Perhaps Bernanke will become Irrelevant at this Stage
Markets are eagerly awaiting Bernanke’s latest idea in his news conference today. It would be a big surprise if he changes his stance on anything, so don’t look for much.
It is striking that in the little Cyprus issue this week (Cyprus itself is not a big deal, but as a measure of the tip of the Euro-emerging markets iceberg it is a big,big deal) that T-Bonds and the dollar got a big lift. This should have turned on a light bulb for the Fed, low interest rates don’t need the Fed. In my opinion the next T-Bond rally towards the final bubble top (the real world-wide deflation based bond rally) over the next year or two would be an opportune time for the Fed to unload bonds in a stealthy measured way on the market.
While the long term trends and momentum waves are solidly bearish on gold, we are getting out of half our short gold as a trade, looking for a rally to the 1725 level where a full short position will be reinstated.