Weak Dollar Continues Boosting Gold Rally

The Market Gage - Dillon Gage's Precious Metals Newsletter

The rally in the price of Gold continues this morning as the sell-off in the Dollar Index continues. Overnight the Dollar Index had a very tight trading range, showing a high of 94.08 and a low of 93.82. Which, by the way, is a 13-month low reached this past Friday.

Some Foreign Exchange Traders on the street said this morning that they expect the Dollar Index to continue to trade lower and test the 93.50 level later in the week.

If that’s the case, the price of Gold will continue to benefit from such a move.

A mixed bag reported in the ETF arena where Gold saw outflows and Silver saw inflows into
the fund overnight.

MONEY……Past and Present

We’ve come a long way from the first introduction of paper money here in the U.S.
and now to a new way of mimicking cash, called “Cryptocurrencies.” Is cash as we know it
going away? Heading out each day, will all I need to carry in my pocket is a smart phone and a handkerchief?

Let’s start by looking at some of the significant steps on the history of money’s timeline:

Paper money here in the U.S. was started in the year 1690 issued by the Massachusetts Bay Colony to fund Military expectations.

The first printed checks are traced to 1762 in England. The word “check” originated in England where serial numbers were placed on pieces of paper as a way to keep track of or “check” on them.

The first credit card was issued by Diners Club in 1950, allowing members to charge
the cost of restaurant bills only.

Wire transfers originated in the 19th century and since then they have become one
of the most successful methods of transferring money across the world.

The first ATM machine was installed by Chemical Bank at their Rockville Centre in New York. The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially coded card.

The Advent Of The Internet:

The history of the internet begins with the development of electronic computers in the 1950s. In 1960, the U.S. Government’s defense project called ARPANET was developed to interconnect several super-computer sites in our country so that if any one of them is destroyed in a nuclear explosion the defense system will continue to function.

In 1983, several researchers began to assemble the network of networks.

It wasn’t till 1990 that the internet really took off when computer scientist Tim Berners-Lee invented the World Wide Web.

Why I have changed gears, so to speak, from paper money to the internet? It’s because of the many ways money transfers over the Internet. The most famous money transfer program “PAYPAL” was developed and launched in 1999.

Now we will examine the future in money transactions called “Cryptocurrencies.”

With the extensive development of the Internet in ways we could never imagine, it’s not a surprise that a demand has increased for a way to transfer money quickly, seamlessly and anonymously. Banks are shaking in their shoes over this technology.

Even JP Morgan’s Chairman Jamie Diamond sees that his group must get involved in the new technology.

So what are Cryptocurrencies and what does the future hold?

The most famous Cryptocurrency is “Bitcoin,” a virtual currency that is not controlled by any Central Bank. Instead, Bitcoins are created through a process called mining, in which a computer tries to solve a cryptographic problem. The total supply of Bitcoins is capped, which has led to comparisons with assets like Gold.

To clear the air and try to explain the new technology in layman’s terms, lets define both Cryptocurrencies and Blockchain Technology. Blockchain is the technology that enables the existence of Cryptocurrency. (Bitcoin is the name of the best-known Cryptocurrency. The one for which Blockchain technology was invented.) A Cryptocurrency is a medium of exchange, such as the U.S. Dollar, but it is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.

The mechanism for tracking the price and volume is like an exchange or Blockchain that instantly documents and electronically publishes every transaction.

Some investors really believe this technology is the future because they believe the world’s Monetary System has flaws and will eventually collapse. They claim that with all that’s going on in Washington, the Dollar’s global dominance is coming to an end and will be replaced in the future with cryptocurrencies.

Whether you believe the Dollar is doomed or not, this technology is here to stay and catching on in a big way. Just in the past three months, investors pumped over 1 trillion dollars into Cryptocurrencies.

Now many exchanges like the (CME) Commodity Metals exchange are looking at Blockchain technology for trading and operations.

Cryptocurrencies, Blockchain technology, driverless cars and a cashless society…the future is upon us, and you can rely on the folks at Dillon Gage to be your go-to Precious Metals experts to keep you updated on the future enhancements in technology in our industry and elsewhere.

Will you be ready?

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.