The following chart includes the year to date totals from the U.S. Mint as of 5pm on February 4th. Changes below reflect the sales since our last report on January 29th.

Gold

Silver

One man’s opinion:

Something has to be done at the Fed. On Tuesday, Kansas City President Ester George said, “There has been NO substantial shift in the outlook that would justify pausing further gradual rate hikes.”

Gold and silver sells off on her comments.

Wednesday New York Fed President William Dudley said, “The tightening of financial conditions that have taken place since the FED began raising short–term interest rates in mid-December is a matter of considerable concern to the FED.” He also indicated that a weakening of the Global economy accompanied by further appreciation in an already strong dollar could have “significant consequences” for the U. S. economy.

Gold and silver rallied off his comments, the dollar index sells off.

What is reported in their comments have a direct effect on all the markets, from equities to oil, to the dollar and commodities. How could two people that sat at the same table and collectively agreed on what direction the FED will take at that meeting come out a month later and BE ALLOWED TO EXPRESS TWO COMPLETELY OPPOSITE VIEWS ON THE FED POLICY GOING FORWARD?

We need and demand orderly markets in order to attract investment. These crazy comments bring uncertainties to all markets and chase folks from investing in them.

It’s time for the Fed Chair to stand up to these folks and tell them to keep their comments to themselves and let the FED minutes collectively speak for them.

By the way, since Dudley’s comments the dollar has weakened substantially creating a strong rally the gold price.

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 tightening of financial conditions that have taken place since the FED began raising short–term interest rates in mid-December is a matter of considerable concern to the FED, New York Federal Reserve Bank President William Dudley said in an interview this morning. He also indicated that a weakening of the Global economy accompanied by further appreciation in an already strong dollar could also have “significant consequences” for the U. S. economy.

Almost immediately we saw a selloff in the dollar index and gold and silver rally to the upside. This goes to show you that the market is very sensitive to any comments made by any Fed official.

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.

Longs still in control of the gold market as we continue to witness inflows into the gold ETF’s. Gold overnight broke thru the 200-day moving average at $1,132.00, but failed to gain momentum above as selling from the Middle
East put a damper on the rally.

Kansas City FED President Esther George said yesterday, “There has been no substantial shift in the outlook that would justify pausing further gradual rate hikes.” For some professional gold traders, these statements from the FED gives them mixed signals on whether to join the rally or sell into it.

Some gold traders said at these levels they would take a wait and see stance for the remainder of the week as they await Friday’s job numbers. Their preference is still playing in the oil arena, but if the market catches a bid and settles above the 200-day moving average today, some have indicated that they would abandon the oil market and concentrate on the gold market again.

Silver holding her head above water, rallying to $14.495 overnight in the March contract. With the lack of available one thousand oz. bars on the street, we have seen premiums increasing. The question remains, is this a indication of things to come as CME warehouse stocks continue to decline? And with the price of silver at these levels, we are witnessing some junior silver mining companies struggling to obtain financing to produce more silver.

Have a wonderful Wednesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.

The price of gold was well supported over the last two weeks partially due to the increase of almost 2 million ounces into the ETF funds. Silver, in the same period was going in the opposite direction, seeing small redemptions in the ETF each and every day.

Fresh gold fund buying overnight helping gold hold its positive position this morning. As we start the week, we see the dollar index in negative territory, also a positive for the gold price. Gold seems to have some momentum at these levels and becoming a trend setter helping silver to catch a bid also.

Technical levels of resistance in gold to watch for is $1,132 in the April contract and $14.48 in the March contract for silver.

We still await some clarity on last week’s wild silver fixing numbers. As I said last week and still believe today, the process is broken and I wonder if there is a fix for the “fix”? The price is supposed to reflect a benchmark price at the time of day so that all the producers, hedgers and speculators can trade on, but after last week’s disaster, many are trying to figure out another way to fix a price. Some are going to the CME settlement price. But I don’t believe that’s a good alternative because it doesn’t reflect a London price which all the producers’ yearly contracts are based on and all sovereign mints use to sell their products. So I guess only time will tell if everyone can rely on the fix again? Sometimes it’s better just to leave things alone. I’m told it worked for 117 years, they had to be doing something right.

