U.S. Mint Year to Date Sales of Silver and Gold American Eagles

American Eagle Sales as of 4/21/16

The following chart includes the year to date totals from the U.S. Mint as of 5pm on April 21st. Changes below reflect the sales since our last report on April 15th.

Gold
Coin Sales in oz. /#coins + from 4/15/2016
One oz.
263,500
263,500
32,500
32,500
Half oz.
17,500
35,000
1,000
2,000
Quarter oz.
16,000
64,000
1,000
4,000
Tenth oz.
36,000
360,000
1,000
10,000
Total
333,000
722,500
35,500
48,500
Silver
Coin Sales in oz. /#coins + from 4/15/2016
One oz.
17,912,500
17,912,500
912,500
912,500
The Market Gage - Dillon Gage's Precious Metals Newsletter

Physical Gold Had Good 2-Way Action Yesterday

Yesterday dealers reported good two way action in the physical gold market. Weaker dollar and weaker economic indicators were behind the rally in all four metals yesterday. Some dealers I spoke to this morning said, not only did they experience
good two way action yesterday, but they also had a few new inquiries from people who never traded with them before.

Today gold is virtually unchanged after we witnessed an outflow overnight in the gold ETFs. The Silver ETF continues to set a new yearly record as inflows in the gray metal continue. Some financial advisors have indicated their clients are more interested in investing in silver than gold.

A number of clients have indicated that they believe going forward, silver has better chance of tripling in value in the future where gold would struggle to compete with that scenario.

Some Far East silver traders report seeing China pick up their purchases in silver last two days, which in turn helps silver build a base at the $ 17.00 level. I believe the rally in silver will lose some steam and test the $ 17.00 level this week.

PGM traders sharing they had seen new fund investment yesterday in the PGM arena. Something they haven’t seen in quite a while.

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.

The Market Gage - Dillon Gage's Precious Metals Newsletter

More Conflicted Comments From FED

They’re at it again. New York Fed president William Dudley said today, “Gradual path to rate hikes are appropriate. Although the downside risks have diminished since earlier this year, I still judge the balance of risks to my inflation
and growth outlooks to be tilted slightly to the downside.”

Janet Yellen also out there speaking to the media said, “The global economy has seen relatively weak growth despite positive signs in the U. S.” The FED has taken a cautious approach on raising interest rates this year after raising them in December, for the first time in nearly a decade. The bank’s policy committee projects two rate hikes this year.”

Yellen, under criticism that the December rate hike came under pressure from Wall Street and the media, defended that decision by saying, “I did not consider the December decision a mistake, as indications at the time showed substantial progress toward the FED’s labor market and inflation goals. Moving forward, the FED will watch very carefully what is happening in the economy.”

It seems to me that there is much disagreement among the ranks of the Federal board. Four of the 17 members now publicly indicated their disagreement with the dovish guidance stance that Janet Yellen is taking.

SO what does this all mean? Is Janet Yellen losing control of her staff and does the staff have any confidence she can lead?

In the end, with all the different opinions each of the FED governors have (and there are many) raising interest rates will be difficult, when parts of the world economies are in shambles and negative interest rates in the news every day. As they claim rate hikes will be data dependent, I expect the data
will justify staying right where we are because we all know the December rate hike WAS a mistake.

For the gold market there is nothing more important than having clarity on where interest rates will go. So in the meantime the price of gold just sits in a trading range and consolidates with hopes of building a strong foundation to support higher prices in the future.

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.

How the IRS Taxes Various Precious Metals Investments

A Dillon Gage Metals Primer on Proper Compliance

ADDISON, TX (April 7, 2016) – Dillon Gage Metals, an international precious metals wholesaler, is offering free tax advice ahead of the April 15th deadline.

Savvy investors know that owning precious metals can provide a de facto insurance policy for balanced financial portfolios. History shows precious metals, whether in physical or ETF form, operate as the ultimate hedge against inflationary concerns. But in owning precious metals, investors also need to know how and when to report their tax liability to the IRS. Tax season is upon us, and if investors have participated in one of the many variations of investing in precious metals, they’ll need to know how the IRS taxes them. International wholesaler Dillon Gage Metals provides a precious metals tax primer for review:

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Flash Gage – FED Minutes Released

The minutes from last month’s meeting indicated that members could not agree if a rate hike at the next FED meeting in April was in order. What they did agree on is that risks from a global economic slowdown warranted a cautious approach. One member seems adamant about raising rates and that member is Loretta Mester, President of the Cleveland Federal Reserve. Given the recent U.S. economic strength, she wants a gradual series of rate hikes this year. This group is totally out of control and collectively cannot agree on policy. So with the examples I shared with you
in my morning comments, the best path for Ms. Yellen to take is the do-nothing policy.

The United States is not an island but it seems to me some of these FED governors must be living on one, well offshore.

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.

Precious Metals Dip as We Await FED Minutes

As the market waits for the release this afternoon of the FED minutes from the last meeting we see all four metals in negative territory.

Also fueling the selloff are comments made yesterday by IMF Director Christine Lagarde. She said, “The world economy is continuing to RECOVER, but it’s still at a delicate stage. We have growth; we are not in a crisis. The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing.” She warned that because growth had been “too low for too long,” too many people were “simply not feeling it.”

Well, if I may be so bold to politely ask Ms. Lagarde to look out her window. On March 10th, the European Central Bank (ECB) cut rates, charging banks from 0.3 to 0.4 percent to hold cash overnight, putting Denmark, Sweden and Switzerland in negative territory. Migrants continue to come into Germany and other counties in droves putting enormous pressure on each counties economies. What will be the cost to support each family and how will these people find jobs?

German Chancellor Angela Merkel is in talks with Greek Prime Minster Alexis Tsipras about another Greek bailout. Seems to me this story has been around for a very long time. The German people are not happy with the way Merkel has been handling these negotiations. And the Greek people are still fighting any austerity measures presented to them.

So the picture I’m trying to paint is: Over the pond things are not as rosy as Ms. Lagarde and Ms. Merkel would have you believe.

So as Europe continues to struggle, the only thing stopping gold from a strong rally here is the interest rate games the Fed Governors are playing. I know I sound like a broken record (a saying we used many years ago when I was a kid) but my hope is that today, maybe we will get some news out of the last FED’s meeting that will show that a rate hike is not in the cards anytime soon. Wishful thinking on my part.

