Weaker Dollar Helps Gold

Market Gage Gold Market Insights

With the recent Fed rate hike out of the way and the nervous longs conceding defeat, the market has now started to build a foundation. We are not expecting a huge move in gold to the upside, but a trading range between $1,250 and $1,270 to year end.

One reason gold has been bid up over the past few days is the weaker dollar and Ms. Yellen’s comments that with a strong labor market it could take longer for the Fed to achieve its inflation objective.

So in the meantime, with all these comments being shared by the Fed, the price of Gold
is reacting to the upside with hopes of no more rate hikes for the time being.

Focus On Washington

With the tax bill vote expected tomorrow (and expected to pass), equities continue their unbelievable rally with the Dow called to open up over 200 points, setting another new record today.

My argument continues to be, if the economy is operating on all cylinders, why is a tax cut necessary? We are doing fine the way things are without adding trillions of dollars of debt to our bottom line.

With everyone so fixated on the tax bill, no one is really talking about the future cost
facing our nation with the Healthcare and infrastructure bills that have to be addressed.
They just set up a smoke screen with these notions that this tax bill will only be adding a little amount of debt in the next ten years. Wait till Congress has to confront these two issues.

Let’s call it like we see Mr. Mnuchin, this tax bill is a corporate tax cut..period. So you can try to sell it to the American people that it’s all for them, but in reality it’s a Wall Street executive compensation bill. Yes we all know the average American in most states will see a $40 to $60 addition to their paychecks each week (and I’m sure many folks will appreciate the addition), but please don’t sell
it as if it was a life changer helping to get out kids thru college or having money now to buy a new home, because it’s not.

I get it that corporate America needs to be more competitive on the world stage, but with this corporate tax break, how many corporations will bring back the $5 an hour jobs that are now overseas and to seem be working pretty well? Will they really bring them back to the States at competitive wages? One can be sure that that money will be headed to two places: Wall Street executive pockets and investments in technology. Technology doesn’t require benefits or ask for pay raises. If you really cared you would have eliminated the AMT tax from families, not just for corporations, and not reduced the highest tax rate for the wealthiest.

The exiting Fed Chairwoman did indicate that she is not a proponent of adding to the country’s debt. Too bad she will not be in office when she sees what the cost will be to fix our Healthcare system and infrastructure. Yes, this tax bill is a win for the President and the Republican party, but there are real obstacles ahead of us.

I expect when Congress gets around to passing a infrastructure bill, Base Metals will be the recipient of a healthy rally in that arena.

Have a wonderful Monday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. 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. 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.