Conditions are ripe for gold to head higher: from money printing to various forms of stimulus, gold should be rejoicing in its age-old status as "safe haven." The trouble is, that's not happening. For some insight as to why that might be the case, Breakout welcomed Thomas Kee, President and CEO of Stock Traders Daily.
Kee believes that gold is acting more like an indicator, of late. "Our economy is only surviving, it seems, because we've printed so much money," he says. "But with the decline in gold it sure seems that trend of stimulus, of printing, may be coming to an end."
That's not to say that Kee believes there's been a sea change in societal attitudes toward stimulus. On the contrary he says, "Eventually, when things look really ugly again there will be new stimulus packages." Just when that "eventually" is, depends largely on how Washington handles the impending "fiscal cliff."
"We're looking at higher taxes; we're looking at lower spending," Kee points out. "A new stimulus package will eventually be needed because our economy can not stand on its own two feet — but the gold price, the decline that's happening in precious metals, is telling us not to expect that anytime soon."
So now that we're going it alone for awhile, how would Kee have us play this move in the broader marketplace? "The trade is to get short this market near its relative highs where it's at right now," Kee offers, adding, "volatility might be a good bet here—it's really low." As for investing in gold and silver? Kee says it's not quite time to take your chances. "They look like they're in a down trend. They look like they have more to fall, and there's not a reversal happening."
What do you think? Is the Fed done stimulating for the time being? Have gold and silver bottomed, or are they still headed lower? Let us know on our Facebook page.
- Politics & Government