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.

Quiet Start to the Week.

Quiet opening today. Overnight, in the Far East and Europe most precious metal traders report that physical demand in gold is soft, but a little more interest is seen on the silver side from the retail investor.

ETF gold and silver holdings increased overnight with hopes that the increases would be enough to support the gold and silver price.

The Wall Street gold spec traders I spoke to on Friday were still looking for gold to test the $1,200 dollar level in the short term and possibly test the key double bottom support level at $1,175 before buying back their short spec positions.

Some traders believe the pressure will be on from some FED governors to convince Ms. Yellen to raise rates at the next FED meeting, giving traders the fuel they are looking for.

After speaking to a few financial advisors about client interest in either ETFs or physical precious metals, all I get is the same response, quiet on the equity side and not much better in metals.

Most financial advisors are working on managing account fee based business instead of charging a commission on individual trades. With most people trading for $7 dollars a trade it’s not as lucrative as it was in the past.

Factory data orders to be released today. Wednesday, FED minutes will be released and will be scrutinized looking for any clue to what will be the FED’s next move will be.

So I hope I kept your interest enough to…

Wish you all 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.

Positive Job Numbers Impact Gold

The all anticipated report on job numbers for March was released this morning, showing an increase in 215,000 jobs. Unemployment was at 5%, March government jobs up 20,000 and hourly earnings were up 0.3%. Looks like the economy is picking up.

These numbers give ammunition to the FED governors who argue their point that higher interest rates are in order at the next Fed meeting. Anticipated higher interest rates have put pressure on gold and silver prices this morning. At the time of this report we see gold down 16 dollars and silver trading below the important 15 dollar level.

Inflows resumed in the gold ETFs overnight and silver continues its strong accumulation in its fund holdings. These job numbers should have the ETFs’ short term investors heading for the exits, putting more pressure on precious metal prices today.

After seeing the jobs report this morning, some Wall Street spec traders report going short the June gold contract is an investment they feel comfortable in making.
We will just have to wait and see where this goes. With negative interest rates still a story that deserves attention and countries around the globe in a recession, I’ll take the other side of their trade and believe they will be wrong.

(Don’t tell them I said that!)

Have a wonderful Friday and beware of the April Fool’s day pranks.

American Eagles Sales as of March 31, 2016

The following chart includes the year to date totals from the U.S. Mint as of 5pm on March 31st. Changes below reflect the sales since our last report on March 11th.

Gold
Coin Sales in oz. /#coins + from 3/10/2016
One oz.
185,500
185,500
17,500
17,500
Half oz.
15,000
30,000
500
1,000
Quarter oz.
13,000
52,000
500
2,000
Tenth oz.
26,500
265,000
5,500
55,000
Total
245,500
587,500
24,000
75,500
Silver
Coin Sales in oz. /#coins + from 3/10/2016
One oz.
12,000,000
12,000,000
2,842,500
2,842,500

Gold Profit Taking This A.M.

Gold profit taking this morning after yesterday’s rally on dovish FED comments. FED governors seem to continue to press for rate hikes while the global easing continues. Sounds like there is total disagreement on rate hikes in the FED conference room with Janet Yellen having the final say. Holding back from making any commitment on any future rate hikes.

Profit taking also seen in the gold ETF overnight as seen in strong outflows in the gold fund position. Interesting though silver ETFs enjoys new highs as retail investors seem to be more attracted to silver over gold.

Lacking any news, gold and silver prices seem to be settling down as the market waits for Fridays official March employment report. Expected to show the labor market added another 200,000 jobs.

In the meantime, in the absence of any significant news I expect the market to be range bound.

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.

Gold Rallied Today on FED Comments

Gold rallies on her comments and breaks thru resistance levels as FED chairperson Janet Yellen said, it was appropriate for the FED to proceed “cautiously” in raising interest rates.

Global developments and risks have led policymakers to project a slower path of rate hikes than initially expected in December, Yellen said.

Dollar index on the lows after her comments giving gold its bid in early afternoon trading.

Have a wonderful Tuesday.

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.

Gold Rebounds This A.M. From Far East Overnight Drop

Gold fell to a 5-week low in the April contract overnight in Far East trading to $1,206 dollars per ounce. A stronger dollar index was the main culprit overnight, but as I’m writing my report this morning, gold has recovered, the dollar has weakened and now April gold is back to the $1,220 level.

In the absence of any news regarding interest rates here or abroad, gold just seems to be offered on any rallies.

Supply and demand issues are kinda cold these days, as indicated in the April / June COMEX switch widening out. If there was any indication that the demand for gold was exceeding the supply that switch would be collapsing. Over the last few days it’s been widening or, as we like call it, moving to the right.

The good news is the ETF funds continue to see more and more inflows and now the holdings are above 58 million ounces.

Some financial advisors have reported retail investors now are starting to add Silver ETFs to their portfolios to combine with their gold holdings.

My tech friends tell me that the $1231.50 level in the April contract is the next level of resistance and until some bullish news hits the wires we can expect gold and silver to remain range bound.

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.

Negative Interest Rates – Good For Gold?

Why negative interest rates can be a very bad thing for the European economy, but good for the price of gold.

Ever since Janet Yellen was asked about the possibility of the FED adopting a negative rate policy, the topic has been discussed and analyzed all over the internet and in financial publications.

In order to understand what could happen here in the States, we need to look at where negative interest rates are a fact of life.

On March 10th the European Central Bank (ECB) cut rates, charging banks from 0.3 to 0.4 percent to hold cash overnight, putting Denmark, Sweden and Switzerland in negative territory. So if you are a banker in Europe, what can you do in order to eliminate this cost? I guess you don’t have much of a choice. You need a return on your cash so you make new loans.

This situation has the potential to spark a couple of scenarios that would both impact gold:

  1. Some would think this might drive banks to make more risky loans in order to make the bank more profitable, right? Hm…risky loans sound familiar? Remember when banks issued a significant number of mortgages to unqualified borrowers who bought houses that they couldn’t afford…leading ultimately to 2008’s Financial Crisis? Of course, that dark time was driven by more than just a need to be merely profitable…it was spawned by greed that lead to the “big short” or risky loans on steroids. So, if more risky loans are indeed written…regardless of the reason…shouldn’t that be cause for concern and possibly inspire more investor faith in say…gold?
  2. With European banks charging everyday customers a fee for keeping money on deposit in the bank, in addition to all the problems that the average Joe is facing in Europe these days (the inability for governments to meet pension obligations, the tremendous influx of migrants who must be fed and housed putting a strain on the EU balance sheets, reoccurring tragic violence as we just saw in Brussels) where will the average investor put their money? Does gold again sound like the answer?

