Palladium and Gold in 2019

Tightening supplies still the main driver of the increase in the Palladium price

Tightening supplies still the main driver of the increase in the Palladium price. Today’s EFP is quoted at minus 75 minus 65, steadying a bit, but still showing the strong continuing need for spot Palladium.

Open interest in the most active month on the exchange is just over 23,000 contracts, small in comparison to the other 3 metals.

Car companies and Hedge Funds seem to be the main players in this arena. For the few investors willing to get involved in this tiny market, you must be aware that the potential for a dramatic move to the downside is a possibility. One news story or a Hedge Fund liquidating their holdings can cause such a move, but until the EFP changes direction, a strong selloff is unlikely. Nonetheless, some Wall Street Traders who trade this market on a proprietary basis for their firms claim a correction in the price is long overdue.

Declining global auto sales can have an impact going forward. In China, monthly sales have declined for five consecutive months. Declining consumer confidence in the Chinese economy is having an impact on car sales as well as the continued uncertainties in the outcome of U.S. trade talks with China.

Total car sales in China were down almost 2 percent so far this year. It appears that this will be the first annual contraction in more than twenty years.

Gold – Today and into 2019

A weakening U.S. Dollar is continuing to fuel higher Gold prices. At the time of this report (early Friday morning) the Dollar index was at its overnight low of 96.19, heading towards the next level of support at 95.98.

Crazy volatility in the Equity Markets are moving investors into the Gold market, as there are some that just cannot stand to watch their investments lose money.

Going into 2019, the price of Gold should benefit from Geopolitical risks and a softening U.S. Dollar. I expect physical demand to increase exponentially, as investors watch the U.S. debt explode and the costs of entitlements get totally out of hand as our politicians continue to ignore all the warning signs.

Have a wonderful Friday and a healthy, prosperous New Year to you all.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. 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. 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.