On the weekend President Obama made optimistic remarks in Bangkok about resolving the fiscal cliffs.
If Obama is right, it will remove a major uncertainty from the world markets.
The momo crowd has seized on the potential removal of uncertainty and has been aggressively buying gold since Obama’s remarks.
Traditionally gold and silver have been a hedge against uncertainty. If gold was following its traditional pattern established over hundreds of years, it would have gone down on potential removal of uncertainty. However, lately gold and silver have been under the control of the momo crowd which behaves contrary to the traditional role of gold.
History has taught us that whenever an asset class becomes controlled by the momo crowd, and the momo crowded claims that it is different this time, it almost never ends well. This is the reason behind our cautious stance towards precious metals at this time.
Obama’s remarks are vague. No one expects him to talk down the U.S. economy. However, as usual, the momo crowd does not dig deep.
Stock futures are also up on optimism arising out of Obama’s remarks.
The overseas markets are higher.
Gold futures are at $1730, silver futures are at $32.86, and oil futures are $86.26.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
DJIA futures are up 90 points.