Could Govt. Shutdown Boost Gold?

The Market Gage - Gold is Elemental

All Eyes On Washington D.C.

A government shutdown could boost the price of Gold.

Almost everyone in the world of equities is expecting a market correction. Could a government shutdown create the first major selloff in some time? The deadline is midnight tonight.

Regarding the possible shutdown, the Office of Management and Budget said, “Although the government would stop
paying federal workers, S&P predicts a shutdown would increase the deficit because of the added cost required to stop and start federal programs. The last three government shutdowns — two during President Bill Clinton’s administration and a third under President Barack Obama in 2013, cost the federal government $4.25 billion.

Just what this country needs, more money added to the country’s debt.

As we ever get closer to midnight tonight, no one expects a Cinderella ending to the budget bill. Yesterday the House passed their version of the bill, but left out the DACA proposal, something the House Democrats had demanded be part of the bill.

Now Onto Our Markets

Even though we are trading higher this morning, keeping gold from trading even higher is our Ten-Year Bond yield trading at a 2.62 percent, which is a three-year high. The Dollar Index this morning is in unchanged territory.

The CBOE VIX index is in an upward move sitting at over the 12 handle after making a new historical low just a week or two ago. This uptick might indicate some nervousness in the equity arena as some guests on the financial news networks predict a correction soon.

The price of Palladium is back over the $1,100 level after some nervous longs and some fund liquidation took the price of Palladium in the last few days below $1,100. Open interest dropped 1500 contracts in March in the last couple of days, and while that might not sound like a lot, one must remember that the Palladium futures contract is a relatively a small contract compared to Gold and Silver futures contracts.

It’s been a while since I spoke about the precious metal ETF market. One noteworthy point to make today. Overnight, Gold ETFs increased by over 385,000 ounces, an increase we haven’t witnessed in some time.

One significant point I want to share. What’s not mentioned on most business news channels is the talk about reversing some regulations like Dodd Frank which totally handcuffed Banks and trading houses in an enormous way, limiting their income potential. Sure everyone expects an equity correction, but with the Corporate tax breaks and a reversal of these controversial regulations, one could expect our equity markets to stay afloat for a long time to come.

Just my two cents.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.