Gold

The Markets must have four stomachs. They chew, re-chew, re-digest and finally – well, maybe finally – settle on a group-think opinion.

Today that opinion says that the FOMC statement is good for stocks, good for America (cue the “Star Spangled Banner”), good for the world, for everything right and just in the universe. But just wait till tomorrow.

While the Fed left in place its notation that interest rates would remain stable for a “considerable time,” they also boldly underscored progress that was being made. Inflation is nearing the initial target of 2 to 2-1/2% (although plunging oil prices won’t assist in that), and the labor force’s long-standing underutilization is diminishing.

Like so many of the markets, gold seemed befuddled today. Lowering volume, choppy trading that surged then receded, and indecision based on flying rumors about what the Fed might or might not do, hampered gold.

In late afternoon trading, it is up about $1.50, although it is well off its overnight highs, currently trading at 1196-97.

Gold fell down and broke its crown today, but oil is plummeting toward a rendezvous with destiny. The equities markets can’t decide what to do, having been up in the morning but now definitively down in mid-afternoon.

Traders and investors are running toward the exits. There is a combination of reasons for this not least among them the imminent approach of the big fat holiday season and the end of the year book balancing dance.

As we pointed out yesterday the Volatility Index (VIX) has been going crazy. It is up 34% this week, meaning there is much more implied volatility in markets of all kinds.

The yanking this way and that by fundamental forces now growing wilder and woollier by the day, left gold almost becalmed in a sea of madness.

Oil is tumbling into a seemingly bottomless bit, breaching $61 for WTI crude and looking every bit as if it will go lower. (Although we’re sure that the “magical” level of $60 will bring out bargain hunters and risk takers.)

The half- and quart-point losses on the Dow and S&P 500 look positively like a day at the beach compared to the rest of the world’s exchanges. And the modest rise on the NASDAQ seems like Thanksgiving, Christmas and Fourth of July rolled into one.

Oil continued to careen lower today, both WTI crude and Brent free falling around 4.25%. (Natural gas tumbled even more – 4.65%.) Oil-dependent nations that have been planning poorly are reeling, Venezuela and Russia among them.

Fundamentally speaking, today’s U.S. job numbers and income-increase numbers are an ominous sign for gold prices. The solid, 321K monthly hiring figures for November was not only significant in quantity but in quality.