Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
Can the Fed save the stock market?


 -- Published: Tuesday, 10 February 2015 | Print  | Disqus 

GOLD MARKET FLASH NOTE

 

Recently, a number of gold commentators have written that they do not see a significant decline in the stock market over the next year or so because the Fed will step in with further easing to prevent a rout. The perception is that the Fed can still save the stock market when it wants to. We disagree.

First, as mentioned in our February 5th note, the Fed cannot reverse course with QE or its announced policy of imminent rate increases without taking a major hit to its credibility. A reversal means that the previous easing did not work to achieve sustained economic growth, contrary to what the Fed has repeatedly told us. Any positive impact on the markets would therefore be short-lived, in our opinion.

There is a second reason for challenging the impact of Fed future Fed easing on a falling stock market—history shows it doesn’t work. Dr. John Hussman notes in his February 8, 2015 commentary that “investors should remember that the Fed did not tighten in 1929, but instead began cutting interest rates on February 11, 1930 – nearly two and a half years before the market bottomed. The Fed cut rates on January 3, 2001 just as a two-year bear market collapse was starting, and kept cutting all the way down. The Fed cut the federal funds rate on September 18, 2007 – several weeks before the top of the market, and kept cutting all the way down.”

As Hussman points out, Fed easing supports markets when investors are looking to take on more risk. Markets reliably signal a risk-seeking environment; credit spreads are tightening and almost all asset classes are advancing together (what Hussman calls uniformity). That’s not what we have now.
Since mid-2014, we see widening credit spreads, deteriorating market internals such as breadth and key divergences including plunging commodity prices and collapsing Treasury yields.

In short, we don’t see a reason for this to change: 

 

Or, how many ounces of gold to buy the DJI Index
Source: http://www.sharelynx.com/chartstemp/DowGoldRatio.php

Note: Prior to 1896 a surrogate index is used for the DJIA Index. 

 

Jim Anthony

Jim Anthony is a private investor who trades for his own accounts.  He co-founded Seabridge Gold and has helped to finance and advise a number of junior gold producers and exploration companies over the past 30 years.  His gold market commentaries have been published by Seabridge since 2000. Originally a student of economics, Mr. Anthony has become a disciple of markets: "The tape can tell you much more than any economic model." He is not a registered investment advisor and his opinions expressed above are not intended as investment advice.

 


| Digg This Article
 -- Published: Tuesday, 10 February 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.