FED Holds! | USD Drops, AU Pops, AG Pops!

DON’T THINK THIS WAS SUPPOSED TO HAPPEN IN THE METALS?

Fed Complacency now too???

FED Holds! | USD Drops, AU Pops, AG Pops!

Well what do you know.  There’s this from Bloomberg:

You have to look hard to find the word “unchanged” in the first paragraph there, and just notice how one’s eyes tend to drift towards the “relatively soon” quote.  And for those looking for a more exciting headline, well, you get a whole lot of nothingburger.

Then there’s this leading headline from Marketwatch:

Really, The dollar is dopping faster than the blue light special and a K-mart running and going out of business sale and they focus on the “unchanged stock market”?

Then there’s Yahoo Finance’s version of Where’s Waldo, Fed style:

OK, so I put in a little pointer, but what is the point?  Very bland.  Bland indeed.

Hmmm…We have seen this before.  Though don’t count out the insignificance of a dove and headline blandness just yet.  Metals are trying to get a start going, but the dollar, well, the greenback isn’t too happy after the just released FOMC:

We have decent volume coming into and out of the announcement.  If the metals were on hold before, well, they are not on hold any longer. The dollar is downright U-G-L-Y.

We will see if the momentum continues through the close.  So far, so good.

And while the Fed came out with deer in the headlights pause, now might be a good time for a quick reminder of how this magic show is done:

The Fed communicates where it is attempting to move the various markets by the release of their statement at precisely 2:00PM EST.  “News outlets” such as Bloomberg run the headlines through their tickers.  Traders, hedge funds and others pay BIG BUCKS for this nifty little subscription called “Bloomberg Terminal” (but the banks probably get if for free).  Trading Firms (AKA the banks and big money funds) then program their computer algorithms to cue off of specific words and headlines and make market buy and sell orders based off of the headlines.  Knee jerk reactions going into and immediately following the release of the headlines  are common because the computers first react to the headline.  Once the headline is scanned, the news release, AKA the Fed statement, is further scanned, parsed, ground up, calculated, and spit out the other side and further buying or selling takes place.

Now, depending who has the most updated algorithms and who has the fastest internet speeds, well, that is who gets in on the trading action first.  If this was a duel in the Wild West, first mover has the advantage.  At that point, the computers trade off of each other and we see the initial result turn into the momentum, and thus the markets reprice.

Since the Fed will never, ever say anything good about gold or silver, and for that matter, won’t even mention the metals, most trading firms rest assured knowing the Fed has their backs.  They day the Fed does not have their backs, most will know this and abruptly, but rest assured, some will indeed know, especially those in the revolving door of the banks/Treasury/Fed/attorney perches.  They WON”T be losing.

We have been following the prices of gold and silver closely this week.  Silver especially.  Silver is at one of those make-it or break-it points.  Of course we want silver to make it, and perhaps the first indication that it has will be a daily close above $16.66.  That will put our price higher than the average of the last 50 days, and for what it’s worth, the chart will be painted nicely and set-up for a move higher.  Go ahead and fire away on the comments, because like it or not, charts matter, and whether we want to admit it or not, we are all rooting for the silver chart.

Though the day the Fed REALLY loses control, we will know it and we will be rewarded for our hard work and stacking.  No, there will be no advanced notice, and yes, it will probably be a little bit nuts at first…

CHECK BACK ON FRIDAY FOR THE SD WEEKLY METALS AND MARKETS, IN ADDITION TO END OF THE WEEK MARKET COMMENTARY.