Gold Hits Six Week High

The Market Gage - Dillon Gage's Precious Metals Newsletter

A good start to the week as gold reaches a six week high. What makes it more impressive is the fact that the price of gold is higher today even with a stronger dollar and higher treasury yields.

Overnight over 206,000 ounces were added to the Gold ETF helping support additional gains.

Overall, without any significant news, I expect some profit taking in gold today, keeping the price of the June contract below the highs of the day reached earlier this morning at the $1,282 level. But we still see the price continuing higher at a two steps forward, one step back kind of market appreciation.

Over the pond:

As the Euro zone continues to grow in 2017 at a pace twice as fast as we are here in the states there are some shining lights that deserve attention.

Portugal, a country that a while back was headed in the same direction as Greece and Italy (just existing as a bailout country), has turned things around. Just two weeks ago, Portugal announced that it has reached a milestone as they were no longer in breach of the EU budget rules.

Portugal’s growth has increased and unemployment is at an 8 year low. The country’s budget deficit fell to 2 percent of GDP last year, well below the limit of 3 percent set by the European commission.

Only Greece, Spain and France are currently in breach of the EU’s budget rules.

So it seems like the sun is beginning to shine for the countries in the European Union and not so much here on our side of the pond.

So let’s open the window on the U.S.

Washington back to work today, will anything change?

Let’s call it like we see it. The Trump administration
wants tax reform, a simpler tax code if you will, but in reality a simpler tax code means eliminating some tax benefits that many tax payers have been accustomed to. The question remains, how do you develop a plan that both the Republicans and Democrats can agree on? With the Republicans controlling both houses one would think there would be a plan in place already.

Some on the Hill are calling for a revenue neutral plan. Good luck on that idea. Some are calling for a boarder tax. Some are calling for a across the board entitlement cuts. That idea is political suicide. And the Street is calling for corporate tax reform so the stock market can continue its rally.

There seems to be many plans or suggestions that encompass so many aspects of the tax code that in the end it will be impossible to have an across the board agreement.

So what does the future hold? It’s like global warming. Whether you attribute carbon emissions as the reason the glaziers are melting and the sea is rising or you don’t, the bottom line is unless something changes drastically the sea and our country’s debt will keep rising in the future.

In the end, when reality sets in and the world realizes that this problem cannot be corrected because the United States law makers do not have the political will to make these unpopular changes, I expect gold will be the benefactor of such policy.

The seas are truly rising and so will be the price of gold. The boat has already left the dock. There are still some good seats available.

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