Bernanke speaks, gold price rises.

Bernanke lifts gold price again

2012-MAR-27

Precious metal bulls have got used to being “saved” by Federal Reserve Chairman Ben Bernanke in recent years. Frequent spurts higher in the gold price often coincide with Bernanke press conferences, in which the chairman vows to maintain easy money policy at the Federal Reserve. Yesterday was a classic case of this, with gold gaining around $20 in a matter of minutes just after 12GMT following Bernanke’s comments that more progress on unemployment will require "more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies."

As Trader Dan Norcini comments, pity the poor Fed Funds Futures traders. No sooner do we have glimmers that rates are going to rise as the US economy picks up pace and inflation rises, than do we have the Fed Chairman himself come out and quash these rumours. Dan correctly notes that Bernanke is terrified of rising rates. The US is in a debt trap from which there is no escape without considerable economic pain.

Little wonder then, that some analysts view our current epoch as “the most favourable era for gold prices in our lifetime”; BMO Financial Group’s Don Coxe adding that “governments are running deficits "beyond the forecasts of all but the hardiest goldbugs five years ago; central banks are printing money and creating liquidity beyond the forecasts of all but the most paranoid goldbugs a year ago."

Unsurprisingly, the dollar sold off yesterday, with the USDX now below 79.00. 80.00 is looking more and more like a “hard top” as far as this index is concerned, Gregor Macdonald and others noting that capping any rise in the dollar is an important aspect of current US government policy – though one that is seldom discussed in much detail by mainstream media.

A result of this official determination to weaken the dollar is of course, more people looking to buy precious metals.

Tags: Ben Bernanke, buy gold, dollar, Fed, gold price

Author: The GoldMoney News Desk

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Market Madness Market Update - 3/26/12

A spectacular day for US indices. Even though we're not doing market updates anymore today was too good to pass up.

The S&P 500 today took back all of its losses of prior days and more. The index closed at its highs of the day on some last minute buying acceleration to finish at 1416.5, a new high. Wedge resistance is coming up at around 1425 but it's getting narrow here and soon it will resolve and break on way or another. Probably for a correction downward. The market sure does seem to have one coming after a move this large, and this fast.

We were bullish on the semiconductors is some of our last updates and today it finally broke resistance at 440. If bullishness in the general market continues this index very well could be set for some great gains.

And by far the biggest winner of the day, the small cap RUT index. Bye bye you cruel channel. This is going to be the place to be if market strength continues. We've been saying that for awhile now and it has been true for awhile now. Even Goldman Sachs has picked up on it and jumped on the Market Madness bandwagon (OK OK, so maybe they came to their own conclusions based on their own analysis and aren't actually reading our blog...)

That's it. Just had to post those lovely charts and say a quick word. I'm NOT doing market updates anymore, I swear.

Can You Be Overcautious?

Capital Safety: Is There Such a Thing as "TOO Safe"
See the latest capital safety tips from Robert Prechter in his new Elliott Wave Theorist 
March 22, 2012

We all know that the stock market has been rising for 3 years. Many economic measures -- unemployment, consumer spending and confidence, etc. -- also show strong improvement. Yet is that a good reason to stay bullish on stocks?

What a silly question, some people might say. But before you give a reply, please take a look at these financial news headlines -- and then guess when they were published:

• Fed chief predicts economy will rebound despite housing woes (AP)
• IMF predicts an energetic world economy (StarTribune.com)
• US Treasury says economy strong...? (Reuters)
• Job Growth Strengthens Economy (Washington Post)
• Several Signs the Economy Is Reviving (New York Times)

Did they publish this week? Last week? Last month? No. All published in mid-2007, right before the global financial crisis cut the DJIA by 54%; S&P 500 and CRB Commodities Index by 57%; oil by 78%. Gold, emerging markets, and real estate also fell hard. Even bonds were no "safe haven," as 2009 was the worst year on record for U.S. 30-year Treasury bonds and 10-year T-notes: down 26% and 9.7%, respectively.

This chart shows you just how mistaken all that "strong fundamentals" optimism really was (courtesy: Bloomberg):

The lessons are obvious:

1. Don't be lulled by "improving fundamentals." As EWI president Robert Prechter points out,
   
   "You can't say, 'The economy looks good, so I'm bullish on stocks.' This approach...doesn't work at the turns."
   -- March 2012 Elliott Wave Theorist



2. The stock market knows how to surprise the unprepared majority of investors. It's never too soon to safe-guard your capital.

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This article was syndicated by Elliott Wave International and was originally published under the headline Capital Safety: Is There Such a Thing as "TOO Safe". EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.