"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


Monday, September 16, 2013

Gold Cannot Shrug off Bearish Sentiment

Rallies continue to be sold in the yellow metal as the bounce higher ran out of steam near a tough resistance level at $1330. Many traders were watching to see how gold would react on any approaches to this level and whether or not it could maintain its gains having secured a foothold there. It did not... that triggered some long liquidation as well as bringing in fresh short sellers.

Bears are trying to break the market down below the $1300 level. Bulls are attempting to hold it above there. We will know very soon which side has the advantage near term. Rallies however continue to be seen, for now, as fresh selling opportunities. It is going to take some more positive performance on the price charts for that to change. The failure to hold above $1330 is not helpful to the bulls in that regard.

There seemed to be some strange goings on in the Treasury market today with the long bond soaring to 131' 12 overnight only to puke out most of its gains as the trading session wore on. Treasuries look as unsure of their next move as the gold market does right now. Higher yields seem to be here to stay but no one knows exactly "how high" those yields will be before stabilizing. The truth is that the US economy is in no shape to handle higher interest rates and most bond traders realize that. They are also trying to come to terms however with any Federal Reserve "tapering" or "lack of tapering" to gauge whether they should be buying bonds or selling bonds. Each piece of economic news is therefore having an overexaggerated impact on the long bond as it confirms or denies traders' perspectives. The result is more volatility and herky-jerky type price action as firm convictions are lacking.

Markets like these are the realm of the one- three minute bar chart geeks and scalpers.