Still Jittery Hands On The Wheel

If you're inclined to be a nervous investor in gold and silver, this is a perfect time for you to get your ya-ya's out. There are apparently many among precious metals traders who are still betting on a sooner-than-anticipated rise in interest rates from the Fed.

It seems to us this is practically mindless in its misreading of data. Then again, many could just be selling out their positions and taking profits that were previously on the table.

But let's go with the first scenario. The Fed meeting last week produced an 11 to 1 vote in favor of keeping rates stable, although the tapering of QE3 paper purchases continues, as it should.
Fill in the blank - The Fed will raise interest rates soon because _________.

Inflation is acting like a kitten that needs a nap. The unemployment rate just inched back up. The economy in the U.S. and worldwide is much better than it was three years ago, but it is certainly only a shade above tepid, certainly not near boiling.

Investors are putting money into riskier assets like equities. And make no mistake, they are getting riskier all the time. We say this because fewer and fewer stocks are undervalued or at fair value. Those stocks that are undervalued have been left behind now because indeed they are underperforming. Either way, the cheaper stocks present greater risk while the high-flyers like Apple, Amazon and so forth, are a big chunk to bite off if you're looking to invest in equities. Buying 100 shares costs between $50K and $75K, depending.

Meanwhile, once again the international scene has quieted down. Word has it that damage to Gaza has already reached $6 billion and the cost of war for Israel has reached $750 million. But we can't be sure both sides are not ready to come to their senses. France had an interesting idea today: impose a settlement on both sides.

The situation in Ukraine seems a bit more stabilized despite the fact that Ukrainian troops - in an irony for the ages - had to cross into Russia to avoid shelling by Russian-equipped separatists. In a bid to seem more normal, Russia seems to be willing to return those troops to their homeland.

In other items on our radar, the first can be of earth-shaking importance to gold bulls. China, because of its housing bubble may be headed for a banking crisis proportionally as large as the one that rattled the rest of the world in 2008-2009. Keep your eyes and ears on the situation.

In India, the Finance Ministry indicated there would be no easing in its gold importation curbs any time soon, asserting that the move could impact the country's Current Account Deficit 

As always, wishing you good trading,