Stronger Dollar Keeping Gold Capped This Morning

The Market Gage - Dillon Gage's Precious Metals Newsletter

A stronger dollar and higher treasury yields are keeping a cap on the price of gold this morning.

It seems to be intermission time in the war of words between President Trump and Kim Jung Un, so many of the Wall Street Traders are on the sidelines waiting the next shoe to drop.

Gold ETFs have seen inflows in the last couple of days reversing a flat to lower trend seen in the last couple of weeks.

Fed Watch

Investors are waiting to hear the minutes from the Fed’s last meeting, today at 2 pm EDT, with hopes of getting some sense to when the Fed is expected to raise rates again. Their two percent inflation target rate seems to be the barometer for the next rate hike. I expect that there will be differences of opinions between the members on whether the weak inflation numbers are temporary or a sign of a weakening economy.

Over The Pond

Is the Brexit deal in jeopardy of failure? No one seems to know if Brexit will come to fruition.

In the meantime, the British Government is saying they will impose new VAT and custom duty fees if a Brexit deal can’t be reached by the March 2019 deadline.

Government officials are under a lot of pressure to map out plans for both Brexit and non-Brexit scenarios. Ministers are going forward to publish a customs bill and trade bill to establish UK law and EU trading rules.

UK companies are also scrambling to gather information under both scenarios despite the government’s pledge to make the Brexit as seamless as possible, but the government has acknowledged that the possible two different options on the table will probably bring further confusion for UK companies.

Some hope for business groups came on Monday when the ministers announced that they will seek a two or three year transition period to help with any rules and regulations that are put into effect.

However, the European commission said yesterday they were in no hurry to discuss the UK agenda, despite British business executives’ desires to stay ahead of the game. Their current plan is to start negotiations before the end of the year, because they need to discuss the issues of citizens’ rights and the status of Northern Ireland.

Under the EU’s rules, during the transitional period of the Brexit negotiations with the EU, Britain will still be able to negotiate and sign new trade deals with other countries, but cannot start any actions on the terms of the agreements until Brexit is finalized.

Just reading all of what has to get done seems to be an overwhelming task for all involved. I question if it will all be worth it in the end. I guess there is a majority in the UK that says it is.

Some Food for Thought

I thought I would resurrect a song released by the Temptations in 1971. It seems to fit right in. It’s called Ball of Confusion. Here are the lyrics:

People movin’ out, people movin’ in.
Why, because of the color of their skin.
Run, run, run, but you sho’ can’t hide
An eye for an eye, a tooth for a tooth.
Vote for me and I’ll set you free
Rap on, brother, rap on.
Well, the only person talkin’ ’bout love thy brother is the preacher
And it seems nobody’s interested in learning but the teacher
Segregation, determination, demonstration, integration, aggravation,
humiliation, obligation to our nation
Ball Of Confusion that’s what the world is today (yeah, yeah)
The sale of pills is at an all time high
young folks walkin’ ’round with their heads in the sky
Cities aflame in the summer time, and oh the beat goes on
Eve of destruction, tax deduction,
City inspectors, bill collectors,
Evolution, revolution,…

That’s what the world is today, and the beat goes on.

As a country I wonder how much we have learned in the past 46 years? I’ m afraid to say, NOT MUCH…

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