One-Year High Hit By Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

Gold hits a one-year high after U.S. Ten-year Treasury yields approach the 2 percent level. The dollar also heading in the same direction trading as low as 91.01 overnight.

After hitting these lows, both products have recovered a bit, bringing the price of Gold off the highs of $1,362.40 in the December CME futures contract.

It seems that we are beginning to see a rotation out of equities and into other products, as last week it was reported that over 1.1 billion dollars found a new home. If this continues, it is very encouraging for the metals market, and will bring the price of Gold to new highs in the coming weeks ahead.


Where are we going with this?

Wednesday, the Washington Post reported that the President and Chuck Schumer shook hands and created a “gentlemen’s agreement” to permanently scrap the debt ceiling.

Why is the president reaching out to his archenemies in order to get his agenda thru? The reason is he knows he can’t get enough votes on the Republican side, so why not strike a deal with the Democrats? So in the end, he wins and looks good (and we all know the size of his ego), but the country in the end loses big time.

Here’s why. According to the American Tax Foundation, the Trump tax plan will add 6 TRILLION dollars to the country’s debt in the next ten years. So how can he and Mnuchin run the government in the next three and a half years years with every three months threatening another government shutdown because they reached the debt ceiling again?

And there are people still out there that believe the price of Gold still has downside potential? Really?

As soon as this story was released the Ten Year Treasury Yield got down to 2.0325 percent . In turn, the December price of Gold rallied back over the $ 1350 level again.

So now the debt ceiling discussions now put off three months till the middle of December
in order to get funds out to the folks in Texas.

The Fed

They are at it again. Yesterday, Cleveland’s Fed President Loretta Mester said, the Fed shouldn’t wait until inflation hits two percent before raising rates.

The Street believes that the Fed will not raise rates till 2018 and that Ms. Mester said, “that would be a mistake.” Doves, Hawks on the Fed board all chirping between meetings have no purpose because in the end their opinions on a rate hike will offset each other and there will be no rate increase, so why bother saying anything between meetings. It only disrupts the markets. My hope is that whoever replaces the Chairwoman when her term is over in February next year will impose a gag order on all board members and let the minutes from the meetings speak for themselves.

Oh by the way, do you think if I call my credit card company and ask for an unlimited credit line they would approve it? So why should the American people agree once again to put our problems on the next generation?

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