Gold Virtually Unchanged On Static Dollar

The Market Gage - Dillon Gage's Precious Metals Newsletter

No surprise that the price of gold is virtually unchanged this morning after seeing the dollar and Treasuries unchanged.

Overnight the Ten Yield Treasury yield got down to 2.054 percent and the price of Gold didn’t budge. Not a good sign for the longs, as at that level the price of gold should be trading much higher according to a prominent Wall Street Gold Trader.

“A rebound in equities and a steady dollar valuation should put the price of gold under some pressure today,” he said.

My technical friends who shared their market strategies this morning gave me this opinion, “There is strong resistance in the price of Gold at $1348 level in December.” Spot basis $1,343. They point out that since last September between the levels of $ 1,340 and $ 1,344 spot Gold failed to advance at those levels five times. So with the EFP at approximately five dollars, their trading strategy today will be to sell into any rally at the $ 1,348 level in the CME December futures contract. Obviously, if any significant news hits the wires a reevaluation of their trading strategy will be in order.

CBOE Volatility Index is heading south this morning as the street sees a glimmer of hope that some
form of tax reform is a possibility since the President said he will reach out to the Democrats to advance his agenda if the Republicans can’t get it done on their own.

China Creates Bump in the Road for Bitcoin Investors

Bitcoin sold off Monday after the news was released that China’s Central Bank said initial coin offerings were illegal. China’s Central Bank issued a strong regulatory message to stop all fundraising activity
in ICO’s. China is concerned that these transactions can “seriously disrupt the economic and financial order.”

ICO’s raise funds which in turn creates and sells new crypto tokens to investors.

China regulators said these ICO’s are “vulnerable to money laundering and terrorist financing risks due to the anonymous nature of the transactions.”

At this point I think an explanation is in order to explain the difference between an IPO and ICO. An IPO (initial purchase offering)is an regulated transaction as offering shares of stock to investors in a company. On the other hand, a ICO ( initial coin offering ) is an unregulated transaction by where a company attracts investors by issuing a cryptocurrencies to raise money for their projects. ICO participants are usually motivated by a profit potential if the project takes off and the tokens are worth more than the ICO price.

Tuesday, the Bank of Russia also issued a statement on cryptocurrencies. They said, “Operations with cryptocurrencies carry a high risks both during exchange operations, including due to sharp exchange rate fluctuations, and in the case of raising funds through the ICO (initial coin offering) a form of attracting citizens’ investments in the form of issuing and selling new cryptocurrency to investors (tokens).

Even with the warnings, these types of transactions continue to attract many investors looking to hit a home run in a short period of time. As more cryptocurrencies are offered, many expect that U.S. government intervention is right around the corner, BUT think again. With congress having a full plate of more important issues facing our nation, cryptocurrencies are a project to be dealt with at a later date.

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