ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
In December, 2009, Federal Reserve Chairman Ben Bernanke insisted that gold’s surge was not signaling increased inflation expectations because it was simply following along with the general rise in commodities. Now that gold stands head and shoulders above the commodity pack, Bernanke is expressing his bewilderment at gold’s strength. Gold is still not a signal … Read more
In December, Bernanke observed that gold prices reflected general commodity prices and did not indicate rising inflation expectations (in the U.S.). As gold makes new all-time highs, it is now outpacing many other commodities. Many commodities have declined sharply in recent weeks due to fears about the sustainability of global growth. Gold has diverged due … Read more
It appears even gold remains caught up in the carry trades that have supposedly kept commodities aloft for months. Gold plunged almost 4% along with a deep sell-off in the general market. As the market suddenly cared again about the prospects for sovereign defaults all over Europe, traders and investors dumped gold – and almost … Read more
The U.S. dollar index is only trading back to levels from last summer. However, from a technical standpoint, the dollar has broken out: the short-term downtrend has ended, and the current move has considerable upside potential. *Chart created using TeleChart: The chart above shows that the dollar’s break below the 200DMA in May led to … Read more
During recent re-confirmation hearings for Federal Reserve Chairman Ben Bernanke, U.S. Senator Jim Bunning – a frequent critic of the Federal Reserve – asked Bernanke several questions about gold prices. Bunning’s questions appear targeted at prodding Bernanke into acknowledging that inflation expectations are much higher than the Federal Reserve’s current estimation. Bunning also uses high … Read more
In “That’s one long gold bubble,” Tim Ianaco created an illustrative animated graphic from Google news archives comparing the news coverage of “housing bubble,” “credit bubble,” and “gold bubble.” He rightfully observes the following: “…my understanding of how bubbles work is that they materialize rather quickly, fueled by media coverage toward the end and then … Read more
“Tricks are for kids he plays much gigs He’s a big bad wolf and you’re the three pigs He’s a big bad wolf in your neighborhood Not bad meaning bad but bad meaning good“ “Peter Piper” – Run D.M.C., 1986 from the album “Raising Hell” What was once bad is now good. Or maybe what … Read more
“Mish” posted the latest chart from the Investor’s Intelligence Survey, and it shows that bulls are back up to 50% and bears have hit a new low for the year at 16%. (You can directly access two years of data using the chart tool at Schaeffer’s Investment Research). He also noted that bears have only … Read more
Some fun facts: Gold (GLD) is up 18% for 2009. The S&P 500 is up 17% for 2009. The S&P 500 has essentially gone nowhere in “real gold” terms. The angriest bears out there might declare that the stock market rally is merely a mirage, the result of the decreasing value of paper currency. I … Read more
The dollar’s inexorable descent continued Tuesday as the index hit fresh 11-month lows after consolidating for 4 weeks. Accompanying the most recent weakening in the dollar has been a surge in gold and silver. Gold touched $1000/ounce and silver is now up about 44% for the year. Barrick Gold (ABX) has FINALLY eliminated its gold … Read more