Gold and Silver Current Thoughts 9-17-2015

From the Trading Desk

Prior to the Fed’s meeting today, gold traded in an uninspired $7 range during the overnight and early NY trading sessions.  Traders were clearly on the sidelines and had trimmed positions ahead of the FOMC.  Once the Fed meeting finally started at 11 AM PST though, participants returned to the market and gold shot up 1%.  The Federal Open Market Committee decided to not raise interest rates and had dovish overall remarks.  The recent financial turmoil in China, amongst other global economic and financial market developments, appeared to be the main reason for the Fed’s decision to keep US monetary policy steady. The immediate reaction to the interest rate hold was that the USD and treasury yields fell while US equities and the precious metals jumped higher.  Near term resistance for gold is coming in at the 100 day moving average of $1,152.50.  Should the market lose steam tonight, bids will likely materialize ahead of the 50 day moving average at $1,118.50.

The Fed has spoken and did not raise rates today. I had speculated they would raise rates for a token “credibility” raise to satisfy the blowhards at CNBC who keep asking for higher rates as a sign the economy is fine and their beloved stocks can keep rising along with inflation. But CNBC didn’t get what they wanted and neither did I. I was all prepared with my updated data to show how bad the economic data was, which you can view here: WHAT DOES THIS ECONOMIC DATA TELL US? Personally I was impressed that the Fed saw the same lousy data that I saw but their reasoning wasn’t that U.S. data was bad, but rather China and emerging economies needed more help. You heard that right, the Fed is playing a different game than their mandate. James Saft of CNBC puts it this way in a column written just after the announcement;

It also ties Fed policy to the decisions of Chinese policy-makers, a gang who not only can’t shoot straight but whose idea of a market intervention involves a certain unattractive raw forcefulness.

Very little of importance changed in the statement released by the Federal Open Market Committee, other than one line:

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the statement said.

The Fed is admitting that deflation is still a concern. But what did the main announcers from CNBC and Fed lover Steve Liesman say about what the Fed did? They said the Fed “chickened out” in raising interest rates. The funny thing is, if those at CNBC had any sense at all, they would look at my economic data sheet and see that every single article on the economic data page I created the last few months IS FROM CNBC! Do they not read their own articles? I color code them red and green as to whether the data is negative for the economy (red) or positive (green). There is virtually no green data of late so it is no wonder the Fed did not raise rates. But I still thought they would do so and so did everyone at CNBC, except of course for Rick Santelli who got into a tiff with Steve Liesman today (love Rick).

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