I’m more interested in the reaction of traders to the speeches and BS going on these days than listening to the politico’s own BS. Plus, I traded very well today without any of that noise anyway – which I strongly advise at this point.
Regardless, there’s a bunch of can kicking going on and it’s just plain ‘ol making me sick. I can’t believe the CEO of the United States of America is worried about pushing a deal through so the markets don’t freak out – in Asia. F*** me upside down and sideways. We’re just in deep shit as far as I can see.
So let’s make money while we’re watching this unfold shall we? What’s working? What’s not? Sadly, equities are just stuck. Yeah, we’ll see an explosion higher if the debt ceiling is raised, bonds will sell off and we’ll be hearing about the “risk on” trade being back on. I hate that term.
What matters is that with more debt (and, yes, it’s coming) the dollar will again debase. There is a very likely chance now that we’ll see the dollar sell off below what we thought was the 3-year cycle low in April – 72.86.
At the same time, GOLD is now where the focus is – and yes, it’s a very crowded trade. But it continues to be the one true source of value and safety for an ever-decreasing dollar hedge.
Notice that the relative strength in Silver is no longer there, although it is holding strong. But as we build a base between 1,575 and 1,600 here in gold, look for entry point around this area.
Some shaking out will occur, and that’s when the opportunity will arise for one last push higher to 1,800 or so. It’s my best guess but using pivots for next month already gives us room to 1,700 – and panic can easily push it higher.
By the time all’s said and done, it won’t surprise me one bit to see a euphoric reaction in the short-term to any deal that may come from Washington (is the NFL deal a leading indicator?) but more of the same will NOT cleanse the system in the mid-long term.
The pain of deflation is around the bend. I can almost smell it. But Bennie’s going to inflate this (or at least try) one more time before the markets smell a rat. Too bad it’s taken so long. It’s only going to make the future healing that much harder and more painful.
Here’s one more nugget to chew on from the Slope of Hope guys (www.slopeofhope.com) and Tim Knight…..
As goes the Fed’s balance sheet, so goes the equities. For now.
Trade well and always trade the extremes!