So now that they are convinced that Gold is the investment of choice in an negative interest environment, what happens if this hits our shores?

I can see it now, with interest rates below zero major banks will be pressed to show profits and invest in risky high yielding assets. (Again, sounds like 2008, right?) Consumers will pull cash out of banks and hold their cash, because they will be charged by the banks to hold their money and in turn reduce spending. This affects the bottom line of businesses all over the U.S.

Did I paint a clear picture on what can happen here if negative interest rates become a reality? Remember where gold was in 2008 and the rally we witnessed in gold in the four years that followed as the economy tried to recover?

Definitely worth pondering and watching.

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.

Fallout from FED Announcement

This is why I am always critical of our Federal Reserve Committee.

Are we that gullible that some of us believed that the FED was telling us the truth at the last FED meeting, that 4 rate hikes were in the cards in 2016? Only to come out now and say we only expect 2 rate hikes this year. I’m sorry, since low interest rates and a weaker dollar are the main driver of higher gold prices, why don’t they just come out and say they are not sure how many rates hikes will happen in 2016? BE HONEST! BECAUSE YOU REALLY DON’T KNOW. All they have to do is look out the window and they’ll see negative interest rates popping up all over the globe.

Within an hour of hearing on Wednesday that the FED was only predicting possibly 2 rate hikes instead of 4, gold rallied over $32 dollars. Everyone knows that the FED needs to be transparent and by allowing each FED governor to share their opinions (which creates uncertainties between meetings) is a terrible strategy and only causes more volatility in the markets. By the way, three FED Governors are scheduled to speak today.

Anyway, case in point, a $32 dollar rally in the price of gold and a 6 percent increase in the price of oil in AN HOUR.

Oil trading at $ 42 dollars and a stronger dollar this morning putting pressure on the yellow metal. Silver seems to be in a world of her own enjoying her sweet 16 party, but the party might just be ending soon.

So now that the excitement is over, we will let the market dictate the direction of the price of gold and not the Federal Reserve.

Have a wonderful Friday.

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.

FLASH – Gold rallies after the FED announcement

The Federal Reserve Bank leaves rates unchanged. Gold trades higher after hearing the news that the Fed predicts only 2 rate hikes this year down from 4 rate hikes for this year as previously reported.

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.

Quiet Before Today’s FED Decision

Quiet commodity markets ahead of the FED decision today at 2pm. Most expect no rate hike this time around. So we just wait to view the FED minutes in hope of receiving some clarity to when the next rate hike might be.

All four metals in the ETF arena saw increases yesterday, with Gold holding still above the 57 million mark. Uncertainty about global growth and negative interest rates are still a concern for many, as witnessed by the large open interest in the Gold CME contract.

Going forward, if gold continues its decline, I expect there will not be many new buyers in the market until we test the $ 1200 dollar level again. For silver, the story remains the same at $15 dollars, where we expect the level of support to be.

Wall Street spec traders are for the most part not involved at these levels and are also awaiting some direction from the FED before coming out to play once again.

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.

Flash Gage – Gold Momentum’s Direction Change

I felt compelled to write some comments this morning after traveling to New York City yesterday for some meetings, while watching the gold market momentum change direction.

Yesterday we could not hold the $1,246 level of support, a level which everyone with a long position was hoping to hold. As soon as we broke thru the $1,250 area selling pressure accelerated, triggering stop loss orders along the way, (everywhere it seemed), between $1,246 and the $1,237 area.

Some of the Wall Street spec traders have now reversed their long positions, previously purchased days before around the $1,240 area, and are now sitting with small short positions looking for the Fed to indicate rate hikes are in the cards.

Overnight, selling out of the Middle East put more pressure on the yellow metal.

For the first time this year we’ve seen outflows in the gold ETFs. With the strong sell off in the price of gold yesterday, some short term investors decided to take some profits off the table and are waiting for lower levels to get back in.

Now all eyes are on tomorrow’s FED decision on rate hikes. The consensus is, a rate hike will not happen before the June Fed meeting. Nonetheless, in an absence of any rate hike tomorrow, we look for the language published after the meeting for an indication going forward to what the Fed policies will be.

Have a wonderful Tuesday.

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.

American Eagle Sales as of 3/10/16

The following chart includes the year to date totals from the U.S. Mint as of 5pm on March 10th. Changes below reflect the sales since our last report on March 4th.

Gold
Coin Sales in oz. /#coins + from 3/4/2016
One oz.
168,000
168,000
11,500
11,500
Half oz.
14,500
29,000
00
000
Quarter oz.
12,500
50,000
500
2,000
Tenth oz.
26,500
265,000
2,000
20,000
Total
221,500
512,000
14,000
33,500
Silver
Coin Sales in oz. /#coins + from 3/4/2016
One oz.
12,000,000
12,000,000
1,000,000
1,000,000

ECB Cuts Benchmark Interest Rate

The ECB has cut its benchmark interest rate from 0.05 to ZERO as part of a extensive program to help the failing European economy. Also announced, the ECB will increase it quantitative easing program from 60 bn Euro a month to 80 bn Euro a month.

They also decided to cut the bank deposit rate from minus 0.3 pct. to minus 0.4 percent which costs the banks more to deposit cash with the central bank.

At the time of this report we see the Euro hitting a low of 1.0823 and the dollar index up almost one big figure at 98.25.

The stronger dollar hurting the price of gold this morning as we witness red numbers for the third day in a row. Surprisingly, we see another increase in the Gold overnight ETF holdings now standing at 56.7 million ounces.

Gold trading above $1,250 level after European sellers early this morning took gold in the April contract
to $1,237.50. Technical support level now at $1,246.00. In my opinion we must hold this level in order
to see Gold continue its upside momentum.

Have a wonderful Thursday.

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.

The Impact of Negative Interest Rates

The effect of negative interest rates:

Across the pond, Denmark, Sweden, and Switzerland (and let’s not forget Japan) have adopted a negative interest rate policy. This policy effectively means that commercial banks must pay to hold excess cash on deposit with the central banks. Now one must ask, how low can the negative rates go and how does the average investor navigate this landscape?

