The much touted Bernanke pause will be a boon for gold and oil stocks...
As the dollar continues to weaken on the lower rate scenario...commodities will finally decouple from stocks in general...and be able to rise on their own fundamentals.
There has been an effort to attach gold shares to the general market lately... As stocks go...so goes gold mining shares...this is contrary to historical trends where gold was a contrarian play.
WHEN THE FED DOES "PAUSE" THE INFLATION STORY WILL GAIN MOMENTUM...GOLD SHARES WILL RISE...AND PERHAPS STOCKS WILL FOLLOW BECAUSE FOR SOME REASON...INFLATION IS SEEN TO BE "GOOD FOR" STOCKS LATELY... DESPITE THE FACT THAT HIGHER RATES MUST SURELY FOLLOW.
I FOR ONE AM LOOKING FORWARD TO THE BIG BERNANKE PAUSE...IT WILL LIKELY LIVEN UP THE MARKETS CONSIDERABLY... BUT IF THE DOLLAR KEEPS PLUNGING...AND OIL PRICES DO NOT BREAK DOWN--THE FED WILL BE ON THIN ICE GOING WITH A "PAUSE" IN AUGUST.
STILL THE PRESSURE FROM THE STREET IS GROWING EVERY MONTH...
A WILD CARD IS THE MIDDLE EAST SITUATION... IF THE ARAB STREET IS ON THE MARCH...THE FED WILL HAVE TO PROTECT THE DOLLAR TO ASSURE THAT OIL DOES NOT SOAR.
ADDITIONALLY, IT IS NOT CLEAR THAT A "PAUSE" WOULD ACTUALLY HELP THE HOUSING BUBBLE THAT MUCH...MOST MARKETS ARE GLUTTED WITH HOMES FOR SALE NOW...AND THERE ARE NO BUYERS IN SIGHT AT ANY PRICE! THERE IS MORE "WRONG" WITH THE HOUSING MARKET THAN HIGHER RATES... THE HOUSING BUBBLE WAS READY TO BURST NO MATTER WHAT THE FED DID...
IN ANY EVENT, THE NOTION OF THE STOCK DOGS RUNNING WITH THE GOLD BUGS IS NOVEL...
THE STREET SEEMS TO BE BEGGING FOR AN INFLATIONARY FED...BUT THE STREET NEVER THINKS LONG TERM THESE DAYS... LET'S HOPE THE FED STILL DOES.
