Lower gold and silver prices seen in overnight Asian trading after seeing the dollar strengthen. Since then the dollar reversed course and now is in negative territory, but the price of gold seems to be ignoring the decline in the dollar and is sticking right in the middle of the overnight
Some Wall Street Gold traders I spoke with morning continue to hold their short positions in both gold and silver as they believe the trend is their friend. They indicated that they expect the trend will be short lived, so as soon as we bottom out they will put their stop loss positions into place.
The gold ETF outflows continue for the fourth day in a row. This seems to be fund liquidation as I could not find any financial advisor that had any retail ETF liquidations to speak of.
As all eyes seem to be on what the president is proposing every day I wanted to share a personal story and equate it to what is going on in Washington.
I remember not too long ago when my daughter started college and applied for a credit card to use to buy books and food at school. Sure enough, since she didn’t have any previous credit she was turned down. So like any good (but not so smart dad) I co-signed the application and we got her a card. Like any normal college student, it didn’t take long for her to build up a balance of $5,000 and hit her credit limit. Since she is daddy’s little girl and couldn’t be left without a way to eat, we applied for a higher credit limit. One never knows what expenses might arise, poor baby.
The reason I’m sharing this story with you is the exact same thing is being proposed by the Trump
administration. It’s called “expenditures.” The definition of expenditures is “the action of spending funds.” Sound familiar?
So, let’s look at the president’s planned expenditures and how dangerous they could become.
What will the cost be for the planned infrastructure proposal? Democrats say one trillion. The President didn’t comment, but who can argue that it isn’t going to be cheap. Next “THE WALL.” Senate Majority Leader Mitch McConnell said he estimates the cost for the American taxpayer is between 12 and 15 billion dollars. Does anyone really believe that Mexico is going to pay for it? Next “Obama Care.” I don’t think anyone knows what the cost to revamp this insurance plan will be for the American taxpayer. And what will be the cost for each state once the new plan is put into place? Billions, trillions, who knows?
Now let’s look at another type of expenditure: tax cuts…both corporate and individual. I’m sure you are asking yourself how are tax cuts an expenditure? Well if they change the tax code that’s less money coming into the nation’s coffers. So I consider that plan a cost and an expenditure.
So let’s tie this all together. Is President Trump’s plan any different than my daughter’s credit card plan? In the end, Daddy’s on the hook and will end up paying the bill. And yes in the end, “you” the tax payer will be paying the bill.
All of what I shared with you this morning will, over the long haul, have a direct impact on the price of gold. It won’t be today or maybe tomorrow but it’s around the corner. Runaway government spending always has an impact on the price of gold.
I have only one question left if I may be so bold: Mister President, “What’s in “YOUR” wallet?
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.