Over the years, the word inflation was synonymous with higher gold prices, but in my opinion negative interest rates will have a much more profound effect on the price of gold. As an investor, why would anyone want to pay the bank to hold their money. And with more and more European people who are reaching retirement age and having to deal with reduced retirement benefits, there is a concerted effort of many to find a higher rate of return that banks can no longer offer.

Tomorrow we will hear from ECB President Mario Draghi. He has a tough job and I expect he will have limited tools to work with. Additional stimulus will be needed in the EU, but even this tool seems to be losing its effectiveness. There are so many problems to address in the EU. A recession continues to plague many countries. Migrants are entering by the thousands and governments have no means to support them. Unions are still trying to strong arm governments that have no ability to pay for those promised benefits. Not a pretty picture.

That’s why we see an increase virtually every day in ETF holdings and an increase in physical demand in the countries I mentioned above. Yes there have been counter forces driven by comments from the FED governors saying a rate hike is still in the cards, but I believe as I commented before that it’s just a ploy by our Federal Reserve to give central banks time to purchase more gold at attractive rates. I expect a “no” vote on rate hikes by our Federal Reserve next week, which in turn will help fuel gold to higher levels. In the meantime, we see lower gold prices this morning, as oil and the dollar trade higher. The question remains, do the longs have the patience to wait for Draghi’s comments, or sell gold and take some profits at these levels?

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.

Is Gold Heading For April Contract High?

Textbook technicals take gold to a new high for the year in the April contract to $1,275.90. I must acknowledge my friends who just trade off the gold charts. For the second time this year, they called the breakout at the $1,260 area. That’s the second dinner I owe them after indicating that I only give that trading theory a ten percent reliably. So far they have been right twice this year, so an apology is in order to my technician buddies.

U. S. job creation in February reported at 242,000 which keeps the unemployment rate at 4.9%. Right after the employment number we dropped from $1,260.50 in the April contract to the low so far today at $1250.10. I see that sell off as program trading activity, because within the next eight minutes after the news was absorbed
we witnessed strong buying coming in. These moves indicate to me that program trading is alive and well and in the end fundamentally nothing has changed, as people viewed the sell off as a buying opportunity.

In an attempt to keep the stories about negative interest rates in the forefront, I must refer to someone I admire, Janus Capital’s Bill Gross. In article in today’s Wall Street Journal, Bill Gross says, “negative rates threaten bank profits, as well as any business models, such as those of insurance companies and pension funds that depend upon 7% to 8% annual returns on assets.” He went on to say, “the damage extends to all savers; households worldwide that saved / invested money for college, retirement or for medical bills. They have been damaged and only now are becoming aware of it. Negative rates are an enigma to almost all global investors, undermining the basic architecture of financial markets. But central bankers seem ever intent on going lower, ignorant in my view of the harm being done to a classical economic model that has driven prosperity – until it reached a negative interest rate dead end and could drive no more.”

I wanted to share his comments with each one of you so you can hear from other sources on how damaging negative interest rates could be. These comments only add fuel to the momentum that has been created by ETF purchases from the beginning of the year.

ETF infusions continue to increase and now stand at 56.5 million ounces.

In my opinion the ONLY thing that can derail this gold train going forward is the Fed raising interest rates in March. And for most of us, except for some Wall Street gold traders who are holding on to Fed governor comments, we believe that a rate hike in March is off the table.

So who’s buying a train ticket while the fares are still reasonable?

Have a wonderful weekend.

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.

American Eagle Sales as of 3/3/2016

The following chart includes the year to date totals from the U.S. Mint as of 5pm on March 3rd. Changes below reflect the sales since our last report on February 26th.

Gold
Coin Sales in oz. /#coins + from 2/25/2016
One oz.
156,500
156,500
9,000
9,000
Half oz.
14,500
29,000
00
000
Quarter oz.
12,000
48,000
500
2,000
Tenth oz.
24,500
245,000
2,500
25,000
Total
207,500
478,500
75,000
36,000
Silver
Coin Sales in oz. /#coins + from 2/25/2016
One oz.
11,000,000
11,000,000
1,000,000
1,000,000

ETFs Still Leading the Precious Metals Charge

ETFs continue to dominate the Precious Metals arena. ETF holdings up once again overnight, standing at 56.2 million ounces; far from the all-time high of 85 million ounces reported on Jan 1st of 2013. Nonetheless, buying continues to increase from the small retail investor to large hedge funds. Recently the bulk of the buying seems to be from Far East investors.

An article on page C1 in today’s Wall Street Journal reporting that on Tuesday, for the first time, the Japanese government issued benchmark 10-year bonds with negative yields. This means that the government is charging investors for lending it money. No wonder we have seen an increase of physical gold buying In that country.

Another story of interest hitting the tape this morning is Moody downgrading its outlook on the Chinese government’s credit rating from stable to negative citing the country’s rising debt and falling foreign exchange reserves.

On our shores, the Federal Reserve governors continue to send out mixed signals every time they share their opinions. This policy continues to create a smoke screen for the investor on the possibility of future rate decisions. Nonetheless gold is up 15 percent in 2016 and central bank consumption of the yellow metal continues. If the price of gold increases in a big way, they can send a nice gift basket to the Federal Reserve committee as a token of appreciation of keeping the price of gold steady as the central banks around the world add to their gold holdings.

The next FED meeting is scheduled March 15th-16th and the majority of those who follow the FED do not expect any changes to the FED Fund rate. How could they raise rates as the rest of the world is heading toward negative interest rates? In the past year, Finland and Italy have joined the countries issuing bonds with negative interest rates. Adopting these policies increases demand for gold and, as soon as the FED is forced to head in that direction, I expect the physical demand for gold in this country will take off in as big a way.

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.

Futures Contracts and CME & ICE Depositories

What role do the CME and ICE depositories play regarding the futures contract? First let’s define a futures contract. A futures contract is a legally binding agreement to buy or sell a commodity at a later date. Futures contracts are standardized according to the quality, quantity and delivery time and location for each type of commodity.

Trading futures enables gold market participants to hedge market risk. Some participants are:

  • Mine Producers
  • Refiners
  • Manufactures
  • Bullion Banks
  • Wholesalers
  • Retailers

This is the purpose of the futures exchange.

