Elliott Wave InternationalmyEWISocioniomics.Net
Home > Gold and Silver
Gold's June 21 Freefall: Is the Federal Reserve to Blame?
If the Fed gave gold bugs what they wanted, then why did gold fall after Bernanke's June 20 announcement?
By Nico Isaac
Thu, 21 Jun 2012 17:45:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly Get the RSS feed Add to more social media services
Get investable insights sent to your inbox at least once a week – for free. Challenge the way you think about investing with The EWI Independent. Privacy

Here is a simulated conversation between 2 gold traders regarding the 3%, single-day selloff on June 21:  

Gold Trader 1, let's call him "Ned": What a doozey. Gold prices plunged nearly $50 per ounce (3%) in their biggest single-day selloff so far this entire year. My analyst guy up on Wall Street says gold got walloped because the Federal Reserve "disappointed" at its June 20 policy meeting.
 
Gold trader 2, let's call him "Joe": How exactly did gold bugs expect the Fed to act at the meeting?
 
Ned: Well, they wanted two things to happen, as this June 18 Reuters article wrote:
 
"Gold Stretches Gains to 8th Day, Fed Eyed... Gold bugs will watch for hints of more quantitative easing OR an extension of Operation Twist."
 
Joe: So, what did the Fed do instead that was so "disappointing"?
 
Ned: Let's see here. The minutes say Fed head Ben Bernanke is "prepared to take action" if job growth continues to disappoint. And, in the meantime, the central bank extended Operation Twist to the end of the year.
 
Joe: So, the Fed did exactly what gold bugs wanted them to?
 
Ned: Well, when you put it that way, my analyst's explanation for gold's June 21 rout has about as much substance as a stale saltine cracker.
 
Indeed.
 
If you are looking for a more objective view on the trends in gold, silver, platinum, as well as other metals, try our Metals Specialty Service. It might just help you NOT miss gold's next big move.
 
GOLD, Silver and More: Where Are Your Best Opportunities?
 
EWI's Metals Specialty Service Editor Mike Drakulich uses the Wave Principle and 30 years of market experience to help you zero in on hot opportunities now in: 
  1. Gold
  2. Silver
  3. Platinum
  4. HUI and GDX
  5. Copper
  6. Aluminum 
Subscribe today to get Mike's expert intraday and daily Elliott wave forecasts complete with key price levels, targets and valuable insights for gold, silver, copper and other major metals.


Here's How to Get Instant Access to EWI's Metals Specialty Service >>

 
 
 
 

Tags: Gold, precious metals, U.S. Federal Reserve (the Fed), U.S. Federal Reserve (the Fed)
Rating: - based on [23 rating(s)]
Rate this content:
  
 
Get Your Free Email Newsletters

Simply pick what interests you and enter your email address:


Challenge the way you think about investing with The EWI Independent

Dig deeper into the world of Elliott wave trading via Trading the Waves

Get the week's can't-miss articles and free resources from The EWI Weekly Select

Get the latest from our sister organization, the Socionomics Institute
We respect your privacy. TRUSTe


Stay Ahead of the Trend in U.S. Stocks

FFS 
EWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:
  • Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Financial Forecast -- In-depth,intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Theorist -- Bob Prechter's monthly big-picture insights.
Put the Financial Forecast Service on your screen in minutes, risk-free>>


Free 20-page eBook


How to Use the Wave Principle to Identify Actionable Opportunities in Gold & Silver

In December 2010, the conventional wisdom claimed the fundamentals were unanimously bullish -- and that gold & silver would continue higher. Yet in December, EWI's Metals Specialty Service identified a textbook Elliott wave pattern: a "contracting triangle." This 20-page eBook walks you step-by-step through this opportunity-identifying pattern, by using an in-depth, real-world trading example.
Download your free 20-page eBook.

Gold and Silver


© 2013 Elliott Wave International

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.