Momentum Traders Shift To Gold And Silver

Tuesday, January 17, 2017
By Paul Martin

By: Rory Hall and Dave Kranzler
GoldSeek.com
Tuesday, 17 January 2017

“All the reasons being advanced for gold’s rise this week were fully in place at the November 8th election. Perhaps the subsequent slump will eventually be seen as an aberration.” – John Brimelow from JB’s Gold Jottings Report – Contact link

The dollar went nearly parabolic after the election, along with the Dow and the S&P 500. The move was not supported by fundamental factors in any respect. Rather, it was momentum-chasing game fueled by the empty promise of “hope.” While “hope” is a valid emotion for those who believe in life after death, “hope” in the absence of valid fundamental factors can quickly turn into fear – the fear of losing money.

Bank of America released a survey of Wall Street “professionals” in which the respondents stated that the “long U.S. dollar” trade is by far the most overcrowded trade. The dollar index has already retreated about 3.5% since the first of the year. If the index breaks below 100, the current exodus from the long dollar trade could quickly turn into a stamped toward the exit.

On the flip-side of this is gold, which has rallied nearly 6% since late December, and silver, which has rallied 7.8% since its end of December low. The fundamental factors driving gold vs. the dollar would be the continued surge in U.S. Treasury debt issuance; which has doubled in size over the last eight years, contracting economic activity notwithstanding the plethora of fake economic reports; a rapidly expanding Government spending deficit; and a rapidly expanding trade deficit.

The quick-fix band-aid for Trump will be to implement a policy that attempts to push the dollar lower. He tweeted as much earlier today. The spike-up in gold is being attributed to that tweet.

But not so fast, fake news adherents. 50% of gold’s move occurred on Monday, while the U.S. was closed in observance of MLK’s birthday and well before the Trump tweet. Mining stocks in Canada moved up sharply yesterday. This tells us that there are other factors behind the move in gold besides the expectation that the dollar is going to sell-off.

The Rest…HERE

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