Now let’s define the term “Open Interest.” Open interest refers to the number of “open future contracts.” This refers to unliquidated purchases or sales and never to their combined total.

There is always a lot of chatter, or let’s call it a concern, that someday the amount of open contracts in a particular month coming up for delivery will exceed the amount of eligible bars to meet the demand. Historically only 2 to 4 pct. of the open interest stands for delivery. But, in the case of a shortage of product available for consumption, this arena could be tapped into for product.

Without going into great deal, for simplify, the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) have in place stop gap measures that will not totally eliminate the possibility of a short squeeze, but would greatly mitigate the possibility. We will explain this at a later date.

Let’s briefly explain how the metals get into the depository. I will use as an example our CME and ICE depository, International Depository Services of Delaware (IDS).

For simplicity, let’s start at the refinery level. The gold or silver is either recovered from mine production, scrap jewelry or coins/bars to be melted into good exchange delivery bars. The refinery then manufactures these products and their brand (of course) is approved by the exchanges for delivery .

The CME Gold contract has 100 ounce bars with an allowable tolerance of 5 percent. Also 3 kilo bar contracts (32.15 ounces) can be delivered to satisfy the 100 ounce gold CME contract.
ICE has an active kilo bar (32.15 ounces) contract for delivery that competes with the CME contract.

The CME silver contract has 1000 ounce bars (5,000 ounce contract) with an allowable 10-percent weight tolerance.

If the owner of these bars wants to deposit these bars in an authorized depository like IDS for possible delivery against a short futures position, there are strict guidelines to follow.
Directly from the authorized refinery, he or she must use an authorized CME or ICE armored carrier to transport the bars.
A detailed weight list should accompany the shipment. As long as these rules are met when the bars arrive at the depository there are two categories the bars can be put in.

Eligible or registered:

  • Eligible status: Bars are not put in position to be delivered to the exchange to cover a short position but are “eligible” to be put on receipt at a later date.
  • Registered status: Bars are eligible at any time to be delivered (tendered) in settlement of a futures contract.

All exchange depositories must meet strict CME and ICE regulations before becoming an authorized depository.

I hope this brief explanation will give clarity to the relationship between the futures market and the authorized depositories.

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.

Gold Prices in Deflationary Conditions

I’ve been asked to talk about what could happen to the price of gold in counties that are battling deflationary conditions such as Switzerland, Sweden and Denmark. Recently these countries began a negative interest rate policy to combat deflationary pressures.

In a deflationary economy, most would prefer to hold a liquid hard asset like gold. There will be some who would hoard cash leaving it out of the banks as most refuse to pay the banks to hold their money. This becomes a very dangerous situation for any economy. When money hoarders take cash out of circulation to use it as an insurance policy for tough times ahead, it creates a self-fulfilling prophecy. In the end businesses will close as they will be selling less goods and services. This strategy in turn creates higher unemployment. Not a good outcome. This might also spur a governments control over actual cash. Governments want cash in circulation to increase money supply. Hoarding is the opposite. Once governments move to control real cash, demand for physical will spike.

Did anyone hear of the term beggar-thy-neighbor? Beggar-thy-neighbor is an international trading policy that utilizes currency devaluations and protective barriers to alleviate a nation’s economic difficulties at the expense of other countries. While the policy may help repair an economic hardship in the nation, it will harm the country’s trading partners, worsening its economic status.

I guess you can say using the policy of beggar-thy-neighbor sounds like someone sticking their nose up at a former friend and ally.

Since the negative rates went into effect in these countries, gold purchases have been on the uptick. There is no doubt that the smart money will turn to gold hoping for a strong return on their investment.

What seems to be the case today with the majority of countries I mentioned experiencing negative interest rates (and let’s include Japan in that group), we are witnessing better than average physical demand.

Here in the states, the majority of the gold purchasing has been in the form of ETFs. The reason? Recent strong volatility in the equity markets along with a strong view that equity prices have peeked. And no one can ignore lower oil prices.

With everyone witnessing depressed commodity prices for a long time, (along with my reasons above), a good number of retail investors, along with some fund managers, have decided to diversify a portion of their equity holdings into gold. Since the beginning of the year, these trades have created momentum to the upside in the price of gold.

So I expect, if the rally in the gold market continues in March and there is no increase in the Fed Fund Rate, a strong interest in the physical metal will be in order.

To summarize: in the end, either in an inflationary environment or a much dreaded and dangerous deflationary environment, “Gold as an investment increases in interest.” But if I had to choose one, a deflationary environment would get the nod.

Have a wonderful Friday.

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.

American Eagle Sales as of 2/25/16

The following chart includes the year to date totals from the U.S. Mint as of 5pm on February 25th. Changes below reflect the sales since our last report on February 19th.

Gold
Coin Sales in oz. /#coins + from 2/18/2016
One oz.
147,500
147,500
6,000
6,000
Half oz.
14,500
29,000
500
1,000
Quarter oz.
11,500
46,000
500
2,000
Tenth oz.
22,000
220,000
2,500
25,000
Total
132,500
442,500
63,000
34,000
Silver
Coin Sales in oz. /#coins + from 2/18/2016
One oz.
10,000,000
10,000,000
1,073,500
1,073,500

What Would a Solid Gold Oscar Trophy Be Worth?

Dillon Gage Metals Calculates a Solid Gold Price Equivalent

ADDISON, TX (Feb. 26, 2016) – Dillon Gage Metals, an international precious metals wholesaler, decided to calculate the actual value of an Oscar award if it were made of solid gold. Which, sadly for the intended recipients, it isn’t. When coming up with the result, they sought the opinion of metallurgy experts in determining the parameters of the trophy and its corresponding value based on current gold prices.

Beginning with the dimensions of an Oscar award, they found that the statues are 13.5 inches high, each weighing 8.5 pounds. The statues are actually comprised of a pewter-like alloy called Britannia, which is 92 percent tin, six percent antimony and two percent copper.

Continue reading →

FLASH GAGE- CME Gold Open Contracts Up 7,500+

CME gold open interest at 452, 839 contracts up overnight 7,549 contracts. CME gold open interest up 80,000 contracts since January 25, 2016.

ETF inflows continue in gold now at over 55 million ounces.

New long positions continue to grow in a big way.

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.

Gold Traders Taken on Trip to the Emerald City

Remember the movie The Wizard of Oz, when Dorothy and her crew were in Emerald City; the Wizard tried to intimidate them using smoke and mirrors? Then Toto pulled the curtain away and the Wizard said, “Pay no attention to the man behind the curtain.”

