Gold Hits Four Month High And Equities Open Much Lower

The Market Gage - Dillon Gage's Precious Metals Newsletter

Wall Street’s frustration with Washington’s gridlock gives gold a boost this morning. Equities to open much lower as retail investors scramble to put their stop loss orders in on the Dow Industrial’s open. Taking some profits off the table could be a wise move right now.

Last night when I was watching the action in the Far East, it was apparent that gold and silver would be opening stronger here in the States. The activity in the dollar was brisk, trading lower versus other world currencies. Currently the dollar index is trading at 98.89, down 88 basis points which helps the rally in gold.

Also giving gold a boost are the World’s Ten-Year Bond yields which are all lower on the day.

The first thing I did this morning was to check in with my financial advisors who indicated that they see a lot of sell orders appearing and their calls from clients are very active. I asked one advisor, who also trades commodities, if he expects that the gridlock in Washington will create a rotation out of equities and into the metals arena? And his response was, “It’s too early to tell, but at this time everyone knows the honeymoon is over. My sense is it will not be a total washout at least not just yet. Just some nervous longs selling out taking some profits.”

Wall Street gold day traders are still not convinced that the price of gold can continue higher. As I indicated last week, some are still hesitant in putting any large positions on the books as their concern continues to be what will be the next President Trump tweet to hit the wires and move the price of gold in an unexpected way.

I see their point, but the are many more important issues that need to addressed by Congress before this economy could be put back on track: the country’s massive deficit that is out of control, our country’s infrastructure (which bridge or tunnel will be the next to collapse due to fatigue?), and our entitlement programs (Social Security, Medicare, Medicaid). I’ll just mention the next thought, but in this case I already threw in the towel on escalating healthcare costs.

What a mess we are in and not one of our representatives has a clue of how or desire to straighten things out, taking the: “Let’s just stick together and vote as the party wants us to.” path. Gutless stance to take. At least try to do what you can to represent the folks who voted you in. Someone step up and cross party lines and make a statement that you are in it for the good of the American people before we all fall off a cliff.

So back to the street. With all due respect to my Wall Street Gold traders, I disagree with their thinking. Just look around you. The dollar is trading at a four-month low as the world looks at us just shaking their heads. Build up the military, fix the roads, entitlement costs increasing day by day and what was that? You want to reduce taxes? Some
chance that will work.

So if you are a long term investor with a view of the world outside your window, you will see that a purchase of physical gold or silver could be the winning investment in the long run.

I will join the rest of the world and just shake my head too. Good luck to us all.

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.