Let The Market Rigging Continue; Gold and the Golden Cross
The Chicago Mercantile Exchange (some call it the Crime-Ex) has lowered speculative margin trading requirements on a variety stock market related products from e-mini, Dow Jones to S&P, as if to say, ‘come in the water is warm.’ Stocks, not surprisingly, are called to open higher.
Yes, the water is warm with various stock indexes at multi year highs. This is just a little move to entice more money flow to benefit stocks. It all makes sense, as one of the Fed’s unspoken mandates is to keep the stock market propped up in order to offer the illusion that not everything is so bad. As has been often mentioned in this space, QE and associated cooperative moves are good for stocks. Anyone advising that you go all out bearish – or fight the Fed (even being overly biased to cash) – needs to be avoided. Of course, have a hedging and ultimately, an exit plan. Now more than ever, the shorter term player, needs to adhere to objectives and not get caught up in the herd mentality of overly crowded trades.
Let’s make no mistake about it. If gold, or silver revisits all-time highs, you can rest assured that the CME will act to promptly raise margin requirements on the metals. Remember the notorious silver margin hikes that killed its rally at $50/oz? Margin requirements remain burdensome to this day in silver. The CME shows no shame in using its lightning zings when things don’t go their way all under the pretense of controlling volatility.
Watch crude, or any other commodity that would have the audacity to rise during this election season and jeapordize the incumbent on PA Ave. You can bet your bottom dollar that a rise in oil will be met with a margin hike to control the price. As always the fix is in. The House continues to win. Does this forestall potential for a flash crash, or other negative scenarios for the bullish stock market stance? This is why close attention needs to be paid to stock market positions. It’s all fun and games until the market is overly goosed and becomes grossly over valued.
Friday Early Gold Rise
Gold above $1780 has completed the so called ‘Golden Cross’ http://read.bi/PKlBFh.This is true of Silver a well. Yes, it’s a bullish sign in the realm of technical analysis, but we’ve know about this bullish outlook for gold by looking at the fundamentals. Plus. When gold was below the golden cross, did that mean it was going to meltdown, or that the a gold bear market had returned? Certainly not. It was called consolidation in a long term bull market. Impatience has a way of leading to faulty conclusions.
Thus far, gold has come within $10 of reaching $1800 basis the December active futures contract.
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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