"Psycho"

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.

 

Comments

LetThemEatRand Tue, 07/25/2017 - 21:04 Permalink

The article's author reveals his own cognitive dissonance in posing a dichotomy between people who are freaked out that Trump won, and people who wonder why CNN is still in business.  The whole problem is that the truth of the "markets" has nothing to do with politics or fake news and everything to do with a few oligarchs who literally own the world, or at least enough of it that they have complete power over the so-called "markets."  All news that does not take into account the power of these few hundred people is fake news.

Jimmy Jimmereeno LetThemEatRand Tue, 07/25/2017 - 23:33 Permalink

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You say, ".....the truth of the 'markets' has nothing to do with politics or fake news and everything to do with a few oligarchs who literally own the world, or at least enough of it that they have complete power over the so-called 'markets'....." Your viewpoint is purely subjective and you have not brought evidence to the table to substantiate your opinionated comment. I heard arguments in a similar vein, not so publically expressed/and accessible  in the mid 1970s because the world then lacked the information technology that we now enjoy.  That was when gold, then at its cyclical $103 low, began to advance.  To wit:   "IMF Auctions and 'restitution' sales (1976-80):  The IMF sold approximately one-third or 1,555 tonnes of gold (50 million ounces) of its then-existing gold holdings following an agreement by its members to reduce the role of gold in the international monetary system. Half of this amount was sold in restitution to members at the then-official price of SDR 35 per ounce; the other half was auctioned to the market ....."  The U.S. Treasury was also a major seller in the physical market at that time (I cannot provide a source quote or link to the amount sold). Despite the above factual description, where major physical gold was unloaded into the market by both the IMF and the USA - surely the "oligarchy" of the day - gold prices advanced from nominal $103 in 1976 to $875 in 1980.  Factually, the market moved +750% without anyone being able to stop it.  The gold price at $850 was so out of balance that it prompted the respected Bank Credit Analyst publication to declare that the price was discounting World War III. What most observers and commentators (probably yourself included) about markets fail to understand is that the "market", be it soybeans, sugar, gold and etc, is in broad equilibrium - probably by my reckoning 95+% of the time.  However, when the fundamental equation reaches a critical level that unbalances the overriding equilibrium at the margin, prices move exponentially away from their equilibrium valuation. So it will be with gold in the next "up" price cycle.:   all of a sudden general price equilibrium - even if it is defined by a several hundred USD sideways range and by years in duration - will be resolved in a non-linear advance. PS:  Your screen name features "Rand" which literate people will associate with the 20th century's premier advocate of reason.  Despite your original perception that graces the ZH "Comments" with certain insights, it is ironic that you cannot interpret your reality rationally (i.e. through the deliberate exercise of reason) and must resort to the superstitious as a way of explaining your reality.   

In reply to by LetThemEatRand

Clock Crasher Tue, 07/25/2017 - 22:22 Permalink

100 Trillion debt units of off balance sheet benefits coming online day by day backed by a money supply of 13 trillion and the dollar is going to rise? Combined with petro dollar weakness.So, the standard of living inside the states would increase and gold would explode at the same time? 

runnymede Tue, 07/25/2017 - 23:21 Permalink

And you're expecting rational markets to exist in a world where fiat money distorts everything and is occupied by irrational ignorant humans? All that's left is sentiment manufacturing and the increasingly ridiculous and manipulative tactics to keep a lid on it. 

El Hosel Wed, 07/26/2017 - 07:38 Permalink

Blatant Fraud for 8 years = current US "Recovery" and "bull" Market. Definately a market built on bull.  This must be the new normal "Short Term", eh punchy?