by Stephen Penny, FTM Daily:
The metals appear to be finding a floor, after a dismal jobs report on Friday led to the market realizing what most of us here have been expecting all along; no rate hike until at least December. That forecast is not based on wild prognostication, but on weak economic data, lower than expected jobs numbers, inflation below “target” (using Gvmt numbers, not actual inflation), and the logical assumption that the Fed does not want to risk a sharp downturn before the election. After Friday’s report, commodities popped and the metals surged. Interestingly, the dollar rose in conjunction with the metals and commodities. The weekly lows in the metals coincided with support levels mentioned in previous weeks; $18.50 and $1308, respectively. While bouncing off of key support is encouraging, the volume was not overly impressive. More on that in the charts below.
So, does this mean we’re all clear and it’s time to back up the truck?
Prudence is warranted as several overhead resistance levels still need to be to be cleared. As traders and investors, it serves us well to have a firm grasp of both the bull case and the bear case. While certainly not a prediction, it’s very possible that some “positive” data could be released in the weeks ahead that gives the Fed cover to continue talking about a rate hike. Remember, good data helps the political establishment and there is ample incentive to “massage” the numbers. How long will the market continue to pay attention to Fed jawboning? Nobody knows that for sure, but monitoring price and volume, in response to their prognostications, will give the best indication as to when they begin to lose whatever credibility remains.
My personal strategy is to dollar-cost average into physical gold and silver each month, regardless of the price. That’s an insurance policy. I like to add mining stock positions on steep pullbacks in the context of a longer-term uptrend – as is the case now- while keeping some dry powder in case the selloff continues longer than anticipated.
Metals Related News and Trends
Below is a brief synopsis of several stories that expand upon some of the trends being tracked at Follow the Money.
I hope I don’t come off as overly cynical in these brief commentaries. The way I see it is that you can either become overly bitter [I’ve been there!] or you can remain vigilant while simultaneously having some fun pointing out the excessive tomfoolery. That said, if you lost your job recently, sarcastic comments about Friday’s jobs numbers may seem callous. I am truly saddened by the current state of affairs and thankful that my ultimate hope is not in any political leader, central bank policy, or even precious metals. My intent is to strike a healthy balance, as these are certainly serious issues that will have lasting effects.
- Bill Gross: The Fed has mastered market manipulation. The fact that the Fed has “mastered market manipulation” is likely old news to FTM readers. (If this is all new to you, that’s ok, start here.) What is significant to us as trend followers and investors, however, is the recent flurry of financial heavyweights, like Bill Gross, George Soros, Stan Druckenmiller, NathanRothschild, etc., openly talking about the prudence of owning physical gold and silver. Some, like Steve Forbes, have even been shedding light on the ridiculous fact that a private banking cartel lends money into existence, leaving taxpayers on the hook to repay the freshly created currency…with interest, of course. It’s good work if you’re connected enough to get it and are willing to sacrifice your integrity on the altar of money. If you or I were to try this, it would be called counterfeiting – and rightfully so. When the private banking conglomerate, affectionately known as The Federal Reserve, engages in the same activity, it’s deceptively dubbed “Open Market Operations.” Sound legit? It’s not, and don’t allow the cloak of academic sounding vernacular and fancy titles to convince you otherwise. This game has been played time and again across the centuries and it always ends the same. What has been will be again, what has been done will be done again; there is nothing new under the sun. Wisdom, not gold, is your most valuable asset. Think independently and respond accordingly.
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