We start the week seeing little movement in the U.S. Dollar and bond prices across the globe. Equity markets continue their up one day, down one day posture, no wonder the price of Gold and Silver continue to be range bound.
Refiners are still pumping out one-thousand ounce bars from refining lots, finding it difficult to place them in the market place. Mints are holding significant inventory in blanks hoping that one day they can put them to good use.
Dealers are still holding large inventories in the secondary market material they purchased and they too are hoping for a chance to put them back into action.
Overall, the market awaits nervously for the next tweet or geo-political story that can turn the markets upside down.
Corporate earnings reporting should bring a little calm to the equity markets, but for sure, in the back of every trader and investor’s mind is: what in the world will be the next story to cause havoc in the marketplace?
War of the Words
On Friday, Treasury Secretary Steve Mnuchin said that the President is ready to go on with a trade war with China if necessary.
Then Fed Chairman said we will have to wait and see if and what effect it would have on the economy. So he stood pat and said gradual rates hikes are still in the cards.
I find it interesting that the Fed is not reacting to current events and seems to want to stay with their anticipated outlook. That’s a dangerous stance because in the end – as always – they will wind up being reactive rather than proactive. So if the economy slows, as I expect it will, the anticipated rate hikes will just not materialize.
Sure, first quarter earnings should help the equity markets in the weeks ahead, but will it be enough to grow the economy and stop the selloff or will trade tariffs stop corporations in their tracks from opening their pocketbooks to capital investments?
After all the first quarter earnings are published, the street will then focus on first quarter GDP, a number everyone on the street and the Fed will be watching closely.
In the meantime, the price of Gold should remain range bound until the corporate earnings and the GDP numbers are revealed. As always, keeping an eye on the activity in the dollar index and the CBOE VIX Index is highly recommended.
Have a wonderful Monday.
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.