Without any fresh news, we are left with some odds and ends on fundamentals.

One thing is for certain, since today Senate Democrats went "nuclear" concerning the filibustering of all but Supreme Court nominees, Janet Yellen is a lock to be approved as the next leader of the Fed.

What are we to make of an allegedly improving American economy? Conventional wisdom says that a rising stock market makes gold redundant. If the equities begin to fall, though, will gold become the store of value it usually is?

"The argument for holding gold in a bullish economic environment continues to lose water, even if that level of growth remains modest," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

A more moderated view comes from many other analysts, however: "There is some re-pricing due to the new expectation regarding the view on tapering especially after the Fed minutes yesterday and today's fairly good economic data," said Credit Suisse commodity analyst Karim Cherif.

Gold has been and probably will continue to trade in a range. And there are strategies that are not straight-up bull-trade ones.

 David Smith, CFO of Toronto-based Agnico Eagle Mines told the Goldman Sachs Global Metals & Mining/Steel Conference that the price of gold is likely to fluctuate between $1100 and 1500, based on recent market performance.

According to Smith, the lower end of the range "is not a good price for the [mining] industry, and we really can't manage to reinvest and sustain our business at 1100 gold." He expects there to be some pain and some gain both for miners and traders. 

There has been a pick-up in the purchase of physical gold in Asia, but it will not be enough to offset the continued divestment of gold reserves held by ETFs. Asian buying surely can't hurt.

With the misreading of the FOMC minutes, investors in banks felt they were put in the catbird seat and banks and other financial institutions led equities higher. (Banks would benefit from higher interest rates caused by trimming QE3 but they would continue to benefit, as well, from near zero interest rates at which they can borrow from the Reserve banks.)

Wishing you as always,

   

Gary S. Wagner- Executive Producer

 

Market Forecast:

Proper Action

Maintain Gold Short at 1276  stop @ 1294
Maintain Short silver @ 20.47 stop @ 20.90

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

 

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