31 January 2017

Stocks and Precious Metals Charts - FOMC Rate Decision Tomorrow

Gold and silver moved sharply higher today as the US dollar gave up more of its recent gains.

There was overnight commentary on the large number of Comex deliveries for the February gold contract. The gold does not go anywhere for the most part, but it does get shoved around the plate for leverage.

In other words, at the moment the precious metals are running as a paper cross trade with currencies, with actual bullion playing a minor role at best. While this is not uncommon, it is not exactly in synch with the actual physical supply and demand flows in the Asian markets. When speculation disconnects from the physical markets for long enough, we eventually get a jarring reversion.

Stocks gave it up a little, with Washington and Wall Street getting edgy over Trump and his initial executive actions, as needlessly distorted as some of them might be by the friends of Wall Street in the corporate media. The status quo has ruled the roost in this country pretty well for the past 20+ years. Now that they are not handing down pre-ordained policy outcomes, they are not sure what to do. It is like a guy who has been trading on insider information for years suddenly having to figure out exactly what the markets are saying.

The next four years are sure to be interesting.

The FOMC will be announcing their latest rate decision tomorrow. Let's see if the metals can hold close to their most recent upper trendline impact as you can see on the charts.

Most likely is an announcement that the Fed will be slowly winding down some of their reinvestment program as rates continue rising. I am not so sure they will actually do anything except for jawboning.

There seems to be a lot of that going on in Washington these days.

Have a pleasant evening.