Today all eyes on the Dow 20,000 level as all four metals taking it on the chin. What a difference a day makes, Palladium yesterday reaching a new high for 2017 and today we see Palladium doing a complete reversal down $40 dollars at the time of this report. Both Gold and Silver breaking thru key support levels.
As equities take all the headlines, profit taking and new short positions by Wall Street gold traders are taking hold. Most gold traders I spoke with this morning see this as a temporary decline in precious metal prices but they also said they will be trading the trend until it stops setting up short positions across the board.
Meanwhile, the question that is on many minds around the world is: Will President Trump’s stance on “America first” be the beginning of a trade war with the rest of the world? (Quickly followed in our industry with the question: And how would this affect gold?)
One word comes to mind with this approach and its “protectionism.” The word “PROTECTIONISM” is defined as the theory or practice of shielding a countries domestic industries from foreign competition by taxing imports.
The question on my mind, will this approach isolate the U S from the rest of the world from trading with us? Ok, I get it on job creation, sounds like a solid plan, but forcing companies to produce products here in my mind has the word “inflation” all over it.
President Trump has been saying all along that the dollar is too strong. As a person in the Gold industry, that’s music to my ears: Lower dollar, higher gold prices.
The president is talking about lowering corporate taxes to 15 to 20 percent and helping middleclass America with a tax break. Most everyone’s cheering, they like the idea, but many were cheering Bernie Sanders with his socialistic platform too.
So once again I’m screaming: what about our country’s debt? Is anyone listening? Is this the beginning of cutting Social Security benefits and eliminating Medicare as some politicians have called for? What will be the cost to America s tax payers to replace Obama Care? How can the country survive with Trump’s plan to spend billions on infrastructure. Where is all the money coming from?
Both a Socialist policy and a protectionist policy has to be paid by someone. In the end it’s the tax payer that will be left holding the bag.
Let’s not forget why these companies shipped job overseas in the first place. Cheaper labor, period! With many people demanding higher wages, doesn’t this increase costs to do business in the U.S. and eliminate jobs? Am I missing something?
And now we come to these policies and…gold.
The bottom line is, if the president continues this America First policy, it looks like the dollar is destined to head south in a big way and gold will be the benefactor of the move. So in turn, I expect the Fed to be all talk and no action as they were in 2016 giving the price of gold a strong foundation for higher prices this year. Don’t forget, according to the CME FED Fund watch tool prediction, there isn’t one Fed meeting in 2017 that has a probability of a rate hike over 47 percent. Just think, if everything proposed by this administration would stimulate the economy don’t you think the odds of future rate hikes would be much higher?
Believe me, this is not a political comment nor do I want to choose sides on this issue. It’s just my attempt to bring out the facts and I leave it up to you to make your own assessment of things to come and how it will impact our markets.
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.