Something to Consider

Ever since the Fed embarked on its journey with Quantitative Easing, we have all been getting an education in how the markets are responding to this grand experiment. Now that they are scaling back their bond buying program, we are also getting an education in how the markets are responding to that as well. Most of the longer term readers here at the site will know that during the initial years of QE, nearly every asset class began moving higher. Some moved in response to ideas of liquidity injections while others moved higher in response to anticipated currency weakness. This rising tide continued in near perfect sync until sometime in early 2012. That is when the commodity sector in general divorced itself from the rising equity markets. As you can see from the chart that follows, stocks have moved relentlessly higher while the overall commodity sector has continued to sink. Just today it notched a 27 month low. Yet in spite of this, we still have some telling us to prepare for runaway inflation any day now and of course with that, soaring precious metals prices. The question one should pose is “WHY?”. What evidence is there to suggest that a soaring move higher is just around the corner in precious metals?

This post was published at Trader Dan Norcini on Wednesday, September 10, 2014.