Gold remains inside its 5 year wedge with no clear trend yet revealed.
But there are a number of near-term potential catalysts such as the German Elections, Debt Ceiling Debate & Commitment of Traders positioning which may help give some clarity.
In the meantime, "People are literally losing their minds.”
So says Santiago Capital's Brent Johnson in this clip regarding gold, global markets and cognitive dissonance.
Whether it's those on the Left that cannot handle Trump in the White House, or those on the Right who can’t understand how CNN is still in business. Whether it's the gold bugs who can’t understand why gold is not over $10k/ounce, or the equity bears who think equities are overvalued by at least 50%. They cannot reconcile the fact that their minds are saying one thing while simultaneously trying to comprehend the information being broadcast on their T.V.s and computer monitors.
Tracing the source of this cognitive dissonance back to the real “Seven Psychopaths” (voting members of the FOMC), Johnson asks you to just listen (and keep an open mind) to see whether you are guilty of psychotic thinking as well.
While referencing characters from real life and the movies, Johnson wonders whether the bears are overly focused on the equity market (symptom) rather than where the real psychos are focused, which is the bond market (problem).
And also wonders, based on studies showing that “The feeling of knowing” is based on an involuntary brain mechanism much like lover or anger, is it reason or biology that is determining our opinions on the markets?
Johnson believes the danger that most people don’t see is in interest rates. And whether due to a currency crisis, sovereign debt crisis, or the simple forgiveness of G20 sovereign debt, rates may very well rise further and faster than most currently see possible.
In the end, fundamentals always win. But in the short term, markets are Psycho.