This post was just published on ZYX Buy Change
As we wrote in the morning capsule, the traditional beginning of the quarter new money is pouring in stocks, gold and silver, oil, and bonds. However the trigger for the sharp move in gold and silver was comments by Charlie Evans. Evans is the president of Chicago Fed. Evans said that the Fed should stay accommodative until unemployment reaches 5-6%. The present unemployment rate is about 8%.
As soon as Evans uttered those words, the momo crowd aggressively started buying gold and silver.
The momo crowd is not known for deep analysis, so it is not a surprise that they ignored for following:
- Evans is not a voting member of the Fed at the present. He will become a voting member in 2013. In other words, at least this year his opinion does not count.
- Evans said the risk of inflation is very low. Traditionally low inflation is bad for gold and silver.
- There was nothing new in Evans comments. He has been saying exactly the same thing for years.
- Evans is well-known as the most dovish member of the Fed.
