The Fed released a statement at 1230 today indicating it would begin purchasing an additional $45 Billion in Mortgage Backed Securities per month beginning on Jan 1st, 2013. This is to take place of the expiring Operation Twist. OT is balance sheet neutral for the Fed. The buying of MBS is not. So, in total for the year of 2013, the Fed will print and expand it's balance sheet by $1 Trillion. This policy is open ended.. or until the unemployment figure hits 6.5%.
This is the inflationary fundamentals we need in place to make money from the metals bull market.
So, you ask.. why did we not see more fireworks today? Gold and silver are actually down in after hours right now.
Perhaps today was an emotional one for everyone.. but not so much for the big money of which we rely on to move this market. So how is it possible that we have such a big announcement and no big action to show for it?
Take a look at Money Supply (M1).
Now compare that to the price of gold over the same period..
The two have moved together in almost lockstep. As mentioned above, the major expansion of the Fed's balance sheet will not begin to the new year.. so why should gold go crazy now? It's not healthy to have $100 days. Slow and steady. We should see a nice and steady accumulation of metals from here through the end of the year in anticipation of the change on Jan 1st.
Having said that.. there are technicals in play for the metals right now as well. These may trump the fundamentals in the short term. Both formations are bullish continuation patterns.. the symmetrical triangle.
Gold:
Silver:
And one more tidbit. Notice below how the TSI on gold is at crash 2008 lows. 2013 will be very rewarding for those who have the PATIENCE to wait for it.
On to the cycles..
Tuesday formed a swing high in the dollar's daily cycle. Today is day 5. A break below the $79.5x level will give us a failed daily cycle. I keep mentioning the forces from the declining intermediate and yearly cycle.. so a failed daily cycle here would play right into that.
The dollar's weekly cycle peaked on week 9. We have a weekly swing high and are now in the decline. This is week 13 so we have 5-9 weeks left to find a bottom.
The current weekly cycle declining trendline..
Gold is on day 3 of it's new daily cycle.
Silver is now on day 5 of it's current daily cycle.
GDX performed very well today.. as it's about time. It was up over 3% at one point and closed about 2.5% up. The 200 DMA acted as a little bit of resistance here. MACD has double bottomed and may be showing a buy signal here. Slope has already given a buy and so has RSI. I'd imagine we can make a run to $49'ish in the near future then consolidating before an attempt to break this large trending channel.
GDX daily cycle is now on day 5.
I leave you with this..
"Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance." - Jesse Livermore
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