Maybe the buyers yesterday were anticipating support for gold at the level that I was. That support may have held if the Fed had not released minutes suggesting a review of how they proceed with QE3. It would not surprise if that review decides to continue as is. How else will they continue to fund the deficit? No politician is likely to implement the massive austerity and huge tax increases that it would require to get rid of the deficit. That probably can’t work even if they decide to try it. As Greece has seen, significant austerity puts the economy into deep recession and tax revenues collapse offsetting any increase in tax rates. I think they are simply trying to slow the rapid advance of markets with words. They did this in the few months before QE3 when they repeatedly talked down the need for further QE. Then they implemented QE3 which is much larger than QE2. I expect they will continue the pattern of continuing printing to fund the deficits regardless of what they say. We now need to see if the gold market factors that in sooner rather than later. It’s the broad market that needs a correction after strong gains, not the gold sector which has taken a large beating for over a year. In fact the RSI on the HUI is now at the extreme level that has always held in the last 10 years so we may still be close to at least a short term bounce if not a stronger rally. Exact timing is never easy, especially when the fed opens its mouth.
SLR Price at posting:
$2.29 Sentiment: LT Buy Disclosure: Held
