"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, February 24, 2015

It's all in Interest Rate Expectations

I am referring to the gold price in the above title. By that I mean, whatever market participants think as to when the Fed is going to make the first move higher, will determine whither gold goes. You tell me what interest rates will be in June, and I will tell you whether gold will be higher or lower. It really is that simple.

Take a look at the following chart. It is a 30 minute line chart in which I have removed all the markings. The two graphs shown are two totally different and separate markets. You tell me what is what?

Give up? Try looking at the same chart now with the annotations.

Amazing isn’t it? Gold continues to track the movements in the Ten Year Treasury note futures remarkably closely. When it goes up ( interest rates move lower) gold moves up with it. When it goes down (interest rates rise) gold goes down with it.

Notice, there is no “gold price manipulation” crap. No wild conspiracy theories; no “evil bullion bank cartel actively slamming the gold price lower”. No, it is a simple matter of what the market thinks about where interest rates are going and when.

This is why all the wild claims about gold going to the moon, doubling in value, soaring to $2000, blah, blah and more blah are the fruit of empty-headed drivellers who cannot keep their tongues from parading through the earth and defiling us all with their baseless and meritless predictions.

No one knows what interest rates are going to do right now. They are pretty much convinced that the Fed is going to hike at some point but they simply do not know when. For that matter, neither does the Fed itself, based off of what I am understanding of Ms. Yellen’s testimony and her answers in front of the Congress today. How in the hell then can anyone with a functioning conscience have the temerity to be making claims about where the gold price is going and even more hubristically, what it will actually be in a few weeks to a month or more? Do they have some special esoteric insight into the mind of Janet Yellen and the current FOMC that even those people who sit on that Committee do not possess about themselves? Of course not!

Normally I try to restrain myself from expressing my complete and utter disgust at these pestilential gold hucksters and their wild and bizarre claims but there are days, such as today, when I really have had enough of these predators and the trail of wrecked financial lives they leave in their wake.

The best we can do as mere mortals is to try to stay on our toes and constantly assess and reassess what market sentiment is from day to day. Given the state of things and the rather fickle nature of today’s modern markets, that is proving to be a task that requires an almost permanent seat in front of a computer all day long, day in and day out ( you would be amazed at how much extra time you have in a single day once you give up doing those annoying things like eating and sleeping!)

Just like the Fed itself, based right off of the words that came out of Janet Yellen’s mouth this morning, that means we have to sit and look at each piece of economic data and attempt to determine what it is telling us about the state of the US economy.

I can only tell you one thing with certainty – price movements  in gold and many other key markets that will be directly impacted by any Fed decision to hike rates or not to hike rates are going to remain incredibly volatile. Until we see a clear, unambiguous trend for the economy, one way or the other, we are going to experience days in which prices will fly or will drop with a startling rapidity as the computers react to each and every bit of data coming out.

As long as the economic data is mixed and inconclusive, we are going to see uncertainty and uncertainty ALWAYS means choppy and unpredictable markets. Just remember that the next time some pestilential gold guru opens his mouth and confidently asserts that he alone knows where gold is going and when.

Friday, February 20, 2015


NOVEMBER 20-2016



 To the readers of the site;

Thank you for your continued viewership of this site. I encourage those who have not already done so, to give the new site a try ( www.traderdan.com).

I also want to let you know that effective as of the end of this month of February, I have made a decision to no longer allow posting/comments on the site.

The reason is two-fold - first, by allowing the comments, I am forced to fend off the constant spammers from India which is tiresome.

Two - since I am only infrequently posting articles up here, the sheer depth of the comment strings is becoming rather unwieldy due to the small number of articles that I post here.

Thanks again.
Trader Dan