Yesterday was a continuation of the markets reflected in our last comments. The precious metals market fell off, with gold trading around $1202.00/oz. Silver is around $15.30/oz and oil is $29.04/barrel.
Retail sales posted a surprising gain with core retail sales rising .6% in contrast to Dec -.3%.
The stock market posted its second day in a row gain of 222 points.
In the energy sector, Russia and Saudi Arabia, Venezuela and Qatar announced a production freeze which holds production at current levels that are on the high side. This shouldn’t impact the supply much at all and didn’t seem to impact the market.
The news is an example of why a long term strategy is so important when dealing with the markets including the precious metals complex.
Markets aren’t mainly supply and demand as before but are highly affected by government central bank activity.
For example, in our last comment we stated that the market activity reflected the belief that bad economic news would push the central banks into more easing causing the stock markets to move higher. Sure enough, the European Central Bank hinted at more easing today.
This “reading of the governmental tea leaves” is what everyone obsesses over in today’s economic world and frankly it is a sad commentary on the current state of economics.
Therefore we go back to the necessity of looking at the long term when making a decision. Over the long haul, gold and silver have retained their value while the dollar has deflated. Just think of four 90% US silver quarters (90% silver dimes, quarters and half dollars were minted up to and including 1964). They were $1 in 1964 but are worth $16 today. A very simple illustration. Certainly there is fluctuation but the trend is always for inflating the basic currency which translates into a higher “relative” gold or silver prices.
So don’t let the markets or news panic you one way or another. Know what is the reality of economics and then plan for the long term or your objective.
Stephen W. Miller founded Dillon Gage in 1976 after a long career in the brokerage industry. Mr. Miller has a breadth of experience from company management to investment banking services, leading NASDAQ small cap market companies through both first and second tier financing, to taking several organizations through the successful completion of their initial public offering. Mr. Miller and Dillon Gage Inc. have been members of the Chicago Board of Trade and the New York Mercantile Exchange. Mr. Miller is also the co-founder and President of HELPS International.
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.