Palladium Blows Past Gold

Palladium Blows Past Gold

The spot price of Palladium has blown past the spot price of Gold reaching an all-time high in spot at $1,255. Supply concerns still dominate the marketplace attracting more Hedge Fund interest in this small but active market.

Currently, the Palladium market continues to be in a steep backwardation as the current EFP is quoted minus 60 minus 45. Meaning that the price of spot Palladium is trading anywhere from 45 dollars to 60 dollars over the most active futures month on the Exchange, which is March.

The price of Gold under a little pressure this morning mainly due to some profit taking and a need to liquidate some Gold holdings to cover margin calls in the Equity arena.

Explaining the yield curve and why equities react as they do

The yield curve is a predictive measure of future economic activity which is studied in detail at the Fed comparing the Ten-year note to the three-month T–Bill. When that flattens or inverts you have an
average of nine to fifteen months before a recession could occur with the average signal time to be 12 months.

The markets perceive this as a yellow caution sign and doesn’t necessarily mean a recession is imminent. These indicators create strong bear markets in stocks usually a year before a recession develops.

If the yield curve does flatten or invert the Fed has a year to prepare, but in the stock market the initial reaction will be more profound.

Hence to sell off yesterday in the Equity market.

Months ago we shared in “The Market Gage” the consequences of an inverted yield curve and the expected impact in the Equity markets and how we expect it will influence the price of Gold, We are now seeing that develop.

In the end the market will indicate what’s coming down the pike.

Have a wonderful Wednesday.

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.