View News - Central Banks Adding To Gold Holdings

Posted by: sbryan - February 22, 2016

Dillon Gage Market Insights

Ever since Chairperson Janet Yellen hinted that negative interest rates are on the table, numerous discussions have started in the media and all over the internet. What caused a change of direction in just a short period of time? As we hear conflicting opinions from FED governors each week, are they intentionally creating a smoke screen for what’s to come? If their intention is to try to create confusion in the direction of future rates hikes, I give them an A+.

While this is going on, we hear central banks around the world are adding to their gold holdings. Good job Janet, let your central bank friends get in before we really have a direction in the price of gold.

This confusion regarding future rate changes is creating volatility in the price of gold. There are conflicting opinions of many Wall Street traders on whether to go short gold on anticipated rate hikes or follow the trend that the ETF investors have shown.

Across the pond we see many central banks adding negative interest rates to their arsenal. Sweden, Denmark and Switzerland are using this tactic to force investors into moving cash out of savings into other investments. Individual gold purchases in just these three countries increased in a big way.

So is it time to give gold a serious look?

As I’ve been sharing my opinion and the opinions of many gold traders around the world, as we all watch the action in interest rates, the dollar index, equities and the price of oil.

Let’s not forget that recently, gold as an investment has caught a lot of media attention on the business channels and in major newspapers like the Wall Street Journal and the New York Times, BUT they are neglecting to report on one MAJOR factor…

SUPPLY

As I shared in many of my comments in previous months, whatever happened to the supply and demand issues that have moved the price of gold over the years instead of hearing about all these other factors?

Well, guess what my friends? We are about to find out…especially IF negative interest rates become a reality. There will NOT, I repeat NOT, be enough supply to meet the demand. And if that comes to pass, it will be like adding gasoline to an existing fire.

As for those who remember the TV show, “Lost in Space” what was the robot’s famous line? “DANGER, Will Robinson. DANGER.” Janet, I’m sure you remember that show. Maybe you should watch a couple of episodes?

Have a wonderful Monday.

Disclaimer: This editorial has been prepared by Steve Miller 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 and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, 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 this disclaimer.

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