Gold used to be the anti-inflation trade. It appears oil has taken over from gold in that regards over the past 9 months or so. However, gold is still the Armageddon trade as evidenced by its strong showing during what seemed like End of Days this late winter and early spring. It is starting to perk up again.... I am tempted to buy my favorite miner on this breakout, Kinross Gold (NYSE:KGC) - still debating.
[May 5: Closing Precious Metals]
[Jan 30: Starting New Position in Kinross Gold]
In terms of the market - we still need fear - but we're getting there - the move to gold is a good indication. As I stated yesterday that S&P 1300 level is our temporary bottom for now - those big round numbers always act as psychological support. If that breaks, off we go to January and March 2008 lows (1270s). As mentioned, those sucker rallies as we had yesterday afternoon are not be trusted.
As I said yesterday, the Federal Reserve basically left us to our own devices - after that initial silly euphoria wore off, we woke up today to realize all the same problems were there. I truly think with crude sinking (down $5 yesterday pre Fed) they could of drove a short term stake through the heart of some commodities with a 25 basis point raise and strong language about inflation. We got neither. The banks must be bailed out - that's all that matters it appears. Inflation can rage - since it does not show up in government reports.