Gold is struggling to move past the $1,100 resistance. The interesting thing is the mining stocks are possibly leading gold higher and we should find out if we get a technical move past $1,100 pretty soon. Silver as we noted yesterday is acting a little stronger than gold right now.
The dollar is above 97 on the index again and I think we need to get it below 97 for gold to have a little run.
Today’s Fed announcement was a firmer conviction to the September rate hike I have been saying would be a “token” rise of .25 points since May. Yesterday I said the 10 year showed that we are not expecting a rate increase as it was yielding 2.25% and today with the Fed threatening a rate increase it only moved up to 2.29%.
For right now it’s all hail the U.S. Fed and the stock market. Ignore what the data says and ignore the 10% plus that have fallen off the unemployment tracker.
One of my other indicators that I know frustrates the Fed the most is the chart below of Money Velocity. Without the economy moving money around, the Fed can’t have their cake and eat it too. They can’t sustain higher rates.
The ratio has fallen from 1.535 to 1.501 the last year over year ending 1st quarter 2015. Could a recession be on the way instead of this great economy the Fed and giddy folks on CNBC see? Could this token rise in rates be, as I have claimed in the past, a credibility issues that the Fed would like to maintain? An illusion of reality if you will?
By the end of this year I think we’ll have an answer to a lot of things. By the end of this year I hope to have written my “all in” article. There will be a lot that occurs between now and the end of the year. We’re already getting glimpses of problems from Greece to China to Russia to a worldwide deflationary contraction of activity. We may have temporarily resolved issues abroad, but anytime you throw money at something, the euphoria only lasts for a period of time where the economic junkie needs to get another fix. The economic junkie is supposed to get its fix from business activity, not by the purse of governments and central bank Orchestral Manoeuvres In The Dark.
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
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.