know when to hold-em

Good morning and welcome to a Magnificent Monday! The song in my head when I woke this morning really caused me to reminisce. I first heard it in a little honky-tonk on the outskirts of San Antonio in September of ‘74. Dave Winchester and I were just getting back from a weekend bike ride across West Texas and were hot, dusty, and thirsty. This song was playing on the jukebox as we entered the bar. Here is how Tom T Hall greeted me this morning with his 1972 hit, “Old Dogs, Children, and Watermelon Wine.”

The New York Spot Prices took another dive last Friday with Gold closing down $9.70 settling in for the week at $1,280.00, Silver was down $0.23 to $17.00, and Platinum was down $1.00 to close at $921. It wasn’t the week we were hoping for, as gold lost $23, silver lost $0.41, and platinum lost $22.00. In overnight trading precious metals continued to get hammered with gold dropping another $4.70, silver $0.04, and platinum giving up $6.00.

So this morning we’re finding gold at a two week low, and I’m afraid it’s not going to find any traction in the coming hours. The reasons are simple—the dollar and stocks. Over the past few days the dollar has shown incredible strength against almost every other currency. This morning as I look at the exchange rates, the UK£ is down .21% at .76, the EU€ is down .32% at .85, The Japanese ¥ is down .33%, and Chinese ¥ is down almost .24%. It seems the primary driver at the moment is the world central banks asset purchases. At the moment, not only are we not hearing of the U.S. continuing this trend, but what we are hearing is that the Fed will be raising rates again in December. Really? Do they seriously believe we don’t see the slight-of-hand? According to federal records, the total receipts in 2017 were $3.21T while the outlays were $3.65T. That difference might not sound like much, but it’s still almost a half billion dollars! With the new tax plan, current receipt estimates are significantly below 2017, estimated in the $2.1T range while the approved budget is $4T. Hello? I can see the need for asset purchases in our future.

We’re also seeing that although stocks are incredibly overbought, there doesn’t seem to be any concern. The Dow in terms of Relative Strength Index (RSI) is continuing to move up at a staggering rate. According to Charles Bilello of Pension Partners, “The Dow is trading at one of its most overbought levels in history. At 87.61, its 14-day RSI is higher than 99.999% of historical readings going back to 1900. Out of 30,914 trading days, that’s good for top 10 all-time.” Only eight days have seen better? Wow! And I’ll bet a dime to a donut that we see a

“best day ever” before this run is over. Why’s that? Because American corporations are looking at huge savings with a 15% drop in the federal tax rate.

So where does all of this leave precious metals. If I were a gambler, I’d say hold-em. When I've played Texas Holdem and had a winning hand and go all-in, 60% of the time somebody has 4-of-a-kind or a flush and takes the pot. Based on the current economic conditions and world events, I don’t expect any significant changes. According to Investech, "The Dow Jones Industrial Average is technically positive for the short, medium, as well as long term.” I foresee continued declines in the precious metal market which will equate to buying opportunities.

Well, I’ll let that be it for today. Go out there and make a difference! See ya’ll later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.