Dan NorciniGold for December 2007 delivery at the Comex closed down $1.00 at $682.30 today.
Gold had another lackluster day as it continues its choppy trading pattern that has marked it now for more than a week. Volume at the Comex has been mediocre at best over the last six trading sessions. This is not unusual for gold during the “dog days of summer” as it is normally a slow time of the year for gold trading. That will begin to change with the flip of the calendar to September.
Considering the stability of the dollar in today’s session, gold actually held fairly well as did the gold shares which came back off their lows as bullion refused to break down. It is obvious that sellers are appearing above the $684 level in gold basis December while buyers are making their presence felt below $680 in that same contract. The result is this chop that exists. It didn’t help gold any today that the entire world was sitting around glued to their computers or financial TV holding their breath in anticipation of what little words the would-be-gods at the Fed would insert or omit in their press release.
Ladies and gentlemen – I know that as traders and investors we need to follow monetary policy since it affects the dynamics of the markets that we trade but I submit that this pathetic spectacle that occurs every time the Fed releases a press statement is perhaps one of most contemptible displays of human obsequiousness and servility that has existed since the days when human beings offered their firstborns to appease Baal or Moloch. The ridiculous sight of otherwise dignified men and women playing guessing games amongst themselves, “Will they or won’t they put in this word or that word” is so disdainful and so painful for me to observe that I marvel how people can willingly subject themselves to this sort of thing in such a willing fashion.
Do these otherwise intelligent and rational people expect these ivory towered, sequestered and cloistered monetary monks to say something that might send panic and fear throughout the investing world? Can you imagine the following sort of statement coming out of the Fed: “Having examined the recent economic data the FOMC believes that you should head for the hills, grow your own food and get the h*ll out of Dodge while you still can”? Of course they would not – it would make as much sense as Secretary Paulson yakking about how “a strong dollar is in the US interest” all the while the hapless thing drops through one level of support after another. I mean seriously folks – why does anyone in their right mind pay any attention to what these people say anymore? You know that it is their number one job in life to reassure the investing world that everything in the US economy is simply in fantastic shape. We could be in the middle of the proverbial Great Depression and they would tell us that the economy is improving because the unemployment rate dropped to 22% from 25%!
Enough of my rant for now. I feel better getting that off of my chest, not that it will change a single thing. Here is the simple truth: the Fed is trying to play a dangerous game with the markets. On the one hand they need to placate foreign holders of US debt by talking tough on inflation. On the other hand they need to throw the markets a bone and flirt with talk about lower rates to keep everyone in la-la land happy. The result is that they will obfuscate enough so that everyone gets to hear what they want to hear.
Euro gold continues to bee-bop around the mid €480’s with today’s London PM fix coming in at €485.113.
Apparently the shrieks of panic, whining, begging, cajoling, and all around misery from the talking heads on BUY TV were enough to call in the cavalry and up, up and away the S&P 500 index has gone. All of those mortgage lenders that have gone belly up, all of those credit swap guys that cannot pay their bills, all of those hedge fund ninnies who gorged themselves on that worthless crap called CDO’s and who had to shut down redemptions from their clients who were trying to get what was left of their money out before it was too late – all of that has been fixed in the last two days. Problem solved; Case closed; all is well and happy days are here again. “Blue skies, nothing but blue skies, do I see”. Play it again Sam, will ya?
I will leave you with a little sound advice from a man named Solomon, “The prudent man sees the difficulties and dangers ahead and prepares for them; the fool goes blindly on and suffers the consequences” (Prov 22:3). Those who so blithely ignore the problems taking place right now are in for a rude awakening.
Now we wait to see the magic word from the FOMC…
Dan