Well today, another Fed chairman emerges from behind the curtain to add his two cents: Richmond Fed Chairman Jeffery Lacker. I guess he felt left out, or Janet just told him it’s his turn to comment on future Fed rate hikes.

Lacker said “Estimates of the economy so-called natural real rate of interest, the rate when economists think there will be normal economic growth rates and stable inflation, is at or just above zero…This perspective would bolster the case for raising the federal funds target rate.”

So, as Janet Yellen pulls away the curtain once again in an attempt to influence the price of gold, let’s see how she is doing. Oh look, at the time of this report, gold is up $22 dollars at $1,245. So Janet, I don’t think anyone out there believes you anymore. Why? Let me give some reasons.

  1. Looking at a slightly stronger dollar index today, that should put a little pressure on gold, right? Nope we are up.
  2. Gold ETFs shares are up again today at approximately 55 million ounces. Up every day for over
    a month now. FED chatter hasn’t dented that momentum.
  3. How about this? Recently on the CME, we hit a record high open interest in the gold futures at 440,000 contracts.
  4. Strong CME GOLD option activity.

Janet, I hope I made a strong case. When the weather turns a little warmer, I suggest a bocce tournament or some tennis lessons for the staff during trading hours. This will clear the smoke and make your whole staff feel a whole lot better.

Thanks for listening.

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.

FLASH GAGE – Large Inflows To Gold And Silver ETFs

Even with the price of gold and silver down yesterday and the equities putting in a solid performance, we witnessed large inflows into the gold and silver ETFs. I find this increase surprising, especially the way gold traded yesterday, but it seems there is no stopping the interest this investment is creating. Currently the gold ETFs are at 54.4 million ounces, up from 51 million ounces just two weeks ago. Silver also showing positive inflows over the last seven days.

What does this all mean? What I find interesting is the broad based interest this product has been attracting. From the individual retail investor to the large hedge funds (and those in-between), everyone seems to want a piece of the action. Without a doubt these inflows have been helping the price of gold to stay well over the magical $1,200 level.

Many financial advisors have indicated that there are more and more investors putting a higher percentage of their portfolios into the yellow metal. The question remains will this momentum continue? At the time of this report the price of Gold is up over $10 dollars per ounce at $1,220 per ounce, off from the highs overnight around the $1,226 level. If this continues I expect there will be an uptick in the physical arena. There will always be the investor more interested in holding the actual metal than holding a paper ETF.

Have a wonderful Tuesday.

Disclaimer: This editorial has been prepared by Steve Miller 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.

Gold Continues to Consolidate

Dollar index virtually unchanged this morning just below the 97 level as gold continues to consolidate at these price levels.

ETF traded gold funds inventory sits at approximately 53 million ounces as the inflow of investors continues. As I indicated before, these new purchases have supported and rallied the gold price for the first part of 2016. In the past two weeks, fund managers have joined the retail investor as they focus on a trying to find a safe haven for investment.

Most of the Wall Street traders I spoke with are talking about a possibility of negative interest rates, but there are some who still believe more rate hikes are a possibility, if you follow the thought process of San Francisco Fed governor John Williams. This is what he said yesterday, “Despite the Sturm und Drang of international and market developments, the U.S. economy is, all in all, looking pretty good. I still expect to see U.S. GDP growth of about 2¼ percent for 2016. I still expect unemployment to edge down to about 4½ percent by late in the year. And I still see inflation edging up to our 2 percent goal within the next two years. So I’m not down—it all looks good to me.” So listening to his perspective on where he believes the economy is and is going, one would take a bearish stance on gold.

An article in today’s Wall Street journal on page C1 discusses the issues Japan is facing regarding negative interest rates. If negative interest becomes a trend and hits our shores, what impact do think it will have on the price of gold going forward? I can’t imagine paying a bank to hold my money in a savings account. over the past 7 years, senior citizens have been forced to invest in the stock market because of virtually zero returns on their previous popular CD investments. Many financial advisors tell me the seniors are now diversifying, or as some put it, rebalancing their portfolios, to include a higher percentage of their assets in gold.

As I enjoy taking a contrary position on topics like this, I believe Gold will continue to be well supported at these levels and I don’t believe the data the Fed will look at going forward will give them any ammunition to raise rates at the next Fed meeting. As there are many who have different opinions on where the price of gold is headed, one could expect some volatility in the short term.

Have a wonderful weekend.

Disclaimer: This editorial has been prepared by Steve Miller 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.

American Eagle Sales as of 2/18/16

The following chart includes the year to date totals from the U.S. Mint as of 5pm on February 18th. Changes below reflect the sales since our last report on February 12th.

Gold
Coin Sales in oz. /#coins + from 2/11/2016
One oz.
141,500
141,500
17,500
17,500
Half oz.
14,000
28,000
1,000
2,000
Quarter oz.
11,000
44,000
1,500
6,000
Tenth oz.
19,500
195,000
2,000
20,000
Total
132,500
408,500
53,500
98,000
Silver
Coin Sales in oz. /#coins + from 2/11/2016
One oz.
8,926,500
8,926,500
926,500
926,500

Markets Generally Maintain Pace

Walter Pehowich is on vacation today, so our commentary comes from Stephen W. Miller, CEO of Dillon Gage Companies.

Yesterday was a continuation of the markets reflected in our last comments. The precious metals market fell off, with gold trading around $1202.00/oz. Silver is around $15.30/oz and oil is $29.04/barrel.

Retail sales posted a surprising gain with core retail sales rising .6% in contrast to Dec -.3%.

The stock market posted its second day in a row gain of 222 points.

In the energy sector, Russia and Saudi Arabia, Venezuela and Qatar announced a production freeze which holds production at current levels that are on the high side. This shouldn’t impact the supply much at all and didn’t seem to impact the market.

The news is an example of why a long term strategy is so important when dealing with the markets including the precious metals complex.

Markets aren’t mainly supply and demand as before but are highly affected by government central bank activity.

For example, in our last comment we stated that the market activity reflected the belief that bad economic news would push the central banks into more easing causing the stock markets to move higher. Sure enough, the European Central Bank hinted at more easing today.

This “reading of the governmental tea leaves” is what everyone obsesses over in today’s economic world and frankly it is a sad commentary on the current state of economics.

