Precious Metals Modestly Lower This AM

The Market Gage - Dillon Gage's Precious Metals Newsletter

FED Watch.

Precious metal prices are modestly lower this morning as we await the decision from the FOMC meeting today at 2pm Eastern time.

We expect them to provide further guidance on when they expect to raise rates. Still the odds are very low that a rate hike will happen today or in July and a 30 percent chance in September. I expect the odds might change a bit after hearing what they have to say today.

I still stand my ground, as I did at the beginning of the year, that 2016 will not see a rate hike. Obviously, the first quarter GDP numbers and the most recent jobs numbers take away any chance of a rate hike. It’s still my belief that the reason more than half of the FED presidents wanted a rate hike is to have an ability to cut rates in the event of a global economic crisis. At the current levels, a crisis can only turn rates into negative territory, something we all know is a last resort decision for the Fed.

A threat of a rate hike this year is still on the minds of many Wall Street Gold Traders and until they get clarity from the Fed that a rate hike is out of the question a “STRONG” gold rally is unlikely. ( Unless the UK leaves the EU and that event has the potential to cause a big move in the price of gold)

The Brexit vote is just a week away and you can be certain that the FED will be watching this closely. A report released today gives the “leave” vote a 7 point advantage over the “stay” vote. The issue of immigration is the main topic of concert for most. If they decide to leave the EU it will be done over a two-year negotiation period with the European Union and I expect the terms of the separation will not be amicable.

To simply look at what kind of impact this will have in the remaining 27 countries of the EU, one would just have to see where the economic strength will come from, its just Germany and France. The other 25 nations have their own problems to contend with and they all can’t look for the big two for help. Most EU economists feel the migrant crisis will not have a major impact on the nations’ economies, I for one believe it’s way too early to tell as more and move make the move into Europe.

One last bit of information for my article today is to report that the “ETF BULL” investor continues to dig in and we see the Gold and Silver ETF funds set a new high for in-holdings in 2016.

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.