The price of gold trying to recover this morning after taking a hit during the week. Helping to keep the price afloat are a slightly weaker dollar and softer Ten-Year Treasury Yields.
All the chatter from the Fed and its members this week have chased away bidders in the market, subsequently gold traded down to its lows of the most recent trading range.
My technical charting friends are telling me “not to worry.” They say as long as the price of gold stays above the $1,248 level we still see a recovery in the making.
All four metals in the ETF arena saw redemptions overnight, with the worst percentage going out of the Platinum ETF market as the action in the PGMs have been all Palladium.
Focus On Palladium
The issues in the Palladium market seem to be subsiding a bit as three month lease rates are now at 7 percent, down from 15 to 18 percent just a few days ago. Current EFP levels have also come in to minus ten at flat, down from minus 40 minus 20 just a few days ago. The recovery is not over as there still seems to be some blood in the water, but the market seems to be headed in the right direction.
Where’s all the money going?
The Financial Times reports that Exchange traded Equity funds took in more than 30 billion dollars this week, their strongest inflow of dollars seen this year.
They go on to report that in spite of a high-profile sell-off in technology shares, particularly among the so-called Faangs — Facebook, Amazon, Apple, Netflix and Google, all four of the major US indices hit new highs over the past week. The S&P 500, Nasdaq Composite and Russell 2000 reached intraday highs on Friday while the Dow Jones Industrial Average hit a fresh high on Wednesday. The equity market continues its rally. The SPDR S&P 500 ETF took in the largest amount this week.
So when any negative news hits our markets, like predicted higher interest rates in the future, money shifts to where the expected action is to be.
Now Across The Pond to Greece
Once again the Eurozone finance ministers have put together a deal to bail out Greece. July is right around the corner and this bailout package assures Greece’s creditors that the country will not default on this obligations. Pierre Moscovici, the EU’s economy commissioner said that the deal is essential for Greece and the stability of the EU.
This is Greece’s third bailout since the county’s economic crisis in 2010. They just keep throwing money at the situation hoping that things will get better. Some say this policy of just pouring money into the Greece problem is insane, and we all know the definition. Insanity: Doing the same thing over and over and expecting different results. A famous Terminator quote applies here: “I’ll be back”…(for more money later).
On To Washington
The hopes of deregulation and tax reform, in other words “Washington rhetoric,” continues to blow more air into the equity bubble. Not everyone is buying into that talk as we have seen most recently Ten Yield Bond Yields trade as low as 2.10 percent. Nonetheless the Dow continues its march higher on just promises the President’s economic agenda will be achieved.
On Wednesday, the Fed raised rates 25 basis points and have indicated that another rate hike is in the cards for 2017. They also indicated that they will begin to reduce their balance sheet later this year but didn’t indicate when that will start.
Earlier in the week the U. S. Treasury unveiled a plan to reverse the country’s financial regulatory framework,
which is exactly what the Treasury Secretary’s friends on Wall Street have been looking for. I can hear the Wall Street Executives saying, “three cheers for Mnuchin” (after all he is one of them), as some of these regulation changes can give them more freedom to speculate in the marketplace with hopes of increasing their bottom lines and padding their pockets. One thing this country doesn’t need is allowing traders to speculate with house money. After working on the street for 37 years and watching the action around me, I for one can tell you that this is recipe for disaster and one of the reasons we had the financial crisis in the first place.
Back in 1789, Ben Franklin wrote a letter that stated “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain except “Death and Taxes”. The Treasury secretary just added a third one!
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 advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.