Filed under: Trader Dan Norcini
Dear Friends,
The BIG, “no news” news of today was the release of the FOMC details concerning their view of the economy. At 1:15 PM, CST, the “news” broke that the Fed stands ready to provide further QE should the struggling economy encounter additional headwinds.
Both gold and silver shot up sharply higher and the dollar plummeted below support at the 81 level in the USDX, while the equity markets simultaneously jumped and the bond market surged.
I personally do not know why the reaction was so profound. After all, it is no surprise to any of the readers here at JSMineset that the Fed stands ready to engage in “QE to infinity” as Jim has been saying for longer than I can remember.
If you want to distill the essence of their press release, it is basically as follows:
The economy is flat and while it has not worsened, it is also lagging in key areas, notably employment, business spending and consumer spending. Inflation has all but disappeared freeing us from having the least bit of concern about rising interest rates. Bond speculators are therefore given notice that we will be undertaking additional Treasuries purchases should the need arise so please buy the long bond futures and aid us in our task of keeping a positive interest rate environment for the struggling real estate and housing markets, not to mention helping us keep interest payments on the out of control national debt at “reasonable” levels. We’ll print ‘em (Treasuries) and you buy ‘em. Help us out, please.
Gold was obviously not impressed with the implications of such shenanigans as it broke higher to a new record price notching a print above $1290 in the process. Such a policy is nothing more than a planned debauchery of the national currency. The Dollar imploded particularly against the Australian Dollar which notched a two year high. Even the Japanese yen refused to stay down, much to the dismay of the Japanese monetary authorities who no doubt are already making arrangements for their next foray into the market to beat it back down again.
The problem with all this funny money talk is that quite simply it underscores just how anemic the so-called, “recovery” is and how dependent it is upon the life support system of QE. Even as I pen this brief commentary, the S&P 500 has sunk into negative territory which is telling.
In my earlier comments on gold today I mentioned that we might see a setback from the capping effort at $1285 just like we experienced at the previous resistance level of $1260. For all that we know, that setback might well have already occurred and is now finished. Even the HUI moved back above the 500 level after dropping as low as 489. If it can finish strongly above this level, that would make two consecutive closes above a critical resistance level. Generally, from a technical analysis perspective, that is a bullish chart signal that an upside breakout has been accomplished. We’ll see how it closes today and how it fares tomorrow to get a better clue as to what is next. Overnight action in the gold will be revealing.
Fasten your seat belts – all the Fed has done by today’s announcement is inject more volatility into these already stupidly insane financial markets.
The BIG, “no news” news of today was the release of the FOMC details concerning their view of the economy. At 1:15 PM, CST, the “news” broke that the Fed stands ready to provide further QE should the struggling economy encounter additional headwinds.
Both gold and silver shot up sharply higher and the dollar plummeted below support at the 81 level in the USDX, while the equity markets simultaneously jumped and the bond market surged.
I personally do not know why the reaction was so profound. After all, it is no surprise to any of the readers here at JSMineset that the Fed stands ready to engage in “QE to infinity” as Jim has been saying for longer than I can remember.
If you want to distill the essence of their press release, it is basically as follows:
The economy is flat and while it has not worsened, it is also lagging in key areas, notably employment, business spending and consumer spending. Inflation has all but disappeared freeing us from having the least bit of concern about rising interest rates. Bond speculators are therefore given notice that we will be undertaking additional Treasuries purchases should the need arise so please buy the long bond futures and aid us in our task of keeping a positive interest rate environment for the struggling real estate and housing markets, not to mention helping us keep interest payments on the out of control national debt at “reasonable” levels. We’ll print ‘em (Treasuries) and you buy ‘em. Help us out, please.
Gold was obviously not impressed with the implications of such shenanigans as it broke higher to a new record price notching a print above $1290 in the process. Such a policy is nothing more than a planned debauchery of the national currency. The Dollar imploded particularly against the Australian Dollar which notched a two year high. Even the Japanese yen refused to stay down, much to the dismay of the Japanese monetary authorities who no doubt are already making arrangements for their next foray into the market to beat it back down again.
The problem with all this funny money talk is that quite simply it underscores just how anemic the so-called, “recovery” is and how dependent it is upon the life support system of QE. Even as I pen this brief commentary, the S&P 500 has sunk into negative territory which is telling.
In my earlier comments on gold today I mentioned that we might see a setback from the capping effort at $1285 just like we experienced at the previous resistance level of $1260. For all that we know, that setback might well have already occurred and is now finished. Even the HUI moved back above the 500 level after dropping as low as 489. If it can finish strongly above this level, that would make two consecutive closes above a critical resistance level. Generally, from a technical analysis perspective, that is a bullish chart signal that an upside breakout has been accomplished. We’ll see how it closes today and how it fares tomorrow to get a better clue as to what is next. Overnight action in the gold will be revealing.
Fasten your seat belts – all the Fed has done by today’s announcement is inject more volatility into these already stupidly insane financial markets.
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