Is QEternity finally nearing its end?
Dennis Lockhart, president of the Atlanta Federal Reserve, told
Fox Business today that tapering the pace of bond purchases by the
Fed, also known as "quantitative easing" or "QE," may be fast
Since the 2007-09 financial crisis, the Fed has devoured over $3
trillion in mortgage (NYSEARCA:MBB) and Treasury bonds
(NYSEARCA:IEF) in an effort to cut unemployment and boost economic
Lockhart suggested it may be time for the central bank to put
the brakes on QE.
According to a Reuters report, he had previously said
policymakers could consider cutting back on its $85 billion monthly
bond purchases sometime in the second half of this year.
The bond market, particularly long-dated debt, has sold off
hard. ETFs linked to U.S. Treasuries with 20+ maturities
(NYSEARCA:TLT) fallen around 5% over the past month.
What about Gold?
We know that gold has thrived in this unprecedented era of
multi-trillion dollar QE. Gold prices have surged 80% since the end
of 2008, just as the Fed began ramping up its massive QE stimulus.
However, gold has been in correction mode for almost two years
The SPDR Gold Shares (NYSEARCA:GLD) have fallen 25.52% since
hitting their peak on Aug. 22, 2011.
Although global central banks added 109.2 tonnes of gold to
their reserves in Q1 2013 for a ninth consecutive quarter of net
purchases, it hasn't lifted gold prices higher. And over the past
year, gold investment demand is -51%, according to the World Gold
Sentiment towards Gold is Rosy
The bullish sentiment toward gold is once again heating up.
"Hedge funds raised bets on a gold rally by the most in two
months. Speculators raised their net-long position by 35% to
48,096 futures and options by May 28, the biggest gain since
March 19, U.S. Commodity Futures Trading Commission data show.
Most of the gain came from a drop in short bets, which reached a
record a week earlier."
Bullish sentiment, in conjunction with price action and
technicals, tells us on which side of the market to be. Never mind
the ridiculous forecasts of $10,000 per oz. gold, focus on the
Profiting from the 2013 Gold Shock
Contrary to what the very wrong gold experts have said all along,
the ETF Profit Strategy Newsletter alerted its subscribers that the
real money in gold and silver would be on the short side.
In our Weekly ETF Pick from Feb.14 we wrote:
"Despite a modestly rising stock market, the Market Vectors
Gold Miners (NYSEARCA:GDX) has lagged both the broader U.S. stock
market along with the SPDR Gold Shares (
) by a very significant margin. At present, GDX trades around
$41.50 and is well below both its 50 and 200 day moving average.
Buy the Direxion Daily Gold Miners Bear 3x Shares (
) at these levels. A double digit slide for gold would likely
translate into a 20%+ loss in mining stocks. This scenario offers
some big upside potential for bears."
Since then, DUST has surged +71.63%. Also, inverse linked gold ETFs
(NYSEARCA:GLL) have gained more than 27%.
The next phase of the Great Gold Shock could turn out to be one
of the biggest investment themes the experts never saw coming. In a
post-QE world, how will gold react? And which is the right side of
the gold market to be on?
Profit Strategy Newsletter
and Technical Forecast cuts through the daily reams of
misinformation by telling subscribers what to buy, what to sell,
and when to do it.
Since the start of the year, 78%* of our
have turned a profit and our biggest winner was a +525% gain. Our
no bull approach is world famous.
*through 6/3/13 market close