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Discussion Topics -- April 26, 2012
Fed Statement Just More of the Same
Europe Takes a Turn for the Worse
Gold's 8th Month of Consolidation - Paving Way for Breakout?

(April 26, 2012 discussion). The Federal Reserve held another meeting this week, and while all look to the Fed to gain any inkling of policy changes that might affect the markets, this Thursday offered very little in the way of actionable news.  The most productive highlight came in the question and answer session when Bernanke was asked point blank if the prospect of QE3 was closer than it was after the last meeting.  He responded by saying the Fed is ready and willing to step in if economic conditions should worsen and policy be required to assist the economy.  Both gold and stocks jumped after this answer, suggesting that most people do believe that at some point the economy has to worsen, prompting Fed action.  It seems that by holding QE in his pocket, Bernanke is not only supporting the stock market, he's putting a floor underneath the gold price.  Europe is in deterioration mode again, as citizens of countries under forced austerity are beginning to seek political change.  In France, for example, Sarkozy was defeated in the preliminary election by the socialist leaning candidate Hollande.  Similar political changeovers are taking place in Spain, the Netherlands, and the Czech Republic.  This all sheds an interesting light on our own political sphere as we are now in the thick of an election year.  All the while, gold remains range bound, making this the longest consolidation period since the last significant gold consolidation from Feb, 2009 to Aug 2009.  As we all remember, after breaking out of the range set in 2009 gold went on to its greatest run yet, doubling in two years, while increasing almost $1000.  Did the Fed give gold the bump to make it out of this range?  Time will tell, but if gold explodes from this range like it did in 2009, the price levels it achieves over the next few years could be impressive.   30 minutes, with George Cooper, Peter Grant, and Jonathan Kosares

Figure 1

2009 Consolidation graph

Figure 2

Consolidation current

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