A less than expected August jobs report released this morning rallied spot gold nine dollars. Revisions to the June and July unemployment numbers (now down 40,000 jobs) also had an effect.
Yesterday, ADP released their Private Sector jobs report for August and the private payrolls increased by 237,000. Good news for the Equity market as they were only expecting an increase of 185,000.
After yesterday’s strong ADP figure, the street was expecting today’s job report to be stronger than the economists’ estimate of 180,000. When the number came in less than expected at 156,000, the yields on the Ten Year treasuries immediately came down to a yield of 2.0991 percent and the dollar sold off.
Within five minutes of the news hitting the wires we saw treasuries reverse their decline back to the 2.13 percent level and the price of gold retreated from its highs.
I find it fascinating how fast the market reacts to the news. No doubt Algorithm programs were activated at 8:30 as we saw big moves in Gold and Bonds right after the number.
At the time of this report, the Gold market and Bond market have settled down after absorbing the news and now await the next news trigger that will move the needle.
Yesterday, some Wall Street Gold Traders doubled down on their positions after spot Gold tested the $1,300 dollar level and then reversed. I don’t know for sure, but after the news this morning I would imagine they sold out some of their long position and took their profits. Their strategy has always been to get in and get out, making $15 to $20 dollars. Let’s not forget that it’s the beginning of the Labor Day weekend, what a better gift to get them out of town early profiting off the poor job number report.
Digital Cash
Blockchain technology is alive and well and Cryptocurrencies are about to make a big impact on the World Stage.
Switzerland’s UBS is leading the way and has been in discussions with central banks to bring major world banks on line to a new Cryptocurrency platform, set to be introduced to the marketplace at the end of 2018.
Six banks have already put their John Hancock on the bottom line, they are: State Street Bank, CIBC, MUFG, HSBC, Credit Suisse and Barclays Bank.
The Cryptocurrency transaction using Blockchain technology will significantly speed up money transactions between banks with ultimately eliminating wire transfers as payments. Over the
long run this platform will reduce back office staffing, Clearing Houses and speed up financial transactions between banks.
The UBS name for their Cryptocurrency is the “utility settlement coin project,” started by UBS and Clearmatics Technologies in 2015.
UBS claims that each coin would represent a fiat currency, most likely US Dollars or Euro’s, and become the digital currency for financial transactions between banks.
Fed news
For the first time in a very long time, the CME Fed Watch tool shows a 1.4 percent chance of a CUT in the Fed interest rate at the September Fed meeting. It might be insignificant, but nonetheless, it is the first time we have seen a rate cut as a remote possibility. It’s only later this year in December that the CME Watch Tool shows a 36 percent chance of a rate hike. Investors and traders are feeling more comfortable that a rate hike is not in the cards and if you look at a year out, there is no chance of a rate hike indicated higher than 41 percent in any month.
Have a wonderful Labor Day 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.