Gold and Silver Current Thoughts 4-7-2015

The Blog page now has the article up “Don’t Buy Gold Now, Wait Until It’s Under $1,000.”

From the Trading Desk

On Good Friday, US nonfarm payrolls data showed a rise of 126,000 during March after a gain of 264,000 for February.  The March figure was far below the median forecast of 245,000 and nonfarm payrolls for January and February were revised lower by a combined 69,000.  This would have been very bullish news for the precious metals if the market was actually open.  Because of Good Friday and the weekend though, the electronic exchange was closed from Thursday evening through Sunday afternoon.  When the market did finally open on Sunday evening, the first session with a chance to react to the nonfarm payrolls figures, it opened over $10 higher than its last close on Thursday.   Yesterday, gold tested resistance in the mid $1,220s but failed to break through this area.  There is now a triple top at $1,224.  The Chinese were good sellers in the overnight session and the Shanghai Gold Exchange arbitrage versus London moved into a slight discount.  Support for the time being is coming in at the 50 day moving average of $1,207, the low of today thus far.  With the NFP figures not having any lasting effect beyond Sunday’s and early yesterday’s trading sessions though, the market appears to want to test the downside further.

In yesterday’s Current Thoughts I said to keep an eye on the dollar for short term direction in gold as there has been a correlation of sorts. The dollar had a big move up and gold was down most of the day but still over the $1,200 resistance mark. It still seems poised to go higher, but its really the Fed minutes tomorrow that yet again has given us volatility, one day up, the next day down, making it hard to predict daily direction. One can reach for any reason as to why the metals move the week of Fed meetings and minute releases. I simply say expect both.

Fed member Kocherlakota spoke this morning and that makes 2 Fed members in a row that have said the opposite of what 3 Fed members said last week about raising rates. Kocherlakota was in the camp of not raising rates until “late 2016.” Wow! I like this Kocherlakota Fed member. That or the Fed is finally waking up to the data I have been talking about in my articles.

I’ll repeat what I said before about the Fed and raising rates. From their last meeting they will have discussed more about when they are raising rates as we know. Even last week they were talking that talk. So the minutes should reflect that all is well with the economy and their plans. If the dollar market reacts to this, it should be bullish the dollar and negative gold. A good economy and higher rates means the dollar would get stronger.

The fact is, the Fed is all over the place now. If they are all over the place, volatility should increase and that is one of my indicators that tell me what to expect next if they line up with my other indicators. Another indicator I watch is the 10 year and it doesn’t think higher rates are coming as it is still 1.89%. Another indicator is my phone ringing and that of my suppliers and I can tell you flat out, it’s not good.

I don’t know what this means for one day’s action tomorrow, but an admission by two Fed members that the data is not good opens the door next meeting for possibly to talks about QE in the future. What would this potential admission of failure do to confidence? What would it do to the markets? What would it do to the Fed’s reading of the markets and their credibility? Can they simply mention QE and get the results they want? Maybe. But come on Fed; read the data and stop pretending.

I’m sure I’ll have a lot more to say tomorrow, but I wanted to let those of you know that the new ETF Research Trading Service I have set up is doing quite well.

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4% EDC

14.45% RUSL

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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


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