Spin It

You can pick a spin direction when reading the April 30th FOMC minutes. We would call them neutral, steady-as-she-goes. We may spin sightly to the dovish side.

 

Whether you read them as hawkish or dovish, the minutes really had no effect on the price of gold today. The loss of $3.00 per ounce is just more demonstration that we are rangebound.

 

The Russians and Chinese are not dancing in the street over their just-inked natural gas deal, which sounds enormous but in detail looks like a decent-sized deal and not much more. Tsar Putin is just happy to not have to feel the pressure from the West as much as he has.

 

The deal is a 30-year deal worth $400 million in total. So, that's about $13 billion per year. For cash-starved Russia it's a good deal. For China, it relieves some small portion of their energy hunger. Looking deeper, Russia has to invest $55 billion in infrastructure. And that's in today's dollar before what they used to call in Jersey City the "Five Finger Tax. That means that corruption (and normal cost overruns) will probably triple the infrastructure bill. So, let's say $125 billion. Now we've got a deal worth $9billion per year. And then there is inflation, supply disruptions and potential geopolitical issues. 

 

As a comparison, Boeing's sales in 2013 were about $100 billion after standard discounts. 

 

If there is a culprit in gold's mild decline today, it is the equites market. They took much greater steam from the Fed's explanation of its forward look at rate hikes.All three U.S stock marketswere up a bit under 1% each.

 

Other than that, we're standing by our phone and email, waiting for some news to break that will guide the fundamentals. 

 

 

As always, wishing you good trading,