Therefore we go back to the necessity of looking at the long term when making a decision. Over the long haul, gold and silver have retained their value while the dollar has deflated. Just think of four 90% US silver quarters (90% silver dimes, quarters and half dollars were minted up to and including 1964). They were $1 in 1964 but are worth $16 today. A very simple illustration. Certainly there is fluctuation but the trend is always for inflating the basic currency which translates into a higher “relative” gold or silver prices.

So don’t let the markets or news panic you one way or another. Know what is the reality of economics and then plan for the long term or your objective.

Stephen W. Miller founded Dillon Gage in 1976 after a long career in the brokerage industry. Mr. Miller has a breadth of experience from company management to investment banking services, leading NASDAQ small cap market companies through both first and second tier financing, to taking several organizations through the successful completion of their initial public offering. Mr. Miller and Dillon Gage Inc. have been members of the Chicago Board of Trade and the New York Mercantile Exchange. Mr. Miller is also the co-founder and President of HELPS International.

Disclaimer: This editorial has been prepared by Steve Miller 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.

How Bad Econ. News Translates to Higher Markets

Walter Pehowich is on vacation today, so our commentary comes from Stephen W. Miller, CEO of Dillon Gage Companies.

This is President’s day and the overall markets are closed. Futures are showing a higher stock and oil market with much lower gold and silver prices. European markets are higher as is most of Asia, although the Japanese economy declined last quarter and China’s exports were down almost 6% and imports down 14%.

So how does bad economic news translate into higher markets? The thought is that it will push the Fed and central banks into more easing so that people betting on stocks believe it will be positive for their holdings. Remember that the US Fed only has 25 basis points to work with so that reasoning is questionable and frankly means we would be going back to where we were and that nothing has progressed.

As we said in our last commentary, we will more likely than not see continued volatility across the spectrum of investments including the precious metals markets.

One thing is for sure, the fear factor among Americans and others across the world is high. One has only to reflect that people used to buy the good quality stocks for the long haul. In fact, in the 1960s the average hold for stocks was 8 years, but now is only four months.

People just don’t know what to do and are unsettled as to what business creation or investments to make. Add to this uncertainty the death of Scalia and the coming war over his seat on the Supreme court and we have real angst among us all. The reality is that all these concerns do not translate into a strong, vibrant economy and political stability.

So what does it mean for metals? As our recent markets have shown, metals are seen as a safe haven for this uncertainty, but will have a lot of movement along the way. The main question that our investment folks deal with at Dillon Gage is “where in the world do I put my money” and there you have it.

A word of caution, with all this turmoil, don’t get drawn in to the scam artists promising unreal returns or “deals” in the metals markets that are too good to be true. Dillon Gage has provided quality service and great pricing for forty years and will be rock solid for your future. We are here for you, your business and your families.

Stephen W. Miller founded Dillon Gage in 1976 after a long career in the brokerage industry. Mr. Miller has a breadth of experience from company management to investment banking services, leading NASDAQ small cap market companies through both first and second tier financing, to taking several organizations through the successful completion of their initial public offering. Mr. Miller and Dillon Gage Inc. have been members of the Chicago Board of Trade and the New York Mercantile Exchange. Mr. Miller is also the co-founder and President of HELPS International.

Disclaimer: This editorial has been prepared by Steve Miller 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.

American Eagle Sales as of 2/11/16

The following chart includes the year to date totals from the U.S. Mint as of 5pm on February 11th. Changes below reflect the sales since our last report on February 5th.

Gold
Coin Sales in oz. /#coins + from 2/4/16
One oz.
124,000
124,000
27,500
27,500
Half oz.
13,000
26,000
1.500
3,000
Quarter oz.
9,500
38,000
500
2,000
Tenth oz.
17,500
175,000
2,000
20,000
Total
164,000
363,000
31,500
52,500
Silver
Coin Sales in oz. /#coins + from 2/4/16
One oz.
8,000,000
8,000,000
1,000,000
1,000,000

Precious Metals Market Insights from Dillon Gage CEO

Walter Pehowich is on vacation today and Monday. Today’s commentary comes from Stephen W. Miller, CEO of Dillon Gage Companies.

What markets do day to day is interesting to watch. But, if you talk to the trade room at Dillon Gage, looking for them to tell you what will happen tomorrow, they just won’t. They know better and the truth is, if anyone tells you they know, run the other way.

What we do at Dillon Gage is to look at the underlying economies, gold movement,and public sentiment to try to see what we think long term markets are going to do. Walter and others then write commentaries reflecting the markets and our thoughts.

So here are some observations…As I write today (Feb 12th), we are seeing large moves in the market. Stocks are down over 335 points, gold is up over $50 per oz. at around $1250 per oz. Silver is up over $.50 per ounce at around $15.80 per oz. and oil is down $.66 at around $26 per barrel.

Anyway you cut it, this is an active day and the markets do talk about a lot of issues. Let’s see if we can bring it all in.

One of the big issues is the current interest rates market. Currently Japan and Europe have negative rates. In other words, when you buy their debt you do not get any money or interest paid but the bond holder actually pays those governments money just for them to hold their money in their debt instruments. In the US, Janet Yellen, the Chairman of the US Federal Reserve, indicated that the US may be considering going negative as has Japan and Europe. This has huge implications and as other commentators have written, is a basic assault on our economic system. This has been tried by Japan for years and hasn’t worked and this policy won’t work here.

Let me underscore this. It isn’t healthy for our banks nor does it boost confidence within the business community. In short it is incredibly deflationary. Normally when someone such as the government borrows money, it pays people interest for that loan. When the people have to pay the government, it means that although the government has huge debt trouble, the government doesn’t need the money for the debt they are incurring. That means that the government is either printing or has printed so much money or that people are so frightened about things, that they are willing to say that they will buy a government obligation that guarantees that their dollars will be worth less next year. To my knowledge this has never occurred in the US before and may show that the Fed has run out of bullets.

This movement to safety is also reflected in the stock market falling not just today but since the beginning of the year and the rise of precious metals markets.

Top it off by the leading Democratic candidate for the President of the United States is a self described socialist with the policies to match, further unsettles the worlds economic markets.

If you are older, try to protect your principle for sure and know that we will be in for a lot of volatility.

