Follow the Secular Trends While The Headline Dog Chases Its Own Tail

Like a dog chasing its own tail headline commentary tries associate short-term market movements with explanation, connected money repositions into weakness seasonal rally. The inconsistency of day-to-day explanations creates only confusion.

August 10th, Headline: Gold Rises on Speculation Federal Reserve Debt Purchase to Spur Inflation

The dollar climbed for a third day against the euro on concern the economic recovery is waning. Bullion typically moves inversely to the greenback. The Federal Reserve yesterday said “the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” and reversed plans to exit from aggressive monetary stimulus.

August 11th Headline: Gold Falls in London as Stronger Dollar Cuts Investment Demand

Gold declined in London as a strengthening dollar curbed demand for the precious metal as an alternative investment.

The dollar climbed for a third day against the euro on concern the economic recovery is waning. Bullion typically moves inversely to the greenback. The Federal Reserve yesterday said “the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” and reversed plans to exit from aggressive monetary stimulus.

Volatility spawned from confusion is an important tool.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Silver has more work to do than gold, but its setups can occur with shocking speed.

Silver London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Why do you think the Fed has talked about stepping into the bond market? Probably most important, as Jim suggests, the final pillar in gold lies with in the condition of longer term government bonds. Also, the Fed "sees" the short positions building in the bond market and has decided to attack them with words.

Headline: Taleb Says Government Bonds to Collapse, Avoid Stocks

Nassim Nicholas Taleb, who warned that unforeseen events can roil markets in “The Black Swan,” said he is “betting on the collapse of government bonds” and that investors should avoid stocks.

“I’m very pessimistic,” he said at the Discovery Invest Leadership Summit in Johannesburg today. “By staying in cash or hedging against inflation, you won’t regret it in two years.”