Dillon Gage is proud to offer the following insights into the precious metals market from Roy Friedman. Roy has over 3o years of in-depth experience in all facets of precious metals. We will offer Roy’s comments several times each week.
The FOMC spoke yesterday and gold did not like what they said. The Fed statement 
struck a tone of cautious optimism. They cited the improving labor market and the easing of pressure on the global financial markets. The FOMC press release also shows the Fed expects moderate growth and further drops in the unemployment rate to continue throughout the year. The announcement also assured the markets that they will continue to keep interest rates low into 2014. The gold market, while not liking many of these comments, was really spooked by the lack of any mention of quantitative easing (QE3). As I discussed yesterday, the lack of a stimulus package gives the USD room to rally, which adds pressure to gold. The result was a sharp selloff in gold and U.S. Treasuries, while equities rallied sharply and lent support to silver, platinum, and palladium.
This morning finds U.S. equities at their highest levels since 2007, being lead higher by the banking sector. Gold has continued lower and is now trading below $1,650.00 with the rest of the metals following suit. In the short term, the markets will be pressured by speculators trading from the short side, as they look to capitalize on sell stops being triggered as the market gaps lower. I, on the other hand, will look to buy dips from here. I expect there to be a substantial amount of investment dollars looking for a new home, as long term bond positions are liquidated. I also continue to look for a selloff in stocks as a wave of profit taking is long overdue. I expect this rotation, along with increasing physical demand, to stabilize and eventually turn this short term bearish sentiment around.
Roy Friedman has a degree in economics and political science from the State University of New York at Binghamton. For more than 30 years, he has worked at all levels of he industry including as a trader for major Metals firms and international banks. For more information on Mr. Friedman, please click here.
We proposed that Greece *buys* long term eudrbonos and uses them as collateral for the face value of its new bond issue. Nothing prevents Greece from doing so. Alternatively, Greece could use the ESM to *guarantee* the face value of its new bond issue. This would be an excellent use of the ESM. We do not propose direct funding from the ECB. However, we should point out that in the middle of a crisis, institutions deviate from the rules. If the EU and the ECB stuck to their rules, they would not haven been able to provide the 110 billion loan to Greece. Similarly, the Fed. violated many of its rules in 2008 and 2009 to deal with the crisis.