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You Make Me Dizzy Miss Lizzy

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With all the gyrations and with all the verbal pyrotechnics coming out from, and about, the Fed, it's no wonder we've seen a spike in prices this week. Traders and analysts have been spinning themselves into a tizzy over the prospect of tapering or not tapering for eight months now.

The Fed itself isn't helping matters much, either. In a serious game of bridge, talking aside from actual bidding is strictly verboten. Apparently members of the Fed don't view the game they're in as serious because they gibber monkeys at any opportunity.

Perhaps the bears became too rash and that allowed bulls to push back in. Nevertheless, there is a limited upside to gold (and silver) given the precariousness of the Fed situation. we will know more come the 17th and 18th, just next week.

The market murmurings about tapering seem to have simmered down substantially after various members of the Fed - both FOMC members and non-members - spoke on their version of the rubber chicken circuit.

Market sentiment, too, can turn on a dime.

"The dollar has weakened, so that is helping gold," Bart Melek head of commodity strategy at TD Securities said today. "We had seen some aggressive short positions being taken. Some of that is being taken off as many people feel that gold isn't dropping into the precipice. It's no longer a one-way bet."

Meanwhile, U.S. household net worth has risen to an all time high, in aggregate. Those families from the middle class on up to the fringes of the working rich are feeling more at ease as their collective holdings hit $77.3 trillion. That means their stocks, bonds and equity in their homes rose substantially in the last 12 months.

For gold, this signals another move away from one of its traditional market utilities - as a store of value. All that's left fundamentally for gold is to act as a hedge against inflation should it finally arrive.

Adding fuel to gold's rise in the last couple of days is dollar weakness against all major currencies; a jump in oil - it's hovering around $98 per barrel up around $5 from just a few weeks ago; and some uncertainty in stock markets as we speed toward the end of year and the holiday season.

As always, wishing you good trading,

Gary S. Wagner- Executive Producer


Market Forecast:

Over the last few trading weeks we have been in a short market play in both gold and silver. By identifying critical support and resistance levels we were able to effectively move our stops in such a way that when there was a key reversal in the metals markets we would be able to exit our trades and pull profits.
There are of course pros and cons to this approach. By moving our stops as the market trades in our anticipated direction, it allows our trade to attempt to capitalize on any major rally or correction. If in fact the market has a sustained move to the upside or downside we look to capture as much of a percentage of that move as possible. That being said the con to this technique is that we only capture a percentage of the move. All things being equal I’m satisfied with the profits that we took, and now we can sit back and evaluate our upcoming strategy for both the end of this year as well as the beginning of the next.

globe.jpgProper Action

Short gold at 1276  covered @ 1251  +25.00 (2500 per contract)...  

Short silver @ 20.47 covered @ 20.25 +.22 (1100 per contract)


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


Click on Chart below for current chart gallery


Gary S. Wagner - Executive Producer