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.

For the time being, continued gold ETF inflows are helping to keep gold’s head above water. Going forward, with gold at these levels, I don’t expect to see new inflows continuing
into the ETF marketplace.

April $1,106 level is our first level of support, and in my opinion, for the market to hold its bullish sentiment we would have to hold that figure. With the lack of professional gold traders participating in the market, I expect it will create some downside pressure in the price short term. As I indicated in my previous comment, some gold traders have jumped ship and gotten involved in the crude oil market.

Second day in a row the LBMA silver fixing price was set below where the spot market was
trading. Today not as dramatic as the $ .80 cents difference yesterday, but still a concern for most participants. The spot silver price at the time of the fix was around the $ 14.20 area as the fix was settling at $14.08. I wonder if this pattern continues, if a fix ( no pun intended ) to this problem is available.

It looks to me that the electronic fixing platform for silver is becoming a market of its own with very little liquidity. This can become a serious problem for the world producers, government mints and refiners who have annual contracts selling and hedging their production on the silver fixing price.

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.

The following chart includes the year to date totals from the U.S. Mint as of 5pm on January 28th. This is our first report for 2016

Gold

Silver

Thursday’s London silver fix settled approximately $.80 cents off the March future price. Continue reading →

Good morning. I will be traveling to Dallas with the first flight out of Newark this morning, so unfortunately I will be unable to give my live market comments.

But I wanted to still communicate my thoughts on an aspect of the precious metals industry, so I decided to address the question:

Why do Central Banks buy Gold?

In recent months I have been told by some Wall Street professionals that they believe gold fundamentals have deteriorated. Not to mention the Fed’s decision to raise rates in December last year. And adding to this thought process, are some Fed governor comments that more rate hikes are a possibility.

Those facts and other reasons convinced the Wall Street pros that staying short gold was the right decision in the short term.

After talking to a few gold traders Tuesday morning, and witnessing a gold short covering rally today to $1,119, I believe, that their costly strategy has been covered and eliminated. So some look to recover their losses by trading the oil market instead.

Short covering and the continued increase in ETF holdings have supporting the gold price of late, but what you don’t see behind the scenes are the Central Banks continuing to add to their current gold holdings.

Global debt and the devaluation of some world currencies gives the Central Banks all the reasons to adopt that strategy.

Recently, countries have turned their back on the U.S. by selling Treasuries, giving up on us because of our current massive 19 trillion debt problem that has exploded under the current administration.

Where will it end?

Entitlements and health care costs are out of control. And unless we address these problems we may witness the worst economic disaster this country has ever seen. Looking at the facts is a U.S. downgrade in order?

What’s in your safe deposit box?

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.

How does one gage (no pun intended) the future movement in the price of gold? My best answer would be: by researching all aspects of the gold market each and every day; speaking to many different people, from traders around the globe, to folks at the Mints, refiners and dealers; listening to what the FED policy makers have to say and watching worldwide currency activity.

I’m always being asked, “What do you think the price of gold will do in the short term and for the year?” As in any market, trying to calculate the move in the next five minutes is always a challenge, if not impossible. And at times there will be conflicting information making it very difficult to put together a strategy.

Nonetheless, I find the most important factor in finding future movement in the price of gold is market trends, or in other words factors that create momentum.

Whether technical or fundamental (my favorite), there are different signs that indicate a possible direction. Two things stick out today. As I indicated in my previous comments, for almost two weeks now gold ETF holdings have continued their trend in increasing holdings each day. Another factor I found was option related: August $1,175 gold calls traded $26 dollars last week. Both are bullish indictors and as we all know there are NO guarantees.

No crystal balls, no magic wands. So we use the tools I indicated to TRY to determine a direction. Using these tools can provide invaluable insight that can add value to any conversation with any client.

At the time of this report, we witness a weaker dollar, lower crude prices and equities in negative territory. Gold is catching a bid here and at some point I believe that if this rally continues, some of the Wall Street traders will have to cover their short positions.

As we all know life is a gamble and trading precious metals is no different. But with a solid education and using the proper tools, your odds can improve.(Sounds like a fathers speech before sending a kid out to college.)
My apologies.

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.

We start the day on a quiet note with oil and the dollar in positive territory, something that we haven’t experienced for quite some time.

Gold feeling slight pressure this morning because of the stronger dollar and higher oil prices. We have also noticed that base metals as well as Silver, Platinum and Palladium all in green territory.

Gold in backwardation mode. Feb-April gold switch this morning trading .30-.40 back indicating a slight tightness in the metal. London EFP quoted a positive 20-40 figure, haven’t seen this in a long time. One might think, that the reason for this is, the recent increase in ETF holdings over the last ten days.

Refiners and government mints report steady demand for product and are right on target based on their expected models for the year.

A strong Equities market open is expected after seeing oil up over 5 pct. this morning. A welcome breather from all the madness of late.

Across the pond: ECB’s Draghi yesterday indicated downside risks increasing again and sees a need to continue stimulus at least to the end of March 2016. The news created a buy signal to our equity markets here.

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.

Why you need to watch the price of gold with one eye and all the other markets with the other.

Can someone explain to me why the media and government officials stopped talking about the United States debt. At the time of this report, the US Debt is a staggering 19 trillion dollars. That’s $58,000 for each individual in this county. And the Government keeps spending a trillion dollars a year more than it takes in. Is anyone concerned yet, especially with the (I’ll be nice) folks running for president? Is that the best we can do?

Look at these numbers: Every day 10,000 baby boomers are retiring and are expecting to cash in on all the entitlement programs available. One third of them have no savings and will have to rely totally on Social Security. Currently there are 47 million Americans on food stamps. People are living longer. Going forward how can we pay for these entitlements?

In an election year I don t expect you will hear anything about entitlements. For each politician running for office, this topic is suicide and sure to destroy any chance of being elected. So we forget the debt and listen to the presidential candidates trade insults each day. That’s a sure plan for economic disaster.

As a gold trader, I need to understand how all this madness will turn into higher gold prices. I have a lot of theories and will share some of the ones that stick
out in my mind for the short term investment. Let’s look at the landscape now as I see it and have reported in the past.

Gold is virtually locked in a trading range between $1,075 and $1,095. In the last week and a half, buying in the gold ETFs has increased each day. Wall Street gold traders still sitting with short positions believing the Fed governors’ story that more rate hikes are in the cards. I still believe it’s one and done. I see no data to support another rate hike any time soon.

So we have a stalemate.

The longer gold stays in a trading range the more likely it will have a spring effect (or as they say) I expect a short covering rally.

Now let’s look at something I’ve been thinking about for a while. Let’s look at the stock market. Investors are highly leveraged and the volumes are low indicating to me that a sustained rally is out of the cards. Just the opposite I expect will occur. Lower earnings and continued lower oil prices should continue the Dow’s decline.

So here’s my take on the gold market short term. We still see central banks buying gold. Is there something they know that we don’t? I wouldn’t be surprised to see the Fed live up to their promise and raise rates (as some of the Wall Street traders predict) and crush gold only to turn around and buy it cheaper to support our currency. But the downside is, higher rates which will cost us more to finance the country’s debt. So the Fed’s hands are so tied up there is no escape. Look at all the world countries that have now turned sellers of our debt. What does that tell you?

Overall the government is in a sink hole with no rope to save itself. So going forward, I expect a weaker dollar against major currencies and gold to be the investment choice as our government has no alternative but to buy the metal. And eventually the retail investor will catch on, too.

In the meantime, I put my ear to the ground awaiting to hear the roaring rally on the gold train a comin’.

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.

Oil in sell-off mode as Iran say it plans to increase oil production by 500,000
barrels a day now that sanctions have been lifted.

Dow industrials off highs as the oil news is released.

Gold lower with silver, platinum and palladium in positive territory.

