Wall Street Talks Gold February 1, 2019 Over the last couple of days, we interviewed some prominent Wall Street Gold traders about the metal’s prospects and found that their opinions vary somewhat. I would like to share some of their comments. For the most part, the traders I spoke with have confidence that the price of Gold will continue to head higher, pointing out a few details that could back up their opinions. First of all, they noted the Fed Chairman’s dovish tone towards interest rates in 2019. Many believe that the December rate hike was a one and done for the foreseeable future and that’s good for the price of gold. Next, the country’s runaway debt and uncontrolled government spending continues to be a growing concern for traders. And that’s good for Gold. The crazy Brexit negotiations could also help the price of Gold continue building a foundation. One comment that made sense and stopped me in my tracks, “I agree the price of Gold will continue higher, but in the event of a HARD BREXIT, the price of Sterling and the Euro could take a hit and in turn boost the U.S. Dollar, causing the price of Gold to decline quickly.” It took me a moment to digest what he just said and I didn’t have a comeback to dispute his statement. After all, the U.S. dollar is the driver of the price of Gold. One trader said her bottom figure for the Dollar index is 94.20. If the dollar index declines to that level, she believes the price of Gold will peak at the $1,370 level. Currently, the dollar index is trading at 95.50, but at this point I cannot find a catalyst that could move the U.S. Dollar to her target level. Also, we are all in agreement that a slowing economy here and across the globe will help the price head higher. Overall, the consensus was positive, but I still say watching the action in the U.S. Dollar should be at the top of everyone’s to-do list, because without a weaker dollar the price of gold will have a difficult time making new highs. Palladium on the Rebound It didn’t take too long for the Commodity Hedge Funds to take some profits off the table as it became apparent the price of Palladium had traveled to new heights in a quick manner. Subsequently, they quickly took the price of Palladium down over $80 dollars when the market revealed that supplies had started to show up in Zurich depositories. But now, realizing that the material showing up in the Zurich vaults was only a drop in the bucket (so to speak) they have come right back in, waiting for the next news story that could push the price of Palladium to new record levels. Currently, there are almost 785,000 ounces held in ETF funds while in the NYMEX vaults there are ONLY 42,647 ounces between registered and eligible status. Open interest in the most active March Futures contract stands at 21,611 contracts. That’s 2,161,100 OUNCES. What a difference. It will be very interesting to see what happens to the open interest in the March Palladium contract as we approach first notice day, just four short weeks away. Johnson Matthey said that the 2018 Palladium deficit was just under 240,000 ounces, but the world’s largest palladium producer, Nornickel, predicts a deficit of 1 million ounces claiming expectations for autocatalysts will remain strong for the foreseeable future. In a market as small as this, we expect Palladium volatility to continue as any bit of news can move this market in a big way in either direction. One thing’s for sure, it will be fun to watch how things pan out. 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.