Yesterday, the President’s comments left all the currency traders and the Gold traders scratching their heads. The price of Gold was enjoying a healthy sustained rally after the Treasury Secretary Steve Mnuchin indicated that a weak dollar was in the best interests of our economy.
That same day White House Press Secretary Sarah Sanders said, “the President wants the dollar to be seen as a floating currency, after all the dollar is the world’s reserve currency.”
As I indicated in yesterday’s comment, since the President took office, the U.S. dollar has been heading south. Last year in January, the dollar index was trading close to the 104 level and as of yesterday it was trading at a three year low, near the 88 figure.
So after listening to both the Treasury Secretary and the White House Press Secretary, the whole world was expecting this trend to continue. Then out of left field while doing an interview with CNBC news anchor Joe Kernen at the World Business Summit in Davos, the President said, “The Dollar is going to get stronger and ultimately I want to see a strong Dollar,” claiming the Treasury Secretary was misinformed.
Right after he made this statement, the U.S. dollar rallied and the price of Gold took it on the chin. Many Wall Street traders were extremely angry with his comments as they were forced to cover their positions and re-evaluate their trading strategies.
At the time of this report, the dollar index is trading lower at 89.17, but for those who had positions yesterday, especially in Gold, the damage has already been done. Some of the traders I spoke with this morning said they still agree with the Treasury Secretary that a weaker dollar is best for manufacturing and creating jobs for the American worker and believe that the President was just boasting as he usually does when in front of the camera.
So we all brush off the news and start from scratch.
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.