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Senate Passes Budget Bill; Equities Higher

Commentaries & Views

Thursday night the Senate passed the budget bill, freeing up the opportunity for tax cuts. The market’s initial reaction is very bullish, pushing equities to record highs while putting pressure on the metals. Gold has given back Thursday’s gains and is now testing the $1,280 level again. Silver is giving back half of Thursday’s gains but remaining resilient.

What does the possibility of tax reform mean for the metals? The passage of the vote has put pressure on bond futures, meaning rates are rising, which could put pressure on gold and silver. Tie in the stronger dollar, which is also a negative for the commodity space.

We will be on the other side of that trade looking to buy commodities, especially gold and silver if they hold their key levels of $1,280 and $17. The relationship between interest rates, the dollar and commodities has changed because of financial engineering. Central banks and the Fed have lost control, which will be positive for the metals, and the impending market correction will also drive metals higher.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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