It appears that the Fed found a way to still surprise the market, even though the 50 basis point cut was near-certain. The rates were cut earlier. While this move is indeed very surprising as a surprise cut is not something that we’ve seen recently, it’s unlikely to make a lasting effect. Sure, the precious metals market soared today, as people ran for cover amid increased uncertainty, but please keep in mind what we wrote earlier today.

Namely, during the most similar situation technical- and fundamental-wise (in 2008), gold declined along with the interest rates despite very short-term corrective upswings along the way. Miners corrected about half of their recent decline, while silver corrected about 38.2%. Gold corrected about 61.8%. These are all percentages that are relatively normal in case of corrections. And the fact that miners didn’t correct as much as gold did, also tells us something. It tells us that what we’re seeing today is just a correction, not the beginning of a new uptrend.

Our speculative short positions remain profitable.

As always, we’ll keep you - our subscribers - updated.

Thank you.

Sincerely,

Przemyslaw Radomski, CFA