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Crude Lower This Morning

Crude Lower This Morning
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Posted: 01-12-2015 03:06:00 PM
Today's market report suggests that the U.S. and global economies are entering a period of deflation.

Following Friday’s strong close, our market resumed trading yesterday with a probe higher, but volume was light with the highs of $1,231.30 gold and $16.69 silver being short lived. In early U.S. trading, all four precious metals are within a spread of where they were trading when electronic trading closed Friday afternoon. This morning finds U.S. equities and crude oil sharply lower and, if the recent pattern continues, this should be a positive for gold and its siblings today.

With the collapse of crude oil and a stock market that is on very shaky legs, there has been talk of the U.S. and perhaps global economies entering a period of deflation, which would be highlighted by a decline in the price of goods and services while wages are also declining. Friday’s labor report showed that hourly wages for December declined by 0.20 percent which was the largest decline since 2006. While gold has historically been thought of as a hedge against inflation, I would suggest we are seeing the early signs of gold’s value in a deflationary scenario as well. It is also worth noting that gold has rallied sharply recently when calculated using a foreign currency, as the strength of the USD has indeed benefited many market participants.

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About The Author

Roy Friedman

This editorial has been prepared by Roy Friedman 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. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, 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 the foregoing.

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