China’s Purchasing Manager Index (PMI) was released overnight showing that in the month of December, factory activity contracted for the first time in 19 months. The number of 49.7 indicates a slowing Chinese economy and a weaker number than expected.
In turn, Global Equities are all lower this morning. The Dow S&P and Nasdaq suffered their worst annual declines last year since 2008.
The price of Gold continues its march higher, coming off an overnight high in spot at just below the $1,289 level. Prices of the other three metals acting like industrial metals as the global Equity markets sell off.
Currently, the Dollar Index is trading at 96.71, a high for the day, keeping the price of Gold from making a new high this morning. To start last year in 2018, the price of Gold was trading at $1,303. Right now, we are starting 2019 not too far from surpassing that number. I still believe the price of Gold will continue to trade higher in 2019 in a two-step forward, one-step back process, as the world’s geopolitical issues come center stage.
I don’t have the same confidence in the other three metals, as declining Global equity markets will have an impact on their prices. Sure, you could expect some increases in price of the other metals as the price of Gold continues to head higher, but nowhere near the extent of what the price of Gold can do in 2019.
A REALLY Bad Four Letter Word
As a kid my mother always told me that if I used any bad four letter word she’d put soap in my mouth.
Well, I think our politicians in Washington must have listened to their mothers too, by not using or addressing another bad four letter word that can be only described as something that can turn this country into a financial calamity, “DEBT.”
Sure, we are not the only ones with this kind of problem. The world has never had as much debt as it does right now, whether for housing, credit card debt or runaway government spending, global debt is now over 250 trillion dollars.
The biggest borrowers are the U.S, China, the Euro Zone and Japan. Two thirds of the household debt are held by these countries. Three fourths of the corporate debt and 80 percent of the government debt.
The concern is that our own government in the coming years is planning to borrow more and more money. According to the White House office of Management and Budget, over the next four fiscal years they are planning on having a deficit of 900 billion dollars or more. Just to give you an idea 110 billion dollars has being added per month to our government’s debt since the fiscal year end 2017.
And now some groups here in our country are pushing for even more government handouts.
So now with interest rates going up, the U.S. must convince the rest of the world that they should invest in our country so our government can continue to spend more and more money increasing our debt levels.
Maybe that’s the Fed’s “SECRET” agenda that explains why they are raising rates here.
Currently we are approaching 22 trillion dollars in debt.
In other words, a financial catastrophe is just around the corner.
When this disaster occurs where would you like your money to be?
Let me give you another four letter word, that, in this case you would be happy to say and no one’s going to put soap in your mouth.
The defense rests your honor.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. 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. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.