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Speaking Out Of Both Sides Of The Mouth                    
 
There has arisen an ebb and flow in the debate between the hawks and doves in the Fed, the former favoring tapering QE3, the latter holding the line against doing so. The presidents of the Dallas and Atlanta Feds, seeming to speak in direct opposition to the mainstream thinking among voting members of the FOMC said over yesterday and today that tapering could still happen this year.
 
Of course, sane analytic minds say: how? And why? Inflation is tame as can be, employment seems stuck in second gear. Our assessment is that the hawks seem to open their eyes only to what is happening in the equities markets - which do look very good - around the world while the doves look at a more holistic picture that includes the common man and woman, who aren't really recovering from the recession strongly in the least.
 

If the Fed drop the ball by moving too quickly they could endanger the fragile economic recovery; If they move too slowly they could fire up inflation in the near term.

 

In the near term gold prices will oscillate as this debate ebbs and flows. We believe long term fundamental arguments for gold are still very much intact. The world is still in the midst of a massive economic storm stretching from Asia to Europe and to the U.S.

 

In an article published in MIT's Technology Weekly titled "How Technology Is Destroying Jobs" a very interesting analysis of the modern economic technology driven model is made. The article written by David Rodman reviews MIT research into the relationship between productivity gains and employment and very clearly demonstrates that the social contract at the heart of the capitalist system may be in trouble. Essentially even though the economy may grow and industry may profit the benefits are not being translated in terms of jobs and by extension worker earnings. Interesting stuff, and this thesis may make the entire policy of QE, its attack on pensions and savers plus the ever increasing social unrest seen all around the world; be seen for what it is - unorthodox and very, very risky.

 

However, not doing anything could prove to be even far more destructive to world economic health. The hawks are playing with real fire, deadly fire. The doves may burn the house down, but the won't be burning the whole city down.

 

Wishing you as always good trading,

 

 

   

Gary S. Wagner

Executive Producer


Market Forecast:

Mixed messages by the Fed have moved the precious metals markets to lower pricing again today. On a technical basis gold is currently sitting at a critical support level, which at this point looks to be threatened and potentially breached. We have identified a 38% Fibonacci retracement level at 1282 in gold. This is precisely where the market is trading as of this commentary being written. A continuation of this current downtrend could in fact negate any upside model. On today’s video we will identify key areas of support, along with support levels below current pricing to identify a potential bottom in gold prices.

It is my current recommendation that we sideline until we identify whether or not the current support level in gold holds. A break through this level would signal a short play in gold in which we could see the market trade back to the lows found last month at 1181. Support at this level could signal a move back to current resistance areas which we have identified and will point out on today’s show.

 

 

Proper Action:

 

 No active trades. Awaiting trade signal

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COT LINK  See previous weeks in Historical Commitments of Traders Reports. 

  

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Gary S. Wagner - Executive Producer