Video-June-28-2013-Archives-Daily-Show
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Half-Year Ending
The surprise today is the reveille call that silver heard as it rose from a deep slumber. The gray metal is up 6.21% on the day. Gold took some hope in a 2.87% boost due to short covering, renewed belief that it has nowhere to go but up, and some funds adding a bit of gold to start the second half of the trading year.
We are not ready yet to say if the pounding the precious metals have been taking is completely done, but we know that the last rights have not been adminstered and the crypt isn't sealed.
This is in spite of the statements from a Federal Reserve official who actually named September as a point when the FOMC might begin its tapering of bond purchases. The lack of reaction to Federal Reserve Governor Jeremy Stein's comments may indicate that gold and silver have already taken their thrashings from the Fed oscillations and QE3 paring may already be built in to prices of gold and silver. Maybe.
If the Federal Reserve decides to start reducing purchases in September Stein said, "It will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting."
News? He must mean the news that unemployment is creeping back up and inflation is below Fed targets. What kind of governor is this who can't focus on the baseline news and must cast about for secondary and tertiary "news," such as consumer sentiment, to base his opinions on.
Richmond Fed President Jeffrey Lacker said during an economic outlook speech in White Sulphur Springs, West Virginia that he was skeptical that there could be any additional benefits from the continuation of the bond buying and was growing more concerned about potential risks tied to further balance sheet expansion. And the risks are...? Certainly not inflation, which is not just a pussycat but a week-old kitten.
We smell ideology at work in both the above statements. Continuing QE3 is bad because it must be bad because the notion is in a book or white paper somewhere.
Another county heard from: San Francisco Federal Reserve President John Williams said in remarks to the Sonoma County Economic Development Board,
"We need to be sure that the economy can maintain its momentum in the face of ongoing fiscal contraction," citing the drag from Europe as a second risk to the U.S. recovery. He forgot to mention drag from Japan, more important to the economy of the West Coast than is Europe. "And it is also prudent to wait a bit and make sure that inflation doesn't keep coming in below expectations, possibly signaling a more persistent decline in inflation."
"Is it time to act? My answer is that it's still too early," Williams also said.
Why can't these people get on the same page?
It should be remembered that it was not until after 1975 that the Fed began reporting more than twice a year to Congress and not till 1979 that it issued economic forecasts twice per year. Loose lips were verboten in between.
Enough ranting about the poor quality of the Fed's communications.
The dollar was stronger today and that is another interesting indicator for precious metals, both of which shrugged off the gain in the buck. Crude oil was lower; crude is often a commodity that moves in tandem with gold. Some analysts are calling for crude to go as low as $87 a barrel, certainly not good news for anyone. How can the American economy be growing robustly if crude oil is going down?
We can't lay off the Fed, though, as we close out this week, this month, this quarter and this half.
By one measure, the Fed is a raging success. If they've been looking to create volatility, they've got the Heavyweight Championship belt, won the Tour de France, taken the NBA finals and are gunning for a World Series Crown. We can throw in the World Cup title in football/soccer.
Next week is a short week in New York due to the Fourth of July, which this year falls on Thursday. That means sluggish trading on both Wednesday and Friday, bookending the holiday.
As always, wishing you good trading,
Gary S. WagnerExecutive ProducerMarket Forecast:We have seen the precious metals complex in a virtual free-fall over the last couple of weeks. This was due in part to large short positions implemented by fund managers along with massive liquidations of long positions. On a technical basis we saw the market form and break a double bottom at 1335 as it cascaded below 1300 per ounce. We identified a minor level of support at approximately 1277 per ounce, but even that level quickly eroded as a mass exodus continued, this coupled with the lack of physical buyers in Asia and India. This brings us to our current support level which we identified as a 61% retracement. This retracement is from $730 per ounce to its record top above $1900. A 61% retracement of this move falls roughly at 1185 to 1203. Gold traded to an intraday low just to 1185 before today’s major rally began. Today we saw gold move back above that critical and psychological $1200 level to actually close at approximately 1235. With next week being a holiday week expect light trading activity. However what is most important is whether or not we see a continuation of today’s upside move next week. Video archives:http://thegoldforecast.com/video/april-2013-archives-daily-shows http://thegoldforecast.com/video/may-2013-archives-daily-shows
Proper Action: if current support holds (even if only for a bounce), we may be looking at an ending to this massive sell-off. The key is follow through on Monday
Support at 1202
From the week of 06.07. 2013 COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer