Stronger Dollar Pressuring Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

U.S. equity markets following the path of Global markets this morning as the Dow is poised to make another new all-time high.

Meanwhile, the price of gold continues so slide ever closer to the $1,300 dollar level. A stronger dollar and higher Treasury yields continue to apply the pressure.

Wall Street Gold traders totally out of the market at this time waiting to see where the next level of support might be. One trader indicated that he has seen strong selling out of the Middle East. It was only a week ago when he saw strong buying in that part of the globe due to higher oil prices and immediately reversed their positions late last week now playing the market from the short side.

Surprisingly, overnight there were strong inflows into the Gold ETF arena. I’m totally perplexed by that report. One would think that the Gold ETFs would show redemptions, not inflows, as the price keeps trading lower every day.

CBOE Volatility Index not moving, indicating equity investors are very happy with their current investments
and see nothing on the horizon to change their comfort level.

The Fed

Not until December does anyone in the market expect a rate hike to be a possibility. According to the CME
Watch tool predictor, there’s only a 55.8 percent chance it will happen at the December meeting.

But what is on the minds of some traders? Is it possible that if the inflation rate remains around the 1.9 percent level reported in August (just below their 2 percent target rate), the Fed will see that as an indicator that a rate hike is necessary?

The U.S. inflation rate has been below expectations for the last five months, but increased in August giving some the idea that next month’s numbers might show a higher number due to the recent effects of the two hurricanes.

We know economists will try to decipher the numbers when released, but will it be enough for the hawks on the Fed board to get their way?

Here is a statement by New York Fed Head Bill Dudley last week. He said, “While some of this year’s shortfall can be explained by one-off factors, its persistence suggests that more fundamental structural changes may also be playing a role. More “loose lip” comments between meetings only confuses the investing public and should be left to be heard after the minutes from the Fed meetings are released.

Fed fund futures went up over 19 percent last week as the Ten-Year Treasury yields increased to over 2.20 percent, not helping the price of gold in the short term.

Not helping the “Hawks” position on the Fed board was the most recent, less-than-expected hourly and weekly earnings report.

In the news

There seems to be no accountability by any firm holding our personal data!

On September 7, 2017, Equifax, one of the three main credit reporting agencies, announced a massive data security breach that exposed vital personal identification data — including names, addresses, birth dates, and Social Security numbers — on as many as 143 million consumers, roughly 55% of Americans age 18 and older.

This data breach was especially egregious because the company reportedly first learned of the breach on July 29 and waited roughly six weeks before making it public (hackers first gained access between mid-May and July) and three senior Equifax executives reportedly sold shares of the company worth nearly $2 million (hold on, someone slap their hands) before the breach was announced. Moreover, consumers
don’t choose to do business or share their data with Equifax; rather, Equifax — along with TransUnion and Experian, the other two major credit reporting agencies — unilaterally monitors the financial health of consumers and supplies that data to potential lenders without a consumer’s approval or consent.

Equifax has faced widespread criticism following its disclosure of the hack, both for the breach itself and for its response, particularly the website it established for consumers to check if they may have been affected. Both the FBI and Congress are investigating the breach.

Have you recently checked your credit reports?

Have a wonderful Monday.

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.