Most Wall Street gold traders shift market trading interest into oil today as volatility increases in that sector.

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.

We start off the week with a federal holiday honoring the accomplishments of Martin Luther King Jr.

Precious metals activity overnight relatively quiet on light trading volumes. The Dollar Index and the Euro steady, virtually unchanged in morning trading. Crude Oil overnight in the March contract hit a low of $29.35 with most all traders and trade houses looking for a $24 dollar level to be met near term.

Peoples Bank of China is instituting new rules regarding the money flows of the Yuan in and out of the country. The new rules were implemented to minimize short selling of the Yuan outside the country, stopping future devaluation by offshore banks and speculators.

Of the four precious metals only gold continues to see new buyer interest emerging in the ETF arena. During the last seven days, ETF speculators have increased their ETF holdings. I expect, we will continue to see increases if we break above the $1,100 dollar level, otherwise if we extend our seemingly locked-in trading range a redemption is expected. For the most part ETF investors are short term investors and are more inclined to get out if the market looks weak. A sell off in ETFs could move gold back to the lower end of the most recent trading range.

Silver, it seems, is looking to her big sister gold for guidance as she just drifts around the neighborhood with nothing to do. Silver’s cousins, Platinum and Palladium, are still in rehab with no signs of being released anytime soon.

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.

Today I wanted to talk about ETFs, exchange traded funds. Gold exchange traded products are exchange traded funds that track the price of gold. I expect there is a lot of confusion between owning paper gold and owning the physical product. The reason I decided to talk about this topic today is I noticed an increased participation in these funds in the last couple of days.

Some see it as a buying opportunity I guess, with the price of gold consolidating at these current levels.

The thought process in purchasing the ETF (paper gold) is to gain exposure to the spot price of gold without owning the physical metal. This a totally different mindset from the investor who buys the physical product. I believe that the holders of ETFs feel that they have more freedom with owning shares of gold. But if my intention is to own gold, why would I want it in paper form instead of owning the physical product? Physical gold is accepted all over the world and is extremely liquid.

An ETF is a credible alternative if a person wanted to trade gold in the short term. If however the investor’s desire to own gold is to diversify their portfolio, hedge against inflation, provide an alternative currency, remove counter-party risk, or own an asset that is not encumbered by Wall Street, the physical asset is clearly the better way to go as we have seen paper gold promises go up in flames for centuries, while the physical has an unbroken track record of wealth preservation.

On another note: I guess I have some company in believing that the FED will have no credible data to raise rates anytime soon. With the recent news out of China and uncertainties in our equity markets regarding future corporate earnings, some financial advisors have seen an increase in gold and silver demand. Some Wall Street traders indicate they have no intention of adding to, or changing their short bias at this time. This creates an interesting a tug of war between the retail investor and the Wall Street Trader. Only time will tell. What side of the ledger are you on?

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.

I would like to talk about things that effect the price of gold other than supply and demand issues.

Many times in my comments, I have indicated that the movement in the price of gold was effected by the price movement in the Dollar Index. Let’s look at what the dollar index is and how it effects the price of gold.

“The US Dollar Index is the value of the United States Dollar relative to a basket of foreign currencies often referred to as a basket of US trade partner’ currencies.”

The dollar index is a weighted geometric mean of the dollar’s value relative to the following currencies:

• Euro ( EUR ) 57.6 percent weighted average
• Japanese Yen ( JPY ) 13.6 percent
• Pound Sterling ( GBP ) 11.9 percent
• Canadian Dollar ( CAD ) 9.1 percent
• Swedish Krona ( SEK ) 4.2 percent
• Swiss Franc ( CHF ) 3.6 percent

The movement in the price of the US Dollar index can have a direct impact in the movement of the price of gold. The price of the Dollar Index usually trends in a negative correlation to the price of gold and is part of the Wall Street Trader’s arsenal in determining the future direction of the gold market.

The price of gold is traded in dollar terms around the world, therefore, any movement in the dollar index will likely affect the price of gold. In theory, as the dollar index falls the price of gold raises, and vice versa. I must comment that this negative correlation is “NOT” an exact science as other factors can impact both markets individually.

