Maybe the Fed should be defunded as they have rigged the way the economy is run.
Wouldn't that be nice?
The financial markets are fragile, indeed I would say they are broken, and have been for some time. It is now one big Ponzi scheme, however I will try to make contact with Bernie Madoff for confirmation of my statement as being fact.
Funnily enough I don't blame Jerome Powell, he is a very astute guy. He knows the score, and despite his continuous hints about the reality of the situation, there is nothing he can do about it, the Fed had already gone too far by the time he came to take over the chair. Ben Bernanke had the chance to pull the plug many times after the 2008 financial crisis, but decided to continue with additional rounds of QE throughout his tenure, pumping money into the financial system that just stayed there.
Unfortunately for Powell, a little butterfly called Covid - 19 decided to stretch it's little wings, and now we are where we are, bailing out zombie companies, and waiting for the house of cards to totally collapse once we all start to see that the Emperor's new clothes are becoming increasingly transparent.
The trouble is being able to identifying the right butterfly before it flutters.
As the markets stand, particularly the Nasdaq, they seem to be casinos driven by gambling by new 'stuck at home traders' taking advantage of commission free trading via vehicles like robinhood.com, forcing the Nasdaq to look very parabolic and overpriced. Will it end in tears?
At this point in time maybe it is wise to follow the big boys. If this comes to pass in a big way it could create a cascade effect with large margin calls being initiated etc.
Indeed. With Q2 reporting season just beginning, and probably increasing shutdowns due to covid 19, it's going to be interesting to see how the Fed reacts over the next few weeks to try to support asset prices.
However, if the markets retreat strongly with a market correction, precious metals might also be dragged down to some degree, the miners probably more then physical. This could present a good buying opportunity for Gold and Silver especially if price action looks like it is going to consolidate and develop another bull flag. How that flag would develop might be strongly influenced by the Fed's actions over the next couple of months.
It's now getting very interesting. It looks like the Fed is going to have to control the yield curve at some point in the near future, probably around September sometime. If they do, it should be fantastic for the outlook for Gold and Silver prices, and might just be the rocket fuel to send them parabolic.
At the moment it looks like Physical Silver is tagging along with the rise in the US indicies. Despite breaking out to the upside recently, I'm not yet convinced that is fully being perceived as a safe haven or the dead cert. explosive commodity yet. Although there is no doubt that it is starting to be taken notice of, it still feels like the perception of it's industrial aspect is still lingering in there to some degree. What I would like to see is for it to start to move independently of the markets.
Currently the S&P 500 is forming a strong bearish divergence from the price action on both the RSI and Stochastic momentum indicators on time frames lower then the daily chart (3hr or 4hr etc). This indicates that some bearish action could be seen over the next few days. It is going to be interesting to see how both Gold and Silver react should the markets go into reverse. I would suspect that Gold would hold up better then Silver, as it is perceived as more of a safe haven, and probably more so now then in the recent past because of the weakening US dollar. However if Silver continues to rise, or even show resistance, as stock markets are falling, it would indicate that more traders/investors are looking at Silver as a possible wealth preserver etc.
Silver and Gold are both rising fast, however my main concern with regard particularly to Silver is that the price pattern is looking a bit too parabolic for my liking. If the US stock markets go into reverse it could easily wipe out gains in the blink of an eye. The V shaped recovery is still not guaranteed, and could still easily end up being a W shaped double bottom, or something else. That aside, another small drop in price, and strong consolidation for a few weeks would be good for both metals, providing a good foundation, and potential entry points ready for the next leg up.
Having said that, both metals could, of course, continue to rise dramatically without pausing, particularly if the robinhooders have taken notice or FOMO takes hold in a big way. As time passes more investors are beginning to realise that areas of investment that can provide any protection, combined with the prospect of a good return, are very limited. The continuous printing of fiat money, and the prospect of any yield curve control do not bode well going forward for wages, pensions and benefits, but they are manna from heaven for precious metals.