Precious Metals

History tells us that empires are rarely defeated, by any external rival. 

Zero Hedge first revealed the contingency plans that libertarian online retailer Overstock has implemented "in preparation for the next collapse" ten days ago. Today, the strategy outlined by Overstock Chairman Jonathan Johnson has resonated across the Atlantic and this morning as the Financial Times catches up to the story of an "online retailer hoarding gold as crisis defense" in which it calls the retailer a "redoubt of doomsday conservatism" adding its policy to prepare for the loss of central-planning control is "redolent of the small band of US survivalists preparing for the end of civilisation."

Over the past decade; our markets have ceased to behave like “markets”, at all. 

"This industry has committed “hari kari” as far as I'm concerned."

Dennis Gartman, author of the institutionally well followed ‘The Gartman Letter,’ has asked questions about gold’s peculiar price action last week and raised the question as to whether there was official central bank manipulation of gold prices.

This is not legitimate. This is not a market. It is more, systemic crime.

Time and time again, I’m hearing the same sticking points for failing to prepare – for failing to assure a more promising future for themselves and their families.

The bearish thesis for gold rests on four key assumptions in the process of being disproven. Recent gold skepticism has generally arisen from some combination of expectations for i) protracted U.S. dollar strength, ii) significant Fed tightening, iii) escape velocity U.S. economic performance and iv) further increases in U.S. equities. Since the end of the first quarter, the logic supporting each of these projections has dissipated significantly.

Gold is up 3.1% in October and had even larger gains in other currencies. Entering gold’s “seasonal sweet spot” in November, December, January and February.

Where is the “hyperinflation”?

Gold’s biggest enemy is a brilliant Nobel Prize winning economist, university professor and columnist for the New York Times. Sadly, he is also a con man. 

With a 4% probability, it is no surprise that The Fed did not raise rates. Since The FOMC "folded" in September blaming global turmoil, stocks, bonds, and precious metals have soared as China (and EM) chaos has calmed while domestic data has declined. This has led to 'lift-off' expectations extending to April 2016, and so the question today is - how will The Fed convince the world it 'will' raise rates when it really can't...

• *FED REMOVES LINE THAT GLOBAL DEVELOPMENTS MAY RESTRAIN GROWTH
  
• *FED SAYS U.S. ECONOMY `HAS BEEN EXPANDING AT A MODERATE PACE'

A definite hawkish bias but so we are left data-dependent (fundamentals bad, stocks good), and less economically optimistic, but are supposed to believe that December (34%) is still a live meeting (because of some hockey-stick expectation in data) because The Fed needs to raise to show that it can.

With a 4.5% chance of rate hike priced into the markets at today's FOMC meeting, it is unlikely that anything exciting will happen today. However, with China outflows, BoJ easing expectations, and Draghi still promising moar, it appears precious metals are once again bid. Both Gold & Silver have broken back above their 200-day moving-averages this morning...