Because of the many countries included in the Euro Zone, (as compared to the smaller geographical coverage of the other currencies included in the basket), from time to
time I will refer to the activity in the price of the Euro as a direction mover to the price of gold.

There are times in history that one can argue my point, but overall the price of Dollar index should not be ignored and should be used as a tool to determine the future price of the yellow metal.

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.

One of Only Nine Exchange Approved Precious Metals Depositories in the United States

NEW CASTLE, DELAWARE (Jan. 12, 2016) – The Commodity Exchange, Inc. (NYMEX or Exchange) and CME Group approved International Depository Services (IDS) of Delaware, a subsidiary of Dillon Gage Metals, to become an Approved Depository for gold, silver, platinum and palladium. The Exchange has approved IDS after a vigorous review process determined that the IDS facility met or exceeded the most stringent security and operational requirements expected by the Exchange. IDS becomes just the ninth precious metals depository in the world to achieve COMEX approval.
Continue reading →

The Shanghai stock exchange starts off the week down 5 percent as retail investors there continue to sell equities. China’s central bank intervened today trying to strengthen the yuan with hopes this will create some stability in the region. One trader told me that he expects the sell off to continue as the market is already down 15 percent in the first week of the year.

One would think as the Shanghai market continues to fall we would see a rotation into gold as a safe haven for the Chinese retail investor. “Not so fast” said a broker I spoke with this morning, as you look at the pricing landscape of other commodities still retreating. This morning we witness all base metals lower and who could ignore oil down to a 32 handle with no one standing up to support the oil market at this time.

After Friday’s strong employment numbers we see the dollar index slightly higher at the moment against the other major currencies.

Wall Street traders still smiling over Friday’s job numbers as they continue to maintain their bearish stance in the Gold and Silver market. Friday’s job number could help the Fed Governors keep their promise of multiple rate hikes in 2016. Higher interest rates would
make the dollar more attractive to yield seeking investors, but in turn will put pressure on gold and silver prices as most Wall Street traders are predicting.

Early Wednesday morning I will be traveling to see my friends in our Dallas office, so I will unable to give a live market commentary. So instead of asking for coverage, I created what think is an informative and educational piece explaining the workings of the “US Dollar Index.” I hope you will tune in.

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.

Good morning from the Fun show in beautiful Tampa.

World equity markets take a breather today from the wild activity experienced earlier in the week. The Shanghai stock market today showed gains of almost 2 percent after the government lifted the circuit breaker rule and stepped in to stabilize the Yuan. I expect most believe this is only a Band-Aid approach to bring calm to the market. Ninety percent of the activity on the Shanghai exchange is retail investor activity. As the weekend approaches, the China retail investor is still very nervous knowing that the Government in the long run cannot control the direction of the market.

Gold down today after hitting a 9-week high yesterday. At the time of this report we see the dollar index higher and oil basically unchanged as the market awaits the job number at 8:30 eastern time.

Wall Street Gold traders feel a little better today, (not changing their bearish stance), but if world equity markets take another hit I expect a strong short covering rally to ensue. I believe if this happens it will be a confirmation to them that another Fed rate hike is not in the cards, no matter what these Fed presidents report on the business news channels.

Silver took her time to follow gold yesterday, but once she got started had a better day percentage wise than gold.

If you are looking for gold and silver this morning you find them hanging out on the street corner at 1100th and 14th Avenue. Stop by and say hello.

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.

The Gold market started the year on solid ground near the midpoint of its year-end trading range, but the question remains: “what will be the catalyst to push gold over the magical $1,100 dollar level and beyond?” Continue reading →

We start the year with higher gold and silver prices caused by geopolitical tensions in the Middle East. Also contributing to the higher price of Gold this morning is the decline in the world equity markets.

China setting the tone for the world equity markets this morning. A 7-percent drop in the Shanghai Stock market triggered circuit breakers that halted trading on the first trading day of 2016. The main contributing factor to the Shanghai decline this morning was the news that China’s manufacturing surveys show that factory activity slowed for the 10th straight month.

