The Federal Reserve has actually done something at last worthy of note. They indicated that they will provide more stimulus for the faltering economy, taking aim now at driving down mortgage rates. The Fed said it will buy $40 billion of mortgages per month in an attempt to desperately foster a recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.
Of course, this will also fail if they are buying mortgages from the bankers. They will use this as a means to dump what they have been trying to get rid of all along, while it is not necessarily guaranteed to stimulate employment or housing prices. The Fed should LIMIT this type of purchasing from FannieMae and not from the bankers. That will have a more direct impact rather than providing a dumping ground and golden parachutes for the bankers.
Nevertheless, we should see gold rise a bit more to test the Monthly Bullish Reversals, and it is next week that volatility should rise further. The sharp rally today after this announcement shows the short-term sentiment. However, we MUST achieve a monthly closing above 18100. We have resistance at 17900-18100. We have a Directional Change in October, key turning points ahead are November, January, and then we have a Panic Cycle next July that is lining up with the same position as did the 1987 Crash. So it still appears that things will go nuts next year in early August. That will probably be the rally into 2016. We will be looking at this in detail at the San Diego Conference. We have split this into three Conferences in an effort to keep much smaller audiences to allow more interaction and personal questions.
