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Precious metals continued to rally throughout the day on Friday as the USD weakened and crude oil rallied.The dovish FOMC report continues to impact our market as speculative short positions were covered before the weekend at the same time as now longs were entering the market. Physical demand was steady at the higher price points with silver leading the charge higher. If you believe like I do that the U.S. economy is still not out of the woods and remains on shaky legs despite the growth in payrolls and drop in unemployment rate, then you also suspect that the USD will continue to weaken through the spring and perhaps longer. The weakening USD will of course support gold and silver and just perhaps we will look back and say the recent dips below $1,150.00 gold and $15.50 silver were indeed buying opportunities. Slow and steady are just not the way for silver and the move I talked about in Friday’s commentary, calling for a run into the spread between the 50 and 100-day moving averages, happened all in one day as silver rallied over 80 cents.
Barring any geo-political news, the direction of all markets appear to be tied to the USD’s intra-day reaction to U.S. economic data. In the short term, gold support should be expected from $1,175.00 through $1,165.00. A break below $1,1650.00 likely means the USD is again in rally mode and sub-$1,150.00 can be expected. Gold is likely to face resistance as we approach $1,200.00 from producer selling, but a break above $1,200.00 should see us testing resistance between $1,225.00 through $1,240.00. Silver support should be strong as we approach $16.50 while a break above $17.00 should bring us a look at $17.40 – $17.50.
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.