China has now become the biggest fear for markets

CNBC/Patti Domm/5-9-2017

“Stocks are at record highs, the VIX is at a 10-year low, and while investors are relieved the French presidency did not go to an anti-euro candidate, new risks are filling the void. Topping the list of market worries is China, which has been on the back burner for months now. Some weaker-than-expected data, however, has put a spotlight on the country’s economy.”

MK note:  Those wondering why gold didn’t stage one of its quick rebounds following the Fed meeting might want to throw the slowdown in China into the analysis. News of problems in the Chinese economy took on renewed concern almost immediately following the meeting.  Commodities took a hit, particularly copper and some of the other industrial metals, but that bled into the gold and silver markets as well. Simultaneously, however, reports surfaced of strong demand for gold from China.  So maybe the post-Fed-piling-on in the gold and silver markets lacks justification, and more importantly, depth given the fact that gold demand in China went in the opposite direction.

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I’ve written extensively of the madness of machines and the large segment of trading governed by them, i.e., the primary influences in today’s financial markets.  You can either attempt to ascertain the madness and join the fun (while your luck holds out), or you can bet against it with a solid core portfolio position in gold and silver.  Diversification into something real and detached from the paper-based madness makes a great deal of sense.

All of which reminds me of an Ed Stein cartoon. . . . . . .Sometimes the algos simply do not get the reality quite right.

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