Jobs Report Crushes Gold and Silver

The Market Gage - Dillon Gage's Precious Metals Newsletter

A huge rebound in the June Job numbers over the dismal report in May immediately crushes the price of Gold and Silver. 287,000 jobs created in June gives the Fed ammunition to bring rate hikes back to the table. This one bit of data is very important to the FED as the chairlady indicated May’s number was just an aberration. This one number doesn’t change the bullish sentiment of the market and in my opinion, as well as some of my Wall street gold trader friends, it has created a buying opportunity to participate in buying the yellow metal at more attractive levels.

I believe the gold and silver market overreacted to this one piece of data. I can’t deny the fact that the number was very impressive, but one piece of data should not have created such a selloff. As I was watching the activity in the futures market right after the number was released, it appeared to me that the nervous longs had stops in place to protect their profits.

This one number doesn’t change the fact the UK and all of the EU community continues to see a strong demand for the physical metal
and as more and more news comes out of the Brexit referendum, more and more individuals will see the need to have gold and silver in a balanced portfolio.

Still we can’t forget that the European Central Bank and the Bank of Japan have ventured into negative interest rate territory this year in hopes of stimulating their economies. Obviously it isn’t working as we see negative interest rates on sovereign bond exposure increase day after day. On a “what does it matter comment,” we see a huge increase in purchases of safes in Japan as more and more people lose faith in the banking system.

What does this all mean? It means that as good as this jobs number was today the FED cannot ignore what is happening around the world and would be hard pressed in my opinion to raise rates anytime soon. I expect after the hard selloff, a recovery in the gold price will be in order.

Have a wonderful Friday.

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.