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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (15064)	12/3/2015 6:39:58 PM
From: Goose94	Read Replies (1) \| Respond to of 203382

Buckle up: The ride’s just begun, and tomorrow will be a stomach-churner.... Gold’s been very volatile over the past few days. Get ready for more. Yesterday, gold was hit by Fed Chair Janet Yellen’s speech before Congress, along with positive ADP jobs data, losing about 1% on the day and dropping toward a key long-term support range between $1,040-$1,050. This was just a precursor of what’s to come when/if the Fed hikes rates on December 16. I fully expect a sharp sell-off in gold if the Fed does decide to raise rates at their upcoming meeting. But I’ve also been very vocal in my view that such a move would be, ultimately, bullish for the metal. Gold needs to get the rate-hike monkey off of its back. And I expect that when it does, a “buy the rumor, sell the news” phenomenon will help release some of the long-standing short selling pressure on the market. Still, gold did sell off on Yellen’s comments yesterday that supported the view that a rate hike is coming in a couple of weeks. But then, today, ECB head honcho Mario Draghi underwhelmed investors by failing to cut its overnight rate even more (he slashed it from -0.2% to -0.3% and extended its massive QE program by at least another six months…which gives you some idea of how high expectations had been set). In response, investors bid up the euro by nearly 3% against the dollar, and the U.S. dollar index fell fully 2%. Gold rebounded (up about $9.00, or 0.9%), along with oil. The bounce in gold, thanks to the drop in the dollar index, helped mitigate the otherwise bearish effects of Yellen’s further testimony today on Capitol Hill. Elsewhere, the apparent terrorist attack in San Bernardino hasn’t had much effect on gold or other asset classes, and that’s good. It’s a human tragedy, and a major political issue, but should have little near-term impact on the investment markets. So, it’s been a roller coaster ride in the markets over the past few days. But buckle up, because the big move is coming tomorrow…. The release of the November nonfarm payrolls report tomorrow morning will either provide the final nail in the coffin for the Fed’s zero interest rate policy… or rip the lid off to once again expose a zombie economy. The reaction in the markets — particularly in gold — will be dramatic. Considering the way economic data has been flowing in recent weeks, the big surprise would be if the jobs report is significantly negative. There have been some pieces of bearish news, including the recent ISM manufacturing reports, but on balance these seem to indicate employment weakness, if any, a little further down the road. So the odds favor a jobs number tomorrow that would support a Fed tightening on December 16…and thus another sell-off in gold. That, however, should be viewed as a buying opportunity. For one thing, seasonality in gold — with tax-loss selling in December followed by a rally in the January-March timeframe — has been particularly prominent over the last two years. This argues for a potentially profitable trading opportunity coming off of the December Fed meeting. In addition, the structure of the paper gold market has shifted dramatically in favor of an upcoming rebound in gold. The large commercials, which include not only the smart month involved in the daily physical gold trade but also the big bullion banks who have been repeatedly fleecing the big speculators, have shifted their positioning to a very low level of shorts. Conversely, the big speculators — who are typically the victims of the big commercial interests — have gone heavily short. In other words, the lambs are ripe for the slaughter. And gold bugs who recognize the way the game is being played in the paper gold market can now profit along with the big manipulators in that market. To sum up, I expect gold to continue its weakness into the Fed meeting, and likely shortly thereafter. But this will create a very attractive buying opportunity, especially for gold stocks. The best way to play this is in the junior gold explorers/developers/producers that have proven, large-scale gold resources. These companies should be accumulated for the longer term in any case, and the argument for buying them is only bolstered by the short-term buying opportunity that I see coming. Brien Lundin