The title was not meant as a play on words in reference to Operation Twist, but now that I think about it, maybe it should be. The Post-Twist financial world is far different than it was before the genius that is Ben Bernanke’s ‘bigger than yours or mine’ brain concocted a maniacal plan that would “sanitize inflation” signals from the bond market and break the then highly elevated yield curve.*
So, why is today like early 2013 and why is there a twist to that view? Because two indicators have come together to point to economic stability (at least) in the US, with the twist being that other indicators are pointing to a potential unchaining of inflation this time, unlike the 2013 time frame, which was in the grips of global deflation (and Goldilocks in the US).
So gold bugs, don’t get too concerned just yet. The sector has been overdue for a correction and that is what it has been getting. Speaking of sanitizing things, over bullish gold sector sentiment has needed a good clean out. The 2013 signal immediately preceded the worst of the precious metals bear market, but the 2016 signal need not for reasons explained later in the article. Continue reading "It's January 2013, With A Twist"
By: Gary Tanashian of biiwii.com
Not enough inflation. That’s what the Fed is saying yet again.
“Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months”
The problem is, that like their innovative friends at the BoJ, which apparently thinks it is going to now engineer the Japanese yield curve into an inflationary environment, the US Fed is too heavily involved in the Treasury market. So I ask you if just maybe the signals they are looking for in bonds are all screwed up by their very presence in bonds, 24/7 and 365 since 2008? Hello Op/Twist… Continue reading "FOMC: Not Enough Inflation, Folks"
By: Gary Tanashian of Biiwii.com
“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?” –Alice in Wonderland
Silver out performs gold as both rise with Treasury bonds, which are in turn rising with stocks, as Junk bonds hit new recovery highs while USD remains firm as inflation expectations are out of the picture. This is highly atypical, maybe even unprecedented.
Some, deeply dug into their particular disciplines and biases, might say it is dysfunctional, as this backdrop simply does not make sense using conventional methods of analysis. Why again did I name this service Notes From the Rabbit Hole?
When the S&P 500 was robo rising month after month, year after year as it did from 2011 to 2015, you did not need the market report with the funny name because all was linear and as it should be. The same actually, could be said for gold. It was linear and as it should be in its relentless downtrend. Casino patrons simply ride the trends!
But today things are making sense simply because we don’t have a need to make them make sense as linear thinkers would do; we go with the indicators and charts. Continue reading "Wonderland"
"History shows again and again how nature points out the folly of man" – Blue Oyster Cult, Godzilla
I would have written off the gold sector long ago in its ongoing bear market had I thought for one moment that gold's utility as insurance against the acts of monetary madmen/women in high places had been compromised in any way. On the contrary, the monetary metal is simply having its price marked down in a bear market while its value, especially given its current price and all that has gone on in the financial system over the last 3 years remains just fine.
Indeed gold, an element dug out of the ground for centuries, once as money and now as a marker to sound money systems will one day be shown to be a calm oasis from the fallout to global monetary shenanigans currently ongoing. At least it would be an oasis to those who have valued it as such. It is going to feel like a giant dinosaur (minus the kitsch value) ripping through a city built on paper to the multitudes who have taken the bait on the current too big to fail global inflationary operations. They will fail. Timing is the only question. Continue reading "Goldzilla"
The FOMC announced that Operation Twist would continue through year end. This is where the Fed tries to re-inflate the housing bubble (and related areas) by buying long term T bonds to artificially hold down long term interest rates while sopping up any inflationary implications to the money supply by selling short term T bonds. Throw in a side of ZIRP, and you've got a lot of free money flying around out there with very subdued inflation effects.
Gold is in an orderly corrective consolidation. Silver has been hanging around at support and is sponsored by a bullish CoT structure. Commodities, even backing out the wildcards in agriculture, are in nice short-term bottoming patterns (copper is rounding upward and crude oil is breaking up from a small Inverted H&S with a target around 98) and just waiting for the Fed to lose control of the nice macro painting it has been working on since Op/Twist #1, back in September of 2011. Continue reading "Is 30.2.Au flying in Ben's face? Not yet"