NFTRH; Precious Metals Update

With reference to the previous posts about about weak economic data, the fundamentals for gold are getting a boost in this data.  Durable Goods, Machine Tools and Consumer Confidence have all decelerated. The risk of the Fed being sensitive to inflation may have been reduced here in favor of not wanting to tank the markets.

FOMC or not, I have reduced my short positioning to some puts and a bear fund on silver.  I took a small loss on the silver miners short.  What’s more, I have added back GDX on its small pullback because I can take downside when I feel I am right with the fundamentals and generally that is still the case for the gold sector (although gold vs. crude oil still bears watching).

The FOMC meeting comes along with a bearish Commitments of Traders structure and at some point we might wonder just how different it is this time.  We have noted for 8 weeks now (beginning in NFTRH 384) that due to “bull market rules” CoT could be less dangerous now, but this is dragging on interminably and one would have thought a decent reaction would have visited by now.  Not so, not yet.

Here are the charts of the 3 Amigos for your viewing pleasure.  So far, all that has happened are little micro pullbacks.  If the Fed rolls over tomorrow those little flags could prove bullish in a hurry.  If they get tough, the key supports are noted.