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Precious metals, especially gold, were looking very steady and moving higher early yesterday morning, but the euphoria was short lived. A much better than expected reading on consumer confidence strengthened the USD and shortly after gold fell $10.00 as a large seller order was executed on the electronic trading platform, which further elected sell stops taking gold back below $1,300.00.
Yesterday’s end of the month trading in most markets turned out to be a day most would like to forget if they were on the 'long side.' The U.S. and German stock markets had the headlines, as a closing loss of 317 points in the Dow Jones average turned that index negative on the year. Precious metals also took it on the chin yesterday, despite news of Argentina’s second bond default in 13 years. For those trading technically, gold and silver did bend a bit with gold trading below support at $1,285.00 but holding $1,280.00, while silver held the bottom of the support range at $20.25. Further pressure on precious metals could come from a falling crude oil market, which is now trading at a four-month low as global inventories continue to rise.
Following this week's better than expected reading on Consumer Confidence and second quarter GDP, we also had a weak reading on housing and this morning brings us a weak Non-Farm Payroll report as 209,000 new jobs were created in July against estimates closer to 230,000 and the unemployment rate rose to 6.20 percent. While the U.S. economic condition continues to be cloudy, there will be no sign from the FOMC and Janet Yellen regarding the timing of rates being nudged higher until the next FOMC meeting, which concludes on September 17. The lack of a FOMC meeting in August, along with thin trading conditions due to many market participants taking vacation in August, sets this month up to be a very volatile one indeed.
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.