Gold is Telling Us Something

Lets face it, the knee jerk reaction seems to be in full force, that's what yesterday's move looked like yesterday as institutional assets sold off and why? As I said last night, while the policy statement sounded very benign, the market is very sensitive to when interest rates will be hiked, I don't know if it was the 2015/2016 rates edging higher on the infamous "DOTS" or Yellen's statement which is obvious, that rates may be held down longer or shorter as they changed guidance from quantitative (actual dates) to quantitative , which is, "we'll see how it goes" and how it goes is open to a lot of manipulation and interpretation...

For instance, Yellen's insistance yesterday in the press conference that inflation, specifically Tuesday's CPI is "noise", one month doesn't make a trend, but when CPI is above the F_E_D's 2% threshold and it has been trending up for 12 months, more than doubling over the last 8 months , THIS IS NOT NOISE, IT'S A TREND.

As I have said a few times recently, "Gold is bought on the EXPECTATION of inflation", we have a very real inflation monster right now and the F_E_D is seemingly ignoring it or calling it noise, this means to the pros, no matter what the F_E_D says, no matter what their best intensions are, if inflation keeps on at this pace, rate hikes are inevitable, the F_E_D will have no choice in the matter and that's what Gold seems to be reflecting today.

 THE RANGE AND EXPECTED HEAD FAKE MOVE IN GLD AS WELL AS GDX/NUGT.

Look at GLD today, it has broken above the range on huge volume, up almost 3.5%, and now the head fake move just before a reversal concept takes shape as a great example just above.

It's clear as this has been a 12 month (8 month accelerating) trend, that these ranges and head fakes were planned in advance as the inflationary monster didn't just rear its head this week, there's been a solid 8 month trend in which it has more than doubled as the ASSET / QE program has been unwound and in to real falling wages.

This is how far GLD has to go until it breaks out of a longer term base, not that far, then we have a new trend classification.

And GDX/NUGT, they are doing incredible, scary well and they are even closer to a breakout, remember that before QE, miners would lead gold as we saw a few times over the last week as the relationship seems to be coming back as QE is tapered out.

THE MARKET IS SCREAMING, IT HAS SERIOUS RATE HIKE QUESTIONS AS INFLATION IS NOT ONLY SHARP, BUT BEING IGNORED BY THE FED. Will they be caught off guard again like 2007/2008?