• 371 days Will The ECB Continue To Hike Rates?
  • 371 days Forbes: Aramco Remains Largest Company In The Middle East
  • 373 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 773 days Could Crypto Overtake Traditional Investment?
  • 777 days Americans Still Quitting Jobs At Record Pace
  • 779 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 782 days Is The Dollar Too Strong?
  • 783 days Big Tech Disappoints Investors on Earnings Calls
  • 784 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 785 days China Is Quietly Trying To Distance Itself From Russia
  • 786 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 790 days Crypto Investors Won Big In 2021
  • 790 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 791 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 793 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 793 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 797 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 797 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 797 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 800 days Are NFTs About To Take Over Gaming?
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Gold Thoughts

Bailout Ben Bernanke, Chairman of U.S. Federal Reserve, last week demonstrated the intellectual bankruptcy at that institution. No broad based economic need for a 50 basis point interest rate cut was evident. Only purpose of rate cut was to aid investment banks and mortgage brokers. Further, that interest rate cut is now politically impossible to reverse without a crisis in the value of U.S. dollar. This rate cut was a clear signal that dollar, intentionally or due to indifference, would be sacrificed to meet Fed's unspecified agenda. U.S. dollar, as shown in graph, in an undulating bear market, moved to a new low on Fed's action. If chart was of price of a stock, most would call it a sell. Federal Reserve's willingness to sacrifice value of U.S. dollar was reflected in the strong rally by Gold.

Despite U.S. dollar's bear market, confirmed by policy actions of Federal Reserve, foreign exchange markets may have over reacted in the short-term. "Over shooting" is the term used to describe such action by the foreign exchange markets to an unanticipated event. In the short-term, U.S. dollar is over sold, and at a minimum due for a bounce. Loonie's over extended rally is also a result of this turmoil, and should be recognized as such. As a consequence of these events, $Gold became extremely over bought. $Gold should correct the "over shoot". As $Gold moves to perhaps $700 or lower, investors should add to positions. We can then begin talking about the $800 level. And longer term, the actions of Federal Reserve makes the $1,400+ target more likely than ever to happen.

GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html. Ned will be exploring the Gold Super Cycle at The Wealth Expo in NYC, 19-21 October. For information go to www.wealthexpo.net.

 

Back to homepage

Leave a comment

Leave a comment