Gold Traders Taken on Trip to the Emerald City

Remember the movie The Wizard of Oz, when Dorothy and her crew were in Emerald City; the Wizard tried to intimidate them using smoke and mirrors? Then Toto pulled the curtain away and the Wizard said, “Pay no attention to the man behind the curtain.”

Well today, another Fed chairman emerges from behind the curtain to add his two cents: Richmond Fed Chairman Jeffery Lacker. I guess he felt left out, or Janet just told him it’s his turn to comment on future Fed rate hikes.

Lacker said “Estimates of the economy so-called natural real rate of interest, the rate when economists think there will be normal economic growth rates and stable inflation, is at or just above zero…This perspective would bolster the case for raising the federal funds target rate.”

So, as Janet Yellen pulls away the curtain once again in an attempt to influence the price of gold, let’s see how she is doing. Oh look, at the time of this report, gold is up $22 dollars at $1,245. So Janet, I don’t think anyone out there believes you anymore. Why? Let me give some reasons.

  1. Looking at a slightly stronger dollar index today, that should put a little pressure on gold, right? Nope we are up.
  2. Gold ETFs shares are up again today at approximately 55 million ounces. Up every day for over
    a month now. FED chatter hasn’t dented that momentum.
  3. How about this? Recently on the CME, we hit a record high open interest in the gold futures at 440,000 contracts.
  4. Strong CME GOLD option activity.

Janet, I hope I made a strong case. When the weather turns a little warmer, I suggest a bocce tournament or some tennis lessons for the staff during trading hours. This will clear the smoke and make your whole staff feel a whole lot better.

Thanks for listening.

Have a wonderful Wednesday.

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