Gary Tanashian: The media love to get a hold of buzz words and then give them a spin and a life all their own. Recent examples were the mainstream media’s presentation of ‘Operation Twist’ – which was simply an official yield curve manipulation designed to sanitize and dampen inflationary signals – as an inflationary operation, and the ‘Fiscal Cliff’ drama that sent herds of conventional investors to the sidelines* when they should have been contrarian (and bullish) back in Q4, 2012.
Now we have the media on the job tending the ‘Taper’ herd. Among the many hyped up implications of ‘Taper’ according to the media are that it is bearish for gold. But I would put forth not only a rejection of that assertion but just maybe a call for the opposite; a bullish stance on gold in the face of a Fed being coerced by natural movements in the Treasury bond market to talk ‘taper’.
As part of its QE operation, the Fed buys long-term Treasury bonds with newly printed money. It does so to try to keep interest rates down so that the economic recovery they have promoted does not fold in on itself, wheeze, roll over and die. They also buy distressed MBS, but this is a story about Treasury bonds.
As NFTRH noted back in May, long-term interest rates began bottoming (we established targets of 4.2% and 3% on 30 and 10 year yields respectively and were on the rising rates theme long before the word “taper” was first uttered by any talking head) and then not coincidentally various Fed members began chattering in the media… as our latest buzz word was born. Ladies and gentlemen I give you ‘T.A.P.E.R!’, the latest obsession for casino patrons to analyze to death.
Our long-standing target has been 4.2%, below which the 30 year yield now hovers. The red moving average is equivalent to the monthly EMA 100 that NFTRH has used for years in gauging the yield’s limitations and hence its implications for the entirety of the macro markets. TYX is fast approaching its decades old limiter.
Switching to a monthly view (chart from NFTRH 256) of the 10 year yield, we see that it has registered its 3% target at a potentially limiting moving average. Yesterday’s rise in 30 year yields and decline in 10 year yields could simply be a catch up move.(...)Click here to continue reading the original ETFDailyNews.com article: Gold: “Taper This”You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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