Gold Under Pressure from Far East Selling

The Market Gage - Dillon Gage's Precious Metals Newsletter

Far East selling overnight brings the price of gold to a four month low. In the past two weeks, higher global bond yields have put a lot of pressure on the price of gold. Global bond yields are to be watched closely as they are controlling the direction of the gold market.

Gold ETF holdings have declined every day from June 29th, as investors see little or no upside potential in the price. Silver ETFs holdings have been very steady for the same period, even with the price of silver declining.

Dealers are seeing more buying action in the silver market than in the gold market as some investors believe that the silver market is way oversold here.

Janet Yellen to address congress Wednesday and Thursday this week as her board members stand hard with hawkish comments, not helping the price of gold. The Wall Street gold traders I spoke with this morning have no interest in taking on any positions at this time. Most like to play the market from the long side and with the market showing no signs of any sustained rally, off to the Hamptons they go.

Universal basic income anyone?

Over the past 30 years or so, global technology has eliminated millions of jobs. It is predicted that in the next 15 years, income for the wealthy will increase while the incomes of the bottom will stagnate or decline.

So how do we close that gap?

Basic income. It’s not a new idea. It started in the Nixon years but was immediately shot down in congress. A person we all know who has a platform to resurrect this idea is Facebook’s Mark Zuckerberg.

For those who are not familiar with the term, basic income is a periodic cash payment unconditionally delivered to all qualified applicants on an individual basis, without a means test or work requirement.

Basic income experiments are underway in a number of countries, including Canada, Finland and Kenya.

In Ontario, Canada, they just started a pilot program that provides 4,000 citizens with unconditional income of about $12.600 per year. Applicants must be between the ages of 18 and 64 and living on a limited income.

Just a few days ago, Germany’s northern-most state declared they are dead set on testing out this controversial form of social security, whereby every citizen receives a flat monthly sum of money from the state, whether they are employed or not.

Are you scratching your head trying to figure out what the heck is going on here?

I am!

The idea has been sparked by income stagnation experienced by the middle class and working poor of this country, and the slow growth of the U.S. economy.

This idea finds support across America, when the middle class just can’t keep their heads above water. Liberals claim it’s a way to preserve the middle class when most middle class jobs no longer pay enough. Some conservatives say it’s a way to reduce welfare programs.

Still confused?

Is everyone going crazy with this basic income? How will we pay for it? AND what happened to the work ethic this country was founded on? Is this country headed for a socialist government?

A movement is developing to pay for this by calling on congress to impose modest transaction fees on trades of stocks, bonds and derivative products that could generate over 300 billion per year. I guess then distribute the funds to the applicants to help them maintain middle income status.

Before starting my research on this topic I thought this was a Mark Zuckerberg platform to start his campaign for President in 2020. It just might be, after seeing what Donald Trump was able to accomplish why not Zuckerburg? He has plenty of money to support a campaign and he has the attention of many millenniums who would support this platform in a big way, so he might be starting the process by getting as many young people to think there is a free ride out there if they support this crazy idea. But as you can see all it is, is a way to distribute wealth by taxing the middle to upper class of this country going the route of Bernie Sanders looking for freebies across the board.

Just think this as a possibility. Free health care. Free Collage tuition and a basic income stipend to cover all other expenses. Great place America.

As scary as this sounds, if Mark Zuckerberg continues with the promise to help get this idea off the ground, he surely has the platform to do it.

All I can say at this point is stay tuned.

Have a wonderful Monday.

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.