Gold Under Pressure From Many Fronts This Morning

The Market Gage - Dillon Gage's Precious Metals Newsletter

Gold under pressure from many fronts this morning as we see continued outflows of Gold ETF and a call for a new record high in the Dow Industrial average.

Also weighing on the price of gold this morning is the report from the CFTC showing the Net Long Fund Position in gold dropped for the third straight week now standing at 151,570 contracts, its lowest level since March.

So what this indicates to me is that the majority of short term speculators have exited the gold market. As I indicated before in my comments, I view the folks that trade the Gold ETF products as “speculators” and not investors and for the most part they are short term players. I view folks who buy the physical products as investors who tend to hold the coins or bars for a longer period of time.

Commodity hedge fund players can be categorized as speculators with virtually the same mind set as the ETF participant. This is confirmed by the CFTC report showing a strong exiting strategy as the price of gold declines.

Financial advisors loving the equity markets as the Dow is headed for a new all-time high this morning.

Here is a significant statistic you can share with your clients. With all the talk, hype, call it what you want, on how well the equity markets are doing, seemingly setting new highs every day, as of this morning the Dow is up over twelve percent on the year and the S&P is up over nine 9 percent for the year. And Gold which is getting battered, bad press, seeing every one running in the other direction from gold to equities, is UP FROM the first of this year “NINE PERCENT.”

So my question to all of you as investors and speculators is, would you rather be getting into a market at possibly the highs or would you rather buy into a market that was up double digits earlier in the year and has been given up by everyone with a lot of upside potential????

It will be interesting to see where the price of gold settles down and at what level the equities run out of gas.

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