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Precious metals continued probing higher yesterday, as several factors emerged that support gold and have investors looking for a bit of insurance as gold begins the New Year with the label “safe-haven” once again being applied. In no particular order, here are a few factors that have brought buyers to our market over the past few days and are likely to be supportive going forward:
1. U.S. and global equities are under pressure which may bring “new money” to our market as investors rotate out of equities and look for other investment opportunities.
2. Economic data in the U.S. has turned mixed which has many economists and commentators suggesting a rate hike in 2015 is not a certainty and if it does happen is likely to be closer to year-end. Yesterday saw the yield on the 10-year bond slip below 2.00 percent.
3. The fall in crude oil may actually be good for gold as it is weighing heavily on the stock market and highlights macroeconomic concerns in many of the oil producing nations.
4. Concerns continue to rise over affairs in Russia as the Ruble continues to weaken.
5. Concerns over the future of the EU are front and center as uncertainty with regard to Greece mounts.
6. The Financial Times reported this week that the likelihood of a default by the Ukraine later this year is a real possibility as their bonds trade at record lows and their interest rates are soaring higher.
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.