Tune Out the Noise

Today as I watch a former holding (TAS) plummet after being promoted last week on the heels of watching the gold ‘community’ get Ukrained and FOMCed in a double barreled assault, I am reminded just how dangerous herding behavior has become in the social networking phase of the information age, where every genius has got a pitch and a play, every news outlet has got ready made reasoning and the whole cacophonous mess needs an ever more finely tuned Bullshit Detector. 

Hence last week’s opening NFTRH segment.  And by the way, I do not view Dan Norcini as any sort of a hype monger.  Quite the contrary.  From what I have seen he is a well grounded and honest person.

Tune Out the Noise, Follow Technicals & Macro Fundamentals

Mail from a subscriber highlighting Dan Norcini’s view of the precious metals rally being little more than Ukraine-inspired hedge fund short-covering is but one of many inputs I have either received or seen on the internet that for my purposes at least, will be tuned down.  I don’t doubt that Mr. Norcini has good experience as a professional trader, but I do question the importance he seems to assign to what the “hedge fund community” is doing at any given time.

Other inputs received or observed range from the utterly ridiculous ‘China copper demand is declining, so a decline in China gold demand will push gold prices down’ to a wide range of bull and bear rationalizations that vary from unlikely to plausible.  They have one thing in common; they serve to amp up emotions.

Consider this post-2009 litany:  Flash Crash → QE2 → Euro Crisis → Greek Austerity Vote → Cyprus → Operation Twist → Fiscal Cliff → QE3 → Taper → Ukraine → [today we can add in the Yellen ‘you know, like 6 months after taper ends, sort of…’ rate hike hysteria]

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ZIRP Up Next?

Everyone expects Janet Yellen to be a rolling over, inflationist stooge just like they did Ben Bernanke.  Bernanke came on board after Alan Greenspan had taken the Fed Funds rate up to around 5% if I remember correctly.  Inflationists and gold bugs thought they had it in the bag when ‘Helicopter Ben’ assumed control.

Indeed, Bernanke did what he was supposed to do (per the ‘Helicopter ‘Ben’ script) as systemic stresses began to gather in 2007, addressing that pesky Funds rate, culminating in December, 2008’s official ZIRP (zero interest rate policy).  Here again is the chart showing the S&P 500’s ‘Hump #3’ attended by this most beneficial monetary policy.

spx.irx

As noted again and again, the much trumpeted ‘taper’ of QE is not only not a negative for the economy, we have made a strong case that its mechanics are actually a positive, in the near term at least.  But putting ZIRP on the table would be a whole different ball of wax.

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