Gold Stuck In The Mud

The Market Gage - Gold is Elemental

The October jobs creation number comes in at 261,000 and the unemployment rate is now at a seventeen year low of 4.1 percent.

The price of Gold seems to be stuck in the mud, trading for the most part between $1,270 and $1,280 dollars.

Very little change at all in the dollar index and with Treasury yields steady, the price of gold has nowhere to go.

On the positive side, CME Gold active Future volumes are coming in each day at over 360,000 contracts. With the lack of price moment and these healthy volumes one must believe that the price of Gold is consolidating at these levels building a foundation for higher prices ahead.

The price of Silver is steady as she goes, following the same path as Gold.

The gap between the price of Platinum and Palladium continues to widen as now at a $66 dollar differential. Hedge funds still holding on to their long Palladium positions hoping the price breaks the $1,000 level where the anticipated stops might be placed.

Gold and Silver ETF holdings are following the same consolation as in the price of Gold and Silver, showing not too many redemptions or inflows into the funds at this time.

The FED

President Trump nominated Jay Powell to be the next FED Chairman. Mr. Powell, who has been a Fed Governor since 2012 and considered a “Dove,” has supported Ms. Yellen’s slow and steady rate program. Mr. Powell is also on board with a transparent and predictable approach to reducing the FED’s balance sheet.

The President indicated he was pleased with the job Ms. Yellen has done. So in a way he is continuing her legacy by nominating a person with the same ideals, which I’m sure the market participants will approve.

CME Bitcoin Announcement

As the news was released on Tuesday, we immediately sent out a Flash Gage to inform our readers about the exciting new development in the Bitcoin arena and for those who trade Bitcoins the ability to take advantage of the news.

Hats off to the CME for going forward with this new Futures Contract.

Specific details have not yet been released, therefore I can only speculate on how this product will be traded. So if you would indulge me for a moment, I will give you my take on how this product might be traded.

Previously, if you wanted to participate in the new world of Cryptocurrencies and bought Bitcoin, you owned the actual product hoping the value would increase and in the end you could either cash in or buy something with the product.

Now I expect the new CME Future contract will be a cash-settled futures product.

Meaning, you can buy a contract thinking the price will increase in the future or sell a contract thinking the price will decline over time. The details on margin requirements have yet to be released, but I expect that you will have the ability to either buy or sell Bitcoins on a future date with a portion of the cost of the total price of the Bitcoin index as it trades today.

For those who think Bitcoin will implode, you will have a choice of selling a Bitcoin at a date in the future and buying it back before the Future Contract date settles.

For those not comfortable in investing in the actual product, the CME (Comprised of four exchanges: CME, CBOT, NYMEX, and COMEX, a regulated exchange) is giving the investor a new vehicle to participate in the Bitcoin marketplace without some of the risks involved in investing in the actual product.

How this Futures contract differs from your traditional hard commodities product, is that this is really a synthetic product that is “mined” by mathematicians and computer codes – the cost of which is much more difficult to ascertain than getting Gold, Silver or Copper out of the ground.

With the billions of dollars already invested in Cryptocurrencies, the CME had no choice but to create this ingenious product.

I expect it will a big hit when released.

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