Stephen W. Miller founded Dillon Gage in 1976 after a long career in the brokerage industry. Mr. Miller has a breadth of experience from company management to investment banking services, leading NASDAQ small cap market companies through both first and second tier financing, to taking several organizations through the successful completion of their initial public offering. Mr. Miller and Dillon Gage Inc. have been members of the Chicago Board of Trade and the New York Mercantile Exchange. Mr. Miller is also the co-founder and President of HELPS International.

Disclaimer: This editorial has been prepared by Steve Miller 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.

Gold Redemptions in ETF Shares

For the first time in three weeks we’ve witnessed gold redemptions in the ETF shares. This corresponds with the sell signal given by the technical traders Wednesday, when the RSI number broke 80 indicating the gold market was overbought. Wall Street Spec. traders jumped on the band wagon and put pressure on the price of gold as it approached the $1,200 dollar level.

Janet Yellen in the news this morning with testimony before Congress at 10 a.m. ET. Some comments on her prepared speech before the House Committee on Financial Services were released this morning. She says, “Tightening financial conditions driven by falling stock prices, uncertainty over China and a global reassessment of credit risk could throw the U.S. economy off track from otherwise solid course.” Right after this comment was released gold traded up $8 dollars.

The Dollar Index trading above the 96 handle this morning keeping gold in negative territory.

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.

FLASH GAGE: Gold Relative Strength Index at 80%

My technician friends “AKA the gold chart traders” have been knocking at my door this morning bringing to my attention that the Gold Relative Strength Index now stands at 80.4 percent, indicating from the charts that Gold is extremely over bought at these levels. For those who follow the RSI here are the levels most look at:

Simply put:

  • Gold RSI below 30 signals the gold market is oversold.
  • Gold RSI above 80 signals the gold market is overbought.
  • Gold in the area of 50 signals a neutral stance or pause in price is expected.

The Gold RSI indicator measures market price momentum and is a tool some use to predict market tops and bottoms. By no means am I advocating using this tool alone to trade the gold market. It’s just tool a lot of folks use with other information to predict future trends. I for one, give the charts about a 10 percent reliability and that’s just one man’s opinion. (Sorry guys I know you love the charts.)

As I start to write this report we see gold breaking the $ 1,200 level after rallying from $ 1,046 on Dec. 3rd.

Equity markets experiencing somewhat of a free fall today and oil down over 3 percent and who could forget the treasury market in positive territory also. I also heard from a Wall Street Trader today the Funds are very active in the ETF arena.

So only time will tell if this momentum is sustainable. To my chart friends, thanks, I’ll be in touch.

Have a wonderful day.

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.

Gold Up Big AND Dollar Index Positive

What’s happening to our gold market this morning? The dollar index is seen in positive territory and gold is up big. Economics 101 says that’s not supposed to happen. There must be some powerful forces effecting the gold price.

And they are…ETFs. I‘ve been writing a lot about this phenomena in the past few weeks. The gold ETFs are up over 3 million ounces in the last two weeks and up 5.41 pct. on Friday. So I felt it was time to get the pulse of the equity investor.
I have a number of friends who are financial advisors from my old days at Prudential Financial. Now they are spread all over at different firms. After speaking with them this morning there seems to be a few common denominators.

  • It seems that some retail investors have thought very hard about the wild swings in the equity markets. Now some believe that is time to diversify their portfolio.
  • Most don’t understand the physical market and would rather buy ETF shares.
  • Some brokers are recommending investing 10 pct. or more into the gold ETFs.
  • There are a lot of misconceptions about buying precious metals and most financial advisors don’t understand how easy it is to buy physical metals.

Anyway, the average ETF retail investor is usually in this market for the short term and for most, this investment seems to makes sense.
As the gold market continues its rally today and equities decline, I expect we will continue to see more participants enter the ETF arena.

Some retail dealers are reporting two good two way activity. Higher prices have brought some clients in to sell their metal, so a little less demand is seen by the mints and wholesalers as the retail dealers stock up on gold and silver from the secondary market.

CME Silver warehouse stocks continue to see redemptions of 1,000 ounce bars for consumption. On Friday 827,000 ounces were withdrawn from the CME warehouses. JP Morgan Chase took in 310,000 ounces Friday increasing their holdings to almost 44 pct. of all the depositories combined.

Is there a pattern developing here? We will see.

Gold registered warehouse stocks sitting at 159,000 ounces and total combined registered and eligible is 6,515,753 ounces.

One thing I hope doesn’t happen is, to see the market participants start to use the CME warehouse stock inventory to procure metal. If this pattern develops, I expect going forward we will see a direct impact on the price of gold and silver.

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.

Gold ETFs Help Gold Keep Bid Posture

For over two weeks now Gold ETF holdings have increased in a big way, helping gold keep its bid posture. The question now remains, with the dollar steadying, will the retail investor continue to support the gold price by buying more shares?

What I find interesting this morning is just before the unemployment number was released at 8:30 am eastern time, gold was up $ 1.00 for the session. And as soon as they posted the unemployment rate at 4.9 pct. the market sold off six dollars. This tells me that computer trading known as algorithms are prevalent in the marketplace. Key words after news is released can affect the price as it seems to have done this morning.

Case in point – Week in review:

  • Tuesday – Kansas City FED President Ester George states that gradual rate hikes are in the cards.
    Result: Gold market sells off on the news. Higher rates, lower gold prices.
  • Wednesday – New York FED president William Dudley says short term interest rate increases are now a considerable concern for the FED. No rate hike, higher gold prices.
    Result: Gold market rallies in a big way.
  • Early this morning – we witness the gold rally continuing from the past two days off of Dudley’s comments. And here comes the strong unemployment number. This news gives the impression that the FED might have some ammo to raise rates. Higher rates lower gold prices.
    Result: Gold sells off, now we are down $ 11 dollars in today’s session.

See a pattern?

Is the price of gold now driven by computer programs developed by big institutions? Whatever happened to supply and demand issues?

How does a person trade or invest in this market when a single word by a FED president or a government report changes the direction of the market in a split second?

Now that the news is out and absorbed, I expect we will now witness the true direction of the gold market.

The good news is we are still up $25 dollars from when Ester George felt compelled to put her two cents worth of comments into the marketplace. So I believe the key for the next few days is to watch the trading activity in the U.S. Dollar. That activity should be an indication of where the price of gold will trade in the near term. Lower Dollar = higher gold prices.

From snowy New York, have a wonderful weekend.

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