Video-August-27-2013-Archives-Daily-Show
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War. What Is It Good For?
The rumors of war helped gold skyrocket for a while today until it settled down to a more reasonable rise in price. Only 9% of American citizens think intervention in Syria is called for. Equities markets sank on Secretary of State Kerry's bellicose statements. Oil jumped.
Gold is serving as a safe haven with silver following suit.
"The law of unintended consequences and the history of previous military interventions in the region is not a recipe for political and economic stability," said Neil MacKinnon, global macro strategist at VTB Capital. Indeed, what do the politicians know that both the American people and the various financial markets don't know?
According to CNBC, a 20% rise to $1,416 would put gold into a bull market. Numbers released Friday showed U.S. home sales have declined and durable goods orders are depressed, which could indicate the economy isn't improving as much as most people had hoped. Geopolitical issues and the high demand for gold in Asia also must be factored in. As we write this email, gold is sitting right at 1416.
Besides gold, investors will migrate to both the dollar and euro and throw in some Swiss francs in the bargain.
Also of interest to gold and silver bulls is the recent spiking of the CBOE Volatility Index (VIX), which is up 13% to a 17 on its measurement scale. It's not just Syria that is throwing off the stock market mojo. The U.S. debt ceiling is spooking people as well.
That leads us around to the QE3 tapering question yet again. We think that the debate is moot at this point. Regardless of whether tapering begins after the September or December FOMC meeting or not till next year, the taper will be very gradual. The real question will soon become, "What of all these instruments the Fed has bought?" One has to wonder how and how successfully they can be marketed back to the private sector.
We have said previously that one of the problems the American economy is facing is the complete absence of a fiscal policy, that is, a plan that would come from Congress and the President. There is virtually no leadership. Fiscal policy is usually the dog that wags the monetary policy tail. Monetary policy officials - the Fed - usually react to fiscal activities, the province of elected officials. Maybe the split runs the gamut from 70/30 to 40/60, the first number being the percentage by which fiscal policy should be effecting the economy. Right now the U.S. is relying almost solely on monetary policy - interest rates, bond buybacks, etc. The ratio is about 20% fiscal policy and 80% monetary policy. This gives the Fed enormous power that it doesn't really want. Many regional Fed presidents and Chairman Ben Bernanke have said as much.
This uncertainty is good for gold, although until the last few months gold has not been a bullish proposition. That worm seems to have turned. Keep in ind that uncertainty also drives up oil prices, so there has to be a sound strategy by the investor to weigh and counterweigh such factors when apportioning portfolio money. That goes for small investors just as it does for the big institutions. News and economic data will be driving our precious markets for some time.
War. What is it good for? Gold and silver prices, and oil. But not much else.
Wishing you as always good trading,
Gary S. Wagner Market Forecast:As you know following Friday’s upside move in gold we were hoping to find some dip or pullback in order to reenter the market from the long side. After watching gold open overseas on Monday, it became quite clear to me that such a dip might in fact be unlikely. We have identified the most recent characteristics in gold prices as moderately strong rallies, followed by a period of consolidation. Using that assumption we did make a recommendation yesterday to enter both gold and silver from the long side. Today price action in both gold and silver were moderately higher both gaining almost a full percentage point on the day. In hindsight the best possible move we could have made yesterday was exactly what we did: reenter the market from the long side. With that in mind today’s show will offer our most recent insight as well as our exit strategy for our current trade. We will detail support and resistance levels in both gold and silver. Today’s video will also highlight gold’s current intraday high and how that matches with a 100% extension of wave one. This refers to our sub count underneath our current minor wave count.
Proper Action:
We issued a buy recommendation yesterday morning:
Long Gold @ 1401.80 Stop below 1382
Long Silver @ 24.29 Stop below 22.90
Gold COT
Silver COT
COT LINK See previous weeks in Historical Commitments of Traders Reports.
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Gary S. Wagner - Executive Producer