Gold ETFs Help Gold Keep Bid Posture

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For over two weeks now Gold ETF holdings have increased in a big way, helping gold keep its bid posture. The question now remains, with the dollar steadying, will the retail investor continue to support the gold price by buying more shares?

What I find interesting this morning is just before the unemployment number was released at 8:30 am eastern time, gold was up $ 1.00 for the session. And as soon as they posted the unemployment rate at 4.9 pct. the market sold off six dollars. This tells me that computer trading known as algorithms are prevalent in the marketplace. Key words after news is released can affect the price as it seems to have done this morning.

Case in point – Week in review:

  • Tuesday – Kansas City FED President Ester George states that gradual rate hikes are in the cards.
    Result: Gold market sells off on the news. Higher rates, lower gold prices.
  • Wednesday – New York FED president William Dudley says short term interest rate increases are now a considerable concern for the FED. No rate hike, higher gold prices.
    Result: Gold market rallies in a big way.
  • Early this morning – we witness the gold rally continuing from the past two days off of Dudley’s comments. And here comes the strong unemployment number. This news gives the impression that the FED might have some ammo to raise rates. Higher rates lower gold prices.
    Result: Gold sells off, now we are down $ 11 dollars in today’s session.

See a pattern?

Is the price of gold now driven by computer programs developed by big institutions? Whatever happened to supply and demand issues?

How does a person trade or invest in this market when a single word by a FED president or a government report changes the direction of the market in a split second?

Now that the news is out and absorbed, I expect we will now witness the true direction of the gold market.

The good news is we are still up $25 dollars from when Ester George felt compelled to put her two cents worth of comments into the marketplace. So I believe the key for the next few days is to watch the trading activity in the U.S. Dollar. That activity should be an indication of where the price of gold will trade in the near term. Lower Dollar = higher gold prices.

From snowy New York, 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.


American Eagles Sales as of Feb. 4, 2016

US-YTDSales-compressor

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
Coin Sales in oz. /#coins + from 1/29/2016
One oz.
96,500
96,500
7,500
7,500
Half oz.
11,500
23,000
0
0
Quarter oz.
9,000
36,000
0
0
Tenth oz.
15,500
155,000
1,000
10,000
Total
132,500
310,500
8,500
217,500
Silver
Coin Sales in oz. /#coins + from 1/29/2016
One oz.
7,000,000
7,000,000
1,073,500
1,073,500

Special Edition: Something Has to Be Done at the Fed

MarketGageR8-400x327

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.


Flash Gage – Gold/Silver Rally on NY Fed Reserve Pres Interview

MarketGageR8-400x327

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.


Gold Rally Dampened by Middle East Selling

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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.


Gold Still Holding With Help From ETFs

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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.


Gold ETF Inflows Helping Gold

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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.


American Eagles Sales as of 1/28/16

US-YTDSales-compressor

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
Coin Sales in oz. /#coins + from 1/1/2016
One oz.
89,000
89,000
89,000
89,000
Half oz.
11,500
23,000
11,500
23,000
Quarter oz.
9,000
36,000
9,000
36,000
Tenth oz.
14,500
145,000
14,500
145,000
Total
124,000
293,000
124,000
293,000
Silver
Coin Sales in oz. /#coins + from 1/1/2016
One oz.
5,926,500
5,926,500
5,926,500
5,926,500

Flash Gage – Silver Fix Off 80 Cents

MarketGageR8-400x327

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

The LBMA silver fixing price fixed at $13.58 when spot was quoted around the $14.37 area.

The fix now is set by an electronic auction platform replacing the old system where banks could add liquidity in the event the bid / offer balance did not match.

The benchmark platform is maintained by CME group and Thomson Reuters and the LBMA has rights over the data. (see auction data below)

5,200,000 ounces bid 5,325,000 ounces offered
The fix took 14 minutes to complete.
LBMA-Fix

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 Do Central Banks Buy Gold?

MarketGageR8-400x327

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.