The chart below says it all. The history of market reaction to the printer is cyclical. A pattern of market players, ready to sell, ready to lock in the momentous nominal gains (like Goldman), just prior to the end of printing.
One of the biggest secrets in the financial world is that gold and silver simply aren't driven by their fundamental drivers. This gives our readers an even bigger opportunity to participate in the greatest wealth transfer of all time.
Eventually, gold and silver will trade alongside their fundamental drivers and, until then, investors have a precious opportunity to jump in to the biggest investment opportunity in history.
There will be a fundamental change in this erroneous thinking when there is a shock in supply. Someone will be unable to deliver metal, just as in 2011 when in the face of investor demand, dealers simply ran out of silver and all 3 major mints (U.S., Perth and Canadian) ran out of blanks.
Now combine this picture of tight supply with a demand shock; the global citizenry suddenly decide that the U.S. truly can not reduce overall debt and that the programs that are planned will make it skyrocket. These are moments defining true dollar value.
Recent sentiment is not of fundamental dollar strength, but a fleeting temporary shift away from industrial demand driven currencies, stocks, and speculative European bonds. When investors sell these assets, by definition, they are acquiring dollars, lending this temporary demand.
As we warned on the 19th, the stock market has a very high amount of risk. In End of Covert Dollar Printing Expected to Result in Stock Sell Off we illustrate equity market cycles along side printing schedules, and take a look at the upcoming decisions shaping sentiment today. The Fed's deliberate uncertainty over further printing will be the driver over the next few months.
In the article we said, "equity markets are simply complacent in the light of Operation Twist 2 ending in June."