Fed Caught in the Enveloping Horns – Gold and Silver Overwhelm Resistance

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by Jesse

As you know the Fed showed its dovish side in their decision yesterday, which is ironic given all the happy talk about the tight employment picture and booming economy.

The markets are expecting at least 25 basis points cut in July, and there is a great deal of talk about 50 basis points.

Can things get even more crazy than this? I think that they can, and will.

Gold caught fire yesterday, and silver was following.

Money is starting to hit the exits, looking for some safe havens when the consequences of this latest financial asset bubble come to fruition.

After the close yesterday, gold took another strong leg up and was hitting the 1400 market in the globex futures. They maintained this strength during the London and New York sessions, and managed an impressive close aroud 1390.

Silver blew through resistance at 15 and stuck a close around 15.50 today.

Stocks followed suit, rallying hard today.

The SP 500 managed to top its previous closing high.

The tech heavy Nasdaq 100 diverged a bit, and is still short of its prior high, the last blowoff top.

There will be a stock option expiration tomorrow.

The China trade situation, and the steady beat of war drums beating along the Potomac for Iran, should be casting more of a chill on the markets.

The US and China may meet next Tuesday. The G20 meeting in Osaka, which may feature a meeting between Chinese President Xi and Trumpolini, will be next weekend.

Let’s see how things continue to unfold.

Those of you famliar with the movies about the Zulu uprising in South Africa will know about their war strategy called ‘the enveloping horns’ which is a classic pincer movment.

It looks from here that the Fed is caught in such a difficult set of enveloping problems of declining confidence and credibility.  And their cronies on Wall Street and in the Banks may have advanced just one financial asset bubble too far.

Have a pleasant evening.





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