Weaker Dollar Continues To Prop Up Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

Continued weakness in the dollar index, now trading below the 97 level, is propping up the price of gold this morning.

Political uncertainties here in the U.S. are also contributing support to the yellow metal. As you turn on the TV this morning, the dominant talk on the business news channels is unfriendly to the President, as commentators discuss the impeachment process, looking for that a smoking gun.

It seems these days, an investor in precious metals must be aware of the gains and losses in the equity markets, as it appears these two markets have an inverse correlation.

On Wednesday of this week, the markets will be waiting for the FOMC minutes to be released from the last Fed meeting. Currently, the CME Fed Rate watch tool is predicting the odds of a June rate hike at 78.5 percent.

Inflows seen in both Gold and Silver ETFs overnight as some equity investors start to diversify
their portfolios. One Financial Advisor I spoke with this morning indicated that as time goes on and nothing gets accomplished in Washington, he expects more of his clients will ask to put some of their investments into hard assets.

Looking overseas:

Over the weekend Iranian President Hassan Rouhani won his re-election by a significant margin. During his election speech, Rouhani indicated that his country is “not ready or willing to be threatened or to be sanctioned.” He also indicated that, “Iran wants to live in peace and friendship with the rest of the world.” Only time will tell during the next four years of his presidency what road he will take in complying or defying his agreement on nuclear enrichment with the US.

North Korea:
North Korea said on Sunday that it launched another successful medium range ballistic missile. This comes a week after they tested a new type of missile capable of carrying a large nuclear warhead. South Korea’s foreign ministry said Sunday the launch was “reckless and irresponsible” while our Secretary of State Rex Tillerson called it “disappointing and disturbing.” As North Korea’s President Kim Jon-un keeps practicing and developing his missile program, the world just sits and watches. Does anyone have any idea what this guy is capable of? He’s like a 16 year old kid sitting in his father’s car with the keys in the ignition just waiting for the opportunity to start driving. “BEWARE”

I share with you the news on both Iran and especially North Korea, because I believe any unexpected
action could affect the price of price of gold in a big way.

I expect if Kim Jong-un continues his testing, some action will be taken on North Korea when President Trump finishes his trip. One might think during the President’s trip he would ask for support to help curb the actions taken by the North Korea before it acts.

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