Warsh-It Gold, Too!

The FOMC Chairman's remarks at the JackassSon Hole Conference last week were also not good for the price of the yellow metal, as this hourly chart of Gold futures, below, shows. The price was hit for more than $134, overall.

As you can see, the decline took the form of the expanding diagonal, with v > iii > i, and iv > ii, and wave iv overlapping wave i without going above the high of wave ii.

Why does this form keep happening? It is likely because the 'Smart Money' senses the risk and tries to protect themselves early on until the lower lows and lower highs become more convincing, and then the announcement finally breaks and those not in the know previously then sell on the news as best they can.

Again, such a pattern is also likely part of the modern market's survival mechanism - grinding and stalling small players into oblivion until a directional move finally is allowed or forced to occur. The market also spikes the bulls into thinking there will be a new high after the 9:30 am open, then pulls the proverbial rug out from them too. All-in-all it's a dangerous situation 1) unless one is counting and paying attention, and 2) unless one follows Ira's dictum to avoid major market news days like FOMC meetings, payroll reports, etc.

For our part, the speech did little good. Yes, it did raise long term rates a tad. And that might have a minor positive impact on inflation. Or maybe it won't. If businesses are saddled with higher cost long term debt, they may be forced to increase prices to make up the profit differences. Who can say?

No, the problem is not whether the CEO's and FED Chairs can have nice lunches and make speeches to each other at a resort in the peace and security of their enclave. The problem is, in short, whether the enormous level of wealth inequality will be allowed to persist.

For example - while the rich were noshing, above, certain hospitals in Florida announced United Health Care will no longer be accepted for payment of medical claims (a large percentage of Floridian's have Advantage Plans through United Health Care). And why not? Supposedly because UHC won't pay it's bills! Apparently, as the press reports UHC is in arrears $100 Million!

And the Warsh-It show goes on & on. Twiddle with interest rates here, hike them there. Blah, blah. Real lives are not as affected as much by it by it as are affected by lack of free, consistent universal health care. That is a major stupid problem in this country where we put insurance middle-men between the doctor and the patient. We (the government) are so ignorant to accept this idiocy. We let insurance salesmen get a large slice of every medical dollar. People don't get healed because of it. Some children don't get well fast-enough because of it. Some of us die because of it.

Meanwhile, over at the U.S. Treasury some guy named Scott Totally Absent (Totally is his middle name) is reportedly taking BILLIONS of dollars to buy-back some other BILLIONS of dollars. This is shear lunacy in a country where "Congress (can) regulate the currency and set the value thereof." Please! Government Officials, please, start to do something useful. Put the billions to work to improve health care delivery, or help house those without, or help provide decent inner city schools.

In the absence of true purposeful behavior - the country will continue to crumble, and the rich won't care a whit. Where is the law in the UHC case? If I owed $100 Million you can bet they'd throw my behind in the clinker. And where is the law, here regarding anti-trust, to stop the criminal agglomeration of wealth whether it be in health care, computing and technology, or retailing (i.e. Amazon). I have nothing against wealth. I only have something against 1) shameless wealth, i.e. collecting it for it's own sake, or 2) wealth that goes untaxed at the rates the rest of us pay, or 3) wealth that is obtained through disadvantaging others.

Yes, I just count waves. But I also wonder just who got hurt in Gold on Friday with these stupendous, idiotic and needless market movements because of some inane pronouncement. I know I didn't, but it was only because of counting waves, money management, and luck. 

To show the stupidity of what is going on, you only have to remember that Gold once traded for the longest time at $35 / per ounce. Friday's market movement alone was literally 4 times that historical level - in less than one day!  The lunacy continues. Why do we need such volatility in our markets? How does this help anyone? Please ask yourselves what we need to change before even more dire consequences occur.

This is the second post since Friday. Have an excellent rest of the weekend,

TraderJoe