Healthy shake-out in PMs
The Fed’s interest rate cut yesterday and the prospect of more to come confirms its changing priorities. Consequently, the dollar will weaken against both gold and other currencies.
Anticipating and following the Fed’s rate cut gold and silver are seeing a healthy shakeout, which could continue in the short-term. My guess is that both will go higher when the dollar’s TWI breaks down below current 96.75 (currently 97.00). It could be the key to timing:
Given confirmation that the Fed is giving in to political pressure (targeting unemployment is a handy excuse), it shouldn’t be long before the dollar breaks down into lower ground. For non-technical analysts, take my word for it: the chart above is bearish.
Complacency is the order of the day with bond yields having declined, leading foreigners and US investors to think everything is normal. But the Fed is cutting interest rates just as inflationary pressures begin to mount, illustrated in the chart below:
Combine this bullish commodity setup with the dollar’s bearish outlook, for the Fed to de-emphasise inflation is a big mistake which will drive the dollar lower against not just other currencies but principally gold and other commodities..
Doubtless, traders will wait a little more for things to play out, seeing a possibility of further consolidation in gold and silver. Sensible stackers should not try to double guess the consolidation and do what the world’s central banks are doing: buy gold into the dips.
Healthy shake out...??
Only if you survived....)
Fridays triple witch will also be a sea-saw..for the gamblers..
cheers
Would you please provide a graph of inflation - as you define it, ie, printing of currency - compared to the performance of the U.S. stock market? It seems to me that whenever the Fed prints currency into existence the first parties to get the advantage of that new currency are the entities and individuals that buy stocks by the fistful. Therefore, rather than the stock market going down, as you predict, the stock market takes off. Inflation appears to be good for the stock market, even though it may also be good for gold. Who cares if the currency is worth less as long as credit is available? Among the wealthy and the financial institutions that can always get credit, they are going to continue to feed the stock market. I understand that only goes on until it doesn't; but I tend to think that today it can, and will, go on a lot longer than it did in 1929 when there was less currency available and therefore less credit. Please show me where and when what I am writing has been wrong in recent history....especially in the U.S.A. rather than Zimbabwe or Imperial Germany.