Gold Breaks Through Overnight On Soft Treasury Yields

The Market Gage - Dillon Gage's Precious Metals Newsletter

First quarter GDP numbers were released this morning at 8:30 EDT as the Commence Department revised their previous number from 0.7 to 1.2 percent. Consumer spending was stronger than initially thought, but later in this report you will see that the spending seems to be up on “borrowed money.”

Double and triple tops on most recent gold charts were broken thru overnight as Ten-Year Treasury yields softened below 2.25 percent.

The Wall Street gold traders I spoke to this morning covered these small short positions and are now flat, awaiting some news that give the price of gold a boost to the next level of resistance at the $1,271 area.

Across the pond – UK Economic news

First quarter Gross Domestic product in the UK grew by only 0.2 percent. Since the Brexit vote, a lower Pound Sterling attributed to higher costs of imports. Higher inflation has curbed consumer spending. The GDP report for the first quarter contained the worst performing results in over four years. Just to compare it to other countries’ first quarter results: France was almost as bad reporting, 0.3 percent GDP growth, followed by Japan at 0.5 percent, Germany at 0.6 percent and Spain at 0.8 percent. If you are keeping track, the Eurozone as a whole grew 0.5 in the first quarter.

Oil news anyone?

OPEC on Thursday agreed to extend their production cuts for nine months into 2018 as too much supply has effected the price and their bottom line. OPEC is also having to deal with the U.S.’s growing supply from the U.S. Shale industry, making America a producer to be reckoned with.

Back in the States:

Can President Trump’s economic plan really get the country growing at a rate of 3 to 4 percent as promised First quarter GDP initially came in at 0.7 percent, hardly a good start to 2017.

The country can’t wait any longer for an infrastructure bill, tax cuts, health care reform and deregulation for the economy to get going again.

Proposing budget cuts for Food Stamps and Medicaid is just a drop in the bucket on the budget agenda and only targets the most vulnerable, which looks to me like targets that can’t impact the politicians in any way. I’m sorry to say, but that’s how it looks to me.

The President’s plan to keep jobs here is first and foremost. Good jobs, not jobs at minimum wage just to keep the unemployment numbers favorable. More jobs in production of goods and services combined with new training in technology for American workers are desperately needed. You don’t have to look too far to see how many Americans have given up the hope of finding a good job, as the country’s labor force participation rate is still in the low 60s percentile.

And what everyone DOES NOT want to hear is that “America is borrowing again!”

A new report on Monday from the New York Federal Reserve Bank reveals that we haven’t learned our lesson from the last recession. Consumer debt has risen steadily for nearly three years. As of March 31st, America’s household debt balance was $12.7 trillion. Our nation’s consumer debt load, which is comprised primarily of mortgage debt, but also includes credit cards, student loans and auto loans, has passed the previous peak reached in 2008 before the last “scary” recession. When will it end? Or will the American consumer just keep borrowing until their lines are cut.

Interesting how a story this big is not reported on the business news channels. They are too involved in Washington politics. So as the days pass by, we continue to ignore the country’s debt as both parties continue their bickering. The question remains, where is America really headed?

Note to Ms. Yellen: please share this report with your staff, so that when you meet in June, your members will think twice about raising rates again. Ms. Yellen, is the Fed more concerned with feeding the big banks or with the keeping the average American from falling deeper in debt?

As an investor, after reading this report and realizing what shape the economy is really in, doesn’t an investment in physical Precious Metals make sense?

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 advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.