FOMC No Rate Hike: Gold, Silver, Miners Pop – Stocks Drop

We’re very bullish on gold, which is the anti–paper money, of course, and is underowned by investors around the world.   – Paul Singer, Elliot Management Corp

Predictably, the Fed did not raise the Fed Funds rate by a piddly one-quarter of one percent today.  It’s not because the economy is crashing – which it is – but because the foundation of the massive, money-printing inflated asset bubble in the U.S. and globally rests on the teetering foundation of zero-percent interest rates.

Negative rates rates presents another dilemma:  a western financial system that is completely dysfunctional from over eight years of bombarding the western economies with ZIRP and money printing.  At least most of the eastern hemisphere countries have Central Bank lending rates well above zero.  China’s is 4.35%;  Russia’s is 10.5%.

This blog unequivocally said three weeks ago, when the usual Fed clowns began their routinized interest-rate hike threat that the FOMC would whiff again.  What the heck happened to today’s meeting be in “live,”  John (SF Fed’s John Williams)?  Now that the Fed balked once again at nudging rates 25 basis points closer to China’s overnight Central Bank lending rate, does that mean that today’s meeting was not “live?”

Interestingly, stocks were pushed higher overnight and gold was pushed lower.   When I saw it at 5:30 a.m. EST, gold was down $7 from where it opened the overnight CME Globex electroning session (6:00 p.m . EST).

After the “not live” meeting was over and the results hit the tape, both gold and the stock market popped.  But the stock market apparently saw through the transparency of Yellen’s smoke-blowing and interpreted another “dead” meeting to mean the economy is indeed dead.  While gold ramped up toward $1300, the S&P 500 plunged 11 points in the last 28 minutes of trading.

I have been suggesting to my Short Seller’s Journal subscribers that the S&P 500 is starting to tip over – finally.  I think there’s a better that 50/50 chance that the S&P 500 repeats the same kind of cliff dive it took in August 2015 and the beginning of 2016.

On the other hand, it seems that a lot of western money – wealthy individuals and smart hedge fund managers – are beginning to plow a lot of money into physical gold.  Why? Because the price-movement of paper gold relative to the size of the Comex open interest is running in higher in defiance.   This is something that has not occurred in the last 15 years and it’s caught a lot of market analysts wrong-footed.

The character of the market has changed.  I don’t know how much leverage the Fed/bullion banks have to push gold a lot lower at these levels.  We’ll find out as gold challenges $1300 again and we get closer to BREXIT.  The Fed/ECB/BOE are making it clear that they will do their best to manage the price of gold into this potential event.

For anyone interested in opportunities to profit from getting in on the early stage of this next leg of gold’s bull market, check out my Mining Stock Journal.  I present long term view ideas on high potential junior micro-cap mining stock ideas.

I present the views. My service is research-based, not trading-based. Everyone has to
buy/hold/sell according to their own risk/return preferences and tolerances.  I buy LONG term core positions in my ideas and trade in and out of maybe 20% of the position but not very often.  You don’t get rich trading the market. You get rich finding very undervalued ideas and holding them until they are overvalued. We are 90% away from juniors being overvalued.   You can subscribe using this link:  Mining Stock Journal.  You will start with the current issue plus get all of the back-issues (it’s bi-monthly).


9 thoughts on “FOMC No Rate Hike: Gold, Silver, Miners Pop – Stocks Drop

  1. obviously we’re looking at 3 near term events that could send things higher for us and keep the momentum going
    1) close over $1300
    2) BREXIT
    3) June employment # and confirmation the rate hike cycle is over
    and behind the scenes with dwindling bar supply who knows what could happen there

  2. Dave,

    Without a doubt you are one of my favorite pundits but why bother with short selling in a hyper-inflationary environment? Especially since your maximum gain is 100% & losses can be to infinity & beyond.

    Your money could get better returns elsewhere.

    After today’s Fed capitulation, I am telling all my friends to buy 3X ETFs in the PM sector. JNUG is already a 10-bagger YTD, NUGT is close behind & USLV is getting ready to fly.

    Just my two cents.

    1. I agree with Dan. With the fed furiously propping up the markets, shorting doesnt seem to have a favorable risk/reward ratio. Even turd stocks are simply melting up aling with the indices for no justifiable reason. Long gold and just leave everything else alone seems like a good bet. I bought a few pm stocks which I plan to hold for over a year but do have worries about when the crooks will pull the rug from under the sector.

  3. I think that BTC makes sense in a well rounded portfolio mix. 90% of the trading in BTC occurs by Chinese, and there are a hell of a lot of Chinese on the planet. And a lot of yuan looking to trade into something not getting devalued every time they turn around.

    BTC is on the cusp of the early adopter phase. It has great utility for those in areas of the world where people don’t have access to banks. And billions of people are in that situation. Several ways to play BTC. The ETF GBTC, owning Bitcoins, and mining for Bitcoins (or owning equities in Bitcoin miners).

    Trace Mayer makes a good argument for Bitcoin and where he sees it going.

  4. so outside of state treasuries , central banks and pension funds, is there actually any one really in
    stocks? Central banks running around like headless chickens screaming the sky will fall if there is
    a brexit.? selling stocks to prove the point? i seem to remember the same play with the swiss gold
    vote, the greek default …blah,blah…does anyone still truly buy this crap? the vote will be rigged
    the market will top out and gold will get smashed by the criminals yet again,,,maybe i’m just too cynical
    here …but seriously

  5. (12:20 AM here in Western Australia, 12:20 PM EST in New York):

    (Sarcasm on): Yes, yes, YES! The SP500 has MAGICALLY ramped back up to 2050, and it CAN stay above 2050! IF we just BELIEVE! Now clap, come on, clap, clap, CLAP for SP500 to stay above 2050!:

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