Precious metals have followed the course this week and have spent Monday through Thursday moving lower as the USD has strengthened. While the FOMC minutes were a bit more hawkish than expected, with a June rate hike still on the table, it is important to remember those discussions took place three weeks ago and the economic data since the March meeting has been very weak. The selloff this week has been harder on silver than gold and with silver’s move lower yesterday, the gold silver ratio is pushing 74 which is a level that has recently indicated silver is about to rally and outperform gold with the ratio moving back towards the upper 60s.
This morning finds all four precious metals sharply higher, with gold back above $1,200.00 despite the USD strength and crude weakness although it remains above $50.00. Physical demand, while not great, continues to be just good enough as the short sellers were not able to push gold and silver below $1,190.00 and $16.00. This morning’s rally has the feeling of short sellers covering and locking in a profit before the weekend, but a close above $1,200.00 and $16.50 will be a victory of sorts for the market and should bring a test of $1,225.00 and $17.00 next week.
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.