The Fed is headed for an annual operating loss for the first time in 108 years. They will soon be forced to print the money to cover their expenses. A conundrum, indeed!
Rising interest rates reveal the consequences of exorbitant debt and leverage. When the free money disappears, what remains tends to flow into real assets.
Bullish stock market sentiment and unexpected U.S. Dollar strength are putting pressure on gold, while increased volatility in the equities and bond markets support safe haven demand for the yellow metal.
In both the stock market and the precious metals markets, investors face a paralyzing collection of bearish and bullish evidence. Everyone is looking for the asset that will emerge as the winner in this new era of finance.
Gold bounced off the 50% correction line after last week’s plunge. The metal’s next move will either strengthen the bullish reversal or signify a continuation of the 10-month bear market.