On the opening bell of the Dow this morning, we see the industrial average down over 300 points on concerns of China’s data, escalating Middle East tensions and higher oil prices.

In the middle east, Gold is finding safe haven status after Saudi Arabia broke off ties with Iran when protestors stormed its embassy in Tehran upon hearing the news of the execution of a popular Shiite Muslim cleric. The price of crude oil is higher today by 2 pct. because of the actions of the Saudis, the world’s largest exporter of oil.

Wall Street traders back from their long Christmas holiday indicate that they are forced to take on a defensive position covering their small short positions carried over from last year. After speaking to some traders this morning, it appears they expect 2016 to be the same as 2015. Many looking at a decline in the price of Gold and Silver around 15 percent, weaker than the 13 percent decline
in both metals in 2015. I’ll take the other side of that trade. I expect metals will be higher this year because of tensions building in the Middle East. I believe countries will be forced to pledge their allegiance to one side or the other, making it even more important that we have the proper commander in chief in the White house next year. If the world markets decline, I expect any increase in the Fed fund rate will be put on the back burner for a while giving me more confidence that a higher price of gold is in order for 2016.

With the news out this morning, some retail brokers expect clients to take some profits off the table and look for alternative investments in the new year. Some financial advisors indicate that clients will be looking at bonds or precious metals as alternate investments in 2016 if equities decline due to world economic pressures and escalating Middle East unrest.

Nonetheless, in the event that our markets go higher and the demand picks up in 2016, don’t look for the refiners or the mints to make more product available. Most are reporting status quo for 2016. I have not heard of any mint or refinery hiring more folks or buying more equipment in 2016.

Have a wonderful week and a healthy and prosperous 2016.

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 following chart includes the year to date totals from the U.S. Mint as of 5pm on November 12th and the amount of change since our last report on November 6, 2015

Gold

Silver

A surprise job number was released at 8:30 this morning. October jobs came in at a healthy 271,000. Most economists and a panel on CNBC predicted the number would come in at 180,000. Immediately after the number was released we experienced selling pressure in precious metals.

The news moved gold from $1,106 to $1,085 and silver from $15.02 to $14.77. A good friend brought to my attention that gold was down the last 14 out of 16 days. And if I can be so bold to use his phrase: “The last time this happened was, NEVER.” A very interesting comment to say the least. As we reported last week the turning point in the gold market was when we reached the $1,190 area and could not follow thru to $1,200 as we witnessed in one day, half of the new longs that brought the gold market from $1,114 to $1,190 decided it was time to get out. Since then it’s been a bloodbath for anyone trying to establish a long position.

By the way, this job report number moved the chances of a rate hike into December from 48 percent chance it will happen to 74 percent.

The question I’m asking myself this morning is, when will this selloff end? One would think that such a sustained move to the downside, would eventually bring buyers into the market place thinking enough is enough. Well it’s tough to stand in front of a freight train with momentum, but at some point the train must stop to change the crew and unload some of its payload.

In the meantime, my best guess is that this market must settle down for a breather and if not, I have an idea. You old folks probably remember the Superman series with Clark Kent and Lois Lane, right in the beginning of the show you saw Superman stopping an out of control freight train? Well, with Halloween just ended, costumes are 80 present off. I think I’ll go buy a Superman costume and try to stop this market from falling any further.

But if I can’t, you are all on your own.

Have a wonderful weekend.

Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.

The following chart includes the year to date totals from the U.S. Mint as of 5pm on November 5th and the amount of change since our last report on October 30, 2015.

Gold

Silver

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 29th and the amount of change since our last report on October 23, 2015

Gold

Silver

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 22nd and the amount of change since our last report on October 16, 2015

Gold

Silver

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 15th and the amount of change since our last report on October 9, 2015

Gold

Silver

The following chart includes the year to date totals from the U.S. Mint as of 5pm on October 8th and the amount of change since our last report on October 2, 2015

Gold

Silver