Gold and Silver ETF Experiencing Strong Redemptions

The Market Gage - Dillon Gage's Precious Metals Newsletter

After making new highs for the year in the Gold ETF on Wednesday November 9th and new all-time highs in the Silver ETF on Tuesday October 25th; we witness for the seventh straight day strong redemptions in both metals.

Financial advisors report many retail investors continue to cash in their ETF positions to buy equities.

What is very encouraging, even with the strong sell off in the ETFs, is that the price of gold seems to be shrugging off the physical selling necessary to sell off the ETF holdings.

The price of Gold and Silver are back above the critical support levels violated last week at $1,212.00 in the December contract and $16.58 in the December silver contract.

Base metals are helping our cause as copper is up 2 percent this morning and the recent rally in the dollar seems to be stalling. At the time of this report the dollar index is trading at 100.95 after reaching a high last week at 101.49.

Some of the Wall Street Gold traders I spoke with this morning with an appetite for risk are selling into any rally in both gold and silver, believing this rally will not be here for long. They believe the momentum in a stronger dollar is just pausing here and will continue higher in the coming days putting pressure on the gold price.

I think the only bit of news that could bring a strong rally in the price of gold is if the FED does nothing in December. With the CME FED Watch tool at 95.4 percent, a chance of a rate hike in December the market is almost a given, but if the FED does not deliver, I expect the Gold market will see an impressive rally. Don’t forget what the chairperson said last week, “a rate hike is expected relatively soon.” The market is interpreting that as December, I cannot imagine how the markets will react if it doesn’t happen.

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.