Yesterday, I was sitting in front of the TV…..eh…… in front of my computer, watching live streams with Chairman Ben Bernanke. He did not disappoint the markets. The DOW was up +1,84% and the S&P 500 was up +1,7%. What a rally!!!! Ho ho ho.
They are not going to taper now in December, but plan to start tapering in January next year. There was two good news yesterday: 1. The Fed will cut back it`s bond purchases by $10 billion, and 2. The interest rates could remain low even if unemployment drops below 6,5%. This is music in investors ears!
Gold went in the opposite direction and didn`t like the news from the Fed. Gold is now trading near the critical $1200 level. I have written about this critical level before, and this is the break even level for the mining companies.
The mining companies doesn`t earn money if the price goes below $1200. It will be very exiting to follow the gold price in the future. Watch out for this level and see if this level holds. The news yesterday was bearish for the gold, but bullish for the dollar.
A lot of investors and money makers have lost a lot of money in their gold investments since 2011 and that is because they didn`t recognize and adapt to the changing trend. We are in the same situation right now, where a lot of people don`t really know what is to come in 2014. Will we see a rally in gold?
As you can see from the gold chart, we are at a stage one basing phase. 150 and 200 moving averages is slowing down and start to go sideways. This will go on for about 6-12 months. So, now you know when to expect the gold bull market start again.
In this one phase stage, a market goes both up and down and it looks like it goes nowhere. Many people are getting frustrated and start to give up and others that is not in the market stops paying attention to the market. After a bear market, a stage one basing phase will follow and make a new way for a real bull market.
We have seen many bubbles like the internet bubble, housing bubble and the market crash in 2008. Now, it seems like a new bubble is on the way. The Fed are on the way to build a dangerous federal government debt bubble.
It can be avoided by reducing the Congress spending deficit. But in the budget deal last week, they increased the government spending. All this money printing have been a disaster for the U.S.
In Mars next year, we have seen a bull market lasting for five years. What do you think will happen to QE if the economy slows again? Goldman Sachs predict the domestic GDP growth to hit 3% next year (1,7% in 2013). I hope he has right. I look forward to 2014.
News today: Unemployment Claims at 8:30am, Existing Home Sales & Philly Fed Manufacturing Index at 10:00am.
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