A lot of news to share with you this morning.
All eyes on the Fed today with the results on interest rates to be revealed at 2pm ET. The street expecting a .25 basis rate hike. The CME Watch tool has the odds of a rate hike at 90.8 percent this morning. All will be listening to the Chairwoman’s comments at the press conference after the announcement. Her view on the economy and how many more rate hikes she expects this year are on the minds of all traders and investors.
It would be interesting to hear if there were any voting Fed members who wanted to raise rates 50 basis points at this meeting to show the world they are ahead of the curve. Any surprises will have a profound effect on all the global markets.
Yesterday Theresa May’s Brexit bill received approval in the Houses of Parliament, clearing the way for the Prime Minister to set into motion Article 50 by month’s end. Article 50 of the Treaty of Lisbon gives any EU member the right to leave the Union. Article 50 explains in detail the steps on how to proceed. Legally, before the treaty was signed in 2007, there was no way to accomplish this feat. Article 50 gives the exiting country two years to negotiate an exit agreement. Any deal must be approved by a qualified majority of EU Member states. Once started, it cannot be stopped except by unanimous consent of all member states. It will be very interesting to see how this process pans out, possibly setting the stage for other countries down the road to do the same.
Speaking of exiting the EU. Immense interest from all around the globe today in the Netherlands elections. Today, the Dutch voters elect their new government. Controversial candidate Geert Wilders, leader of the Freedom Party who has been losing some ground in recent weeks, is still confident in a victory. His platform has raised many eyebrows as he shared his anti-Muslim comments and aims including no more immigrants from Muslim countries and withdrawal of all residence permits already granted to asylum seekers. He also wants the Netherlands to reclaim their independence, setting the stage for his country to be the next to exit the EU.
One might view current Netherlands Prime Minister Mark Rutte as a little more levelheaded than the extreme views exhibited by his rival. He recently declared in a full page newsletter that “we have to actively defend our values against people who refuse to integrate or act antisocially. Behave normally or go away.” But at the same time said, “the solution is not to tar people with the same brush.” Some recent pools give the election to Rutte, but like the last Presidential polls here in the States they can be very misleading.
Why as a gold and silver investor should you care about the Dutch elections? It’s pretty simple, if Geert Wilders wins, there is a good possibility of another country leaving the EU. Let’s not forget the upcoming French election where Ms. LE Pen said that if elected, she will also put thru a referendum for France to leave the EU within six months. This will leave Germany holding the bag for the fallout for all the countries like Greece, Italy, Portugal and Spain that are just hanging around looking for a bailout. In my opinion, a breakup of the European Union could have a tremendous impact on the price of gold. One just has to remember the action in the gold market during the Brexit vote.
Back to our shores. The price of Gold and Silver range bound this morning ahead of the Fed decision today. Some of the Wall Street Gold Traders I spoke with this morning indicated that they will be ready and able to react to any surprising comments delivered by the Fed. Algorithm programs are at the ready to interpret the news that’s released today and you can be sure that any surprises will move the markets in a blink of an eye.
The financial advisors I spoke with continue to say the Equity investor is “all in” the equity markets with their cash, but they did share that the questions of late have increased dramatically and retail clients are placing their stop loss orders ahead of the Fed decision today.
For the second day in a row, the ETF GOLD funds saw inflows. For the last two days almost 300,000 ounces were added.
I hope all my readers will be tuning in at 2pm ET today for the Fed decision and watching the results of the Dutch election.
Any surprises, we will immediately send out the news in a “FLASH GAGE.”
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.