Right after the 8:30 jobs number was released, Gold was bid up as the dollar sold off and treasury yields headed south. But the rally was short lived. For an unexplained reason, as the price of Gold set new highs, heavy sell volume emerged pushing the yellow metal back into negative territory.
If you have been reading our most recent comments, we had indicated that there was strong resistance in March Silver at the $ 17.32 level. The high so far for this trading session was $ 17.325. I must acknowledge my technical gurus as once again they called it right.
Some Palladium supplies have found their way into the market place reducing the backwardation to minus 8 minus 4. PGM Traders indicate that they expect the rally to take a pause here, but the bias is still to the up side.
A 2017 / 2018 – A Market Comparison
It doesn’t happen very often when we see the Dow, the Nasdaq, the S&P and Gold have big gains in the same year.
In 2017, the Dow gained over 25 percent, the Nasdaq was up over 30 percent and the S&P had increased over 20 percent. And Gold increased by over 14 percent even with all the bad news like proposed higher interest rates and a booming stock market because of the President’s tax plan.
And no one can forget all the stories about cryptocurrencies and the amazing increase in the price of Palladium in 2017, up 60 percent.
So who out there thinks that these numbers can be duplicated in 2018?
First let’s look at the reasons the price of gold had a good 2017. There were three main factors:
- A year-over-year weaker US dollar, down over 14 percent
- A country with out of control debt and no one in Washington willing to address the issue
- And a fellow named Kim Jung In
The reason the Dow, Nasdaq and S&P had such a good year?:
- The proposed Corporate tax cuts from 35 to 21 percent. That’s the main reason for that rally, period.
With the tax bill now signed, one can be certain that Washington in 2018 will be receiving less tax income and our country’s debt will continue to spiral out of control in the years to come. We haven’t even scratched the surface with the cost of healthcare and infrastructure potentially exploding the country’s debt into deeper troubles. And the problems with North Korea will someday in the near future have to be resolved otherwise 2018 will look like no year ever.
We all read in the news that the North Korean dictator had his finger on the launching pad trigger all year firing missile after missile trying to impress the world. And it seems he did just that.
So where do we go from here and what will be the catalyst for all the markets in 2018?
First I expect the President will run out of patience with Iran and North Korea in 2018. He is as unpredictable as the weather and his North Korean counterpart is no different, possibly worse. Issues with Iran could come to a head also.
The only positive factor for a continued rally in the major markets will be the news on corporate
earnings. I expect that will be very positive for the equity markets for at least the first half of the year. After that, it’s anyone’s guess.
But if there is any, and I mean any, conflict, I expect it will derail the Equity markets and profit takers will be at the ready to head for the exits. After all, there is a lot of money siting on the table to be realized. And in the end, no matter what you read about cryptocurrencies and the Blockchain network, the only true safe haven will be once again be GOLD.
Have a wonderful Friday.
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.