right around the corner.

And yes even with the price of gold just hanging around taking slaps to the face each day, it will once again be the safe haven investment to turn to.

You could say I’m a little impatient. How about you? My wife says I watch too much business news and it’s effecting my thinking. Maybe so, but I’m addicted. I’m like a soap opera junkie. I just can’t help myself. That’s why a short vacation is in order. I will be back in the office on Wednesday next week. Until then.

All the best and have a wonderful Wednesday.

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.