"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, December 18, 2013

Market Confidence Soars on FOMC

As those of you who regularly read this blog know by now, my favorite indicator for measuring investor confidence/complacency is the Volatility Index or the VIX.

Notice how the index initially soared higher when the news that the Fed was tapering to the tune of $10 billion. A large number of investors panicked. However, the reaction following that was one of increasing confidence due to both the wording of the FOMC statement, and, Chairman Bernanke's comments during his last press conference.

I maintain that gold needs something to impact CONFIDENCE before it mount a SUSTAINED RALLY HIGHER. With the VIX falling, and the stock market soaring into new all time highs, gold is looking for some friends right now as there is nothing on the radar screen of investors AT THIS MOMENT, to give them a strong reason to chase gold prices higher.

Now the key for gold is whether or not it can hold chart support near $1220. If it loses that level, it is going to test round number psychological support at $1200.

I will get a chart of gold up a bit later today. As you no doubt realize, it has been a very busy day for traders.


  1. Many painful lessons learned today.

    Dollar now soaring after hours on budget news.

    Probably a horrific gap down in GLD and GDX tomorrow.

    1. Yo Mark

      I was just finished having a few beers with Faber and Stockman...they feel real bad about their calls and asked me to apologize to you on their behalf.
      There...your mission is accomplished ! :)

  2. Glad I added to my gold short position yesterday.

    Question for Dan:

    Bernanke has said they will cut back bond buying but will keep zero interest rates well into the future...how does that work ??

    1. It's called wishful thinking. Bernanke only has 4 weeks to go he will be on a Bahamas cruise when the fat lady sings. Not refering to Yellen. In the end the market will assert itself, higher rates ahead then more QE.

    2. It's the magic of the FED. With the FED all things are possible; even what appears impossible. Buy stocks!

    3. Gold stocks! now at lifetime discounts amazing what FED magic can make possible.

    4. Dean;

      Short term rates over which the Fed has direct control. The QE programs were designed to control Long term rates over which formerly had no direct control.

  3. There is no longer any doubt that Bernanke will go down as the greatest ever

  4. too many bears here .. we all now what means , no apple pie left …

  5. you guys still do not get it; I have made a lot of $ WITH FABER OVER THE YEARS; do you just listen to the silly 5 min sound bites? Maybe I am wrong, but I think Bass, Chanos are right and I stay with their ideas. Grantham, the other guy at the Greenwich whorehouse will only lead you down the path to financial destruction ; oh yeah, I remember his name, ray dalio who in a feature story in Barron's stated categorically in '05 or so that subprime was nothing and that he saw nothing but blue skies overhead; be careful everybody because big stuff is right around the corner; sparks

  6. Dan,
    Here is how I see it, the market has gone time after time south on any news that the FED would Taper but now when it does, the market goes up huge. Sounds like the monetary fund at work. I think the market was set to crash and the VIX was set to spike and the FED knew this and threw the kitchen sink at the markets to say "see everyone, I know what I'm doing". The Cannery in this Coal mine is the 10yr which is going out of control higher. They can't get it down and the FED is hoping this news will help and if it doesn't then they can tell everyone that they meant rates to rise, "its part of the plan". I believe this is nothing more than a Hell Mary pass to get consumers to think that rates are going up and they must buy, buy, buy because if they don't they will miss out on all the great low price debt. I don't think for a minute that they will Taper one penny. I believe we are now entering a new phase in the FED where they go back to not broadcasting their so called transparency. And please stop looking at "Women behind the curtain".


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