Gold and Silver Current Thoughts 1-28-2015

From Bloomberg today;

The Federal Reserve maintained its pledge to be “patient” on raising interest rates and boosted its assessment of the economy and labor market, even as it expects inflation to decline further.

“Economic activity has been expanding at a solid pace,” the Federal Open Market Committee said today in a statement in Washington. “Labor market conditions have improved further, with strong job gains and a lower unemployment rate.”

Someone should tell that to those that gather employment data that comes up with true unemployment which is still above 11% (See U-6).

Gold fell to close at $1,281.67 today and the mining stocks took a big hit. Gold started the day down, crept higher at a snail’s pace until the Fed meeting, meandered awhile before finally developing a tradable trend.  Based on my advice yesterday, JDST (up 16.80%) could have been bought today for a nice trade as opposed to JNUG (down 17.11%).

You can read the Fed’s comments here. http://www.kitco.com/news/2015-01-28/Text-of-the-Federal-Reserve-s-statement-Wednesday.html

The most important line being;

Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.

As I wrote in my Current Thoughts at the beginning of the week, I didn’t think there would be an interest rate move up just yet and the Fed will “talk the talk.” The economy is fine the Fed tells us. Europe has their own mess to deal with and it’s not our problem the Fed tells us. The dollar rose sharply and the 10 Year Treasury gained strength sending the yield down to 1.73%. All this led to a down day for gold and silver, but silver hung in there comparatively speaking.

Stocks also took a hit and shook off the good news from AAPL and a few others. TNA took it on the chin. The DJIA fell 195 points to close at 17191. CNBC blamed it on a weak global economy.  My next article will explain to the Fed why a global deflationary slowdown will eventually affect us here and that there is no real reason to be so cheery about the U.S. economy despite the CNBC talk of raising rates sooner than later we have been hearing for the last 6 months.

In my humble opinion, the Fed may still raise rates come next meeting to keep those interested thinking they are in control of things. Remember, this is the same Fed that didn’t see what higher rates did during Greenspan’s tenure and the same Fed that didn’t see the 2007-2009 financial crisis coming. What makes them still believable? Why? Well, the fact is people believe in the Fed and I can’t ignore this fact. Besides, they have a checkbook that is unlimited and banks and everyone else knows they can write a few more trillion dollar checks to “fix” things.

But remember, a Humpty Dumpty economy can’t be fixed and at some point it will all come crashing down. When? I don’t know. But for now I have to decipher whether to be bullish or bearish on stocks, gold, silver and anything else I write about. That’s my job. But give me a little time over the next week to finish sifting through the vast amounts of data before I come to any shorter term conclusions. As many long term readers know, I am pretty detailed in the articles I write and simply try and relay good information to you all so you can make investments that grow or get out of ones that might not be worth staying in.

DGAZ gapped up and might not have given you much of a profit if you got in at the open. UWTI hit another 52 week low. Nothing new there. RUSL fell from 18 to mid 16’s and looks like it will still hit 15’s again where this being about the 4th time might finally break below 15. If it does, I’ll write about a good opportunity to go long. RUSS may be like the play then as it’s 21.86 now, but hit 48 in December on the last smack down of Russia. The S&P downgrade and Ukraine issues make RUSS one to watch and I would lean towards it at this point.

TNA I said to keep stops at 76.28 and it crashed through that after hitting a high of 79.86 earlier in the day. That 80 figure is still strong resistance and now we’ve moved down 5 points from there. I had said yesterday that this ETF can move 3-5 points and today it did. Hopefully you profited from it and looked at TZA once you locked in profit on TNA.

After the volatile Fed week we may have a trending day tomorrow. I see nothing that jumps out at me. According to the arrows below, nothing looks real attractive. The only advice I have is to trade the higher high tomorrow of what moves. I also have not changed my mind on the direction I think gold and silver will still be going; down to new lows.

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Gold and Silver Stock Mining Package