Today's Winner: Gold
Today's main winning asset class was gold, with ongoing weakness across most other assets, except for bonds of course, which continues to price in concerns about deflation. The divergence we noted so frequently last week, between stocks and bonds is now a thing of the past, and has been replaced by that between gold and bonds. Yet gold's rise is hardly driven by expectations of inflation as oil, a much more inflation sensitive commodity tanked. In other words, the QE lite thesis is playing out as predicted, although Goldman's prediction yesterday about a surge in gold likely also put the idiot mutual fund money in the bid for spot. Technically, gold is parked at resistance at the highest level over the past 40 days. All those who have been frothing about an imminent liquidation-induced plunge like that experienced on July 16, have been silenced. Should the 1,220 resistance be breached tomorrow, the next level to keep track of will be the record highs from June. At that point whether the LBMA will follow up with its patented choke (g)old, is anyone's guess.
And for the Fib fans, gold has now retraced 50% of the recent drop from the all time high of $1265.