U.S. Productivity Slump/Weak Dollar Bolster Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

Gold prices seen rallying this morning off a weaker dollar and off a report of weak economic data that was released yesterday. The U.S. Labor Department showing second quarter productivity in the U.S. falling 0.5 percent, its third consecutive quarter of decline.

That’s not what the FED Presidents were hoping for after a strong job number was released last week.

Mixed economic data will continue to handcuff the FOMC from raising rates anytime soon, which in turn
supports the continued rally in the price of the yellow metal.

Silver is enjoying her sister’s success this morning, as strong buying was reported from some Far East traders overnight.

South African Platinum miners’ wage negotiations intensify as its becoming as one observer put it, “starting to get ugly,” so violence is not out of the question. As the labor negotiations seem to grow further apart every day since beginning in July, we see the price of both platinum and palladium experiencing strong rallies. The price of platinum this morning, not seen at these levels since April last year and palladium since June last year.

I always like to watch the ETF market as it gives the investor a good look at what a large group of individuals are thinking about the precious metals markets. Overnight we witnessed a small increase in gold and a small decrease in silver holdings. With today’s strong rally in all four metals I think you will see inflows across the board reported tomorrow. Buyers in the ETFs, for the most part, were responsible for the increase in the price of gold this year.

Let’s take at look at news over the pond that can affect the price of gold long term.

Turkish President Erdogan’s recent threat to re-open migrant routes into Europe from Turkey yesterday, will mean a possible 3 million more migrants heading into Europe. Just what Germany and France need right now after Brittan’s vote to say goodbye to the EU in the Brexit vote. There are 2.8 million Syrian refugees in Turkey without counting the thousands of Iraqis and Afghans currently in Turkey, all fleeing the horrible conditions in their countries. The fact remains, how in the world will the EU be able to support these poor families with employment, housing and food? And let’s not forget something that’s equally important are the issues with conflicting cultures living side by side. The question remains, in the near future, will this turmoil result in an economic crisis hitting all of Europe? In my opinion it HAS to be a GREAT concern for the powers to be of both France and Germany. There are so many issues that need to be addressed in the European Community, and NO-ONE seems to have any answers.

The smart long term gold investor will take into account all these worldwide news items and have the ability to make a smart decision in determining what percentage of his or her portfolio should be in physical gold or silver.

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.