More From Carnac
I may look like a complete idiot in about 10 minutes but I wanted to get on the record before we hear from The Bernank and his minions.
The charts below look like gold is poised to surge higher. Note that the 2-hour has moved through the trendline again but, unlike yesterday, it has held the test back below the line. The lows are swinging higher, too. On the daily chart, note the circled area. The past several days have been dominated by volatility but very little net change in price. This often occurs in a market that is about to reverse course. Buyers get exhausted at tops and are met with increasingly-determined sellers until the bottom drops out. At bottoms, it's the opposite. The selling continues until it is exhausted and the buyers take over. This is where we look to be right now in gold.
There you go. More later. TF
2:50 EDT UPDATE:
Let's call this a mildly stimulative move by The Fed. (Do I sound like LIESman?)
Use the current global panic as bidders for the short-end stuff you want to sell. This will soak up the supply that the Fed offers without moving short rates significantly higher. Take the $400B in proceeds (new found money for Fed to spend on U.S. government largesse), and support the bid on the long-end. Genius! It may even work for a while. The risk to The Fed is that global demand for short-term US debt dries up and you end up flattening, or even inverting, the yield curve. This would be a disastrous consequence of today's action.
To me, since the sale of $400B on the short end will be absorbed by a terrified global investment community, The Fed is simply repatriating dollars and using them to fund the next 90 days of U.S. government debt. A band-aid. That's all this is.
Much larger QE will definitely be coming as soon as early 2012.
Gold surged to 1818 but has since fallen back to 1788. Just goes to show you that Turd, his pen and his sharpie cannot be correct 100% of the time. There's still hope, however, that sanity will return. Let's see how the overnight Asian trade looks.
More this evening. TF