The internecine political warfare that threatens to rip apart America’s two-party system, bring about threatened downgrades from various ratings quarters, and wipe billions off of all kinds of market valuations continued to drag on yesterday and into today. Tea Party figureheads ripped the House Speaker, Mr. Boehner for coming up with a plan that their membership does not find adequate by even the longest of shots. Former Republican presidential nominee John McCain ripped the Tea Party ‘hobbits’ for demanding ‘bizarro’ alternative plans with which to balance the US budget. Mr. Boehner had little more to say to the rank-and-file participating in this internal revolt than to rip them in turn, and bluntly tell them to “get their [insert synonym for the word donkey here] in line.”
The President, albeit having been all but marginalized as a result of the brawl and the developing ‘Civil War’ among Republicans, remains opposed to any production coming from Boehner-land and Congress will vote on the bill today but Democratic lawmakers (all of them) have already signaled that they will pound their shoes on the podium and say “Nyet!” to it. Welcome to Ringling Bros. America; a place where the tent might collapse at any given moment and send the menagerie flying in a cloud of sawdust. If this is brinksmanship, then Clint Eastwood needs to reshoot certain cigar-chomping/eyebrow-furrowing scenes from many a spaghetti western he made eons ago.
Albeit having run out of vigor to a certain extent, Wall Street gold specs did not loosen their bullish grip on the yellow metal too much; not when the consensus perception (and this applies to Mr. Smith on Main Street as well) is fast turning into conviction; the conviction that Rome is flaming out while several dozen Neros are still fiddling, instead of carrying water buckets. Spot bullion dealings opened with a gain of $4.10 per ounce, quotes came in on the bid-side at $1,618.20, and the market remained as nervous as Don Knotts ever was in certain situations. Unsurprisingly, major gold producers Barrick and Goldcorp reported swimming in the warm waters of huge profits; the former’s increased by 35% while the latter’s adjusted earnings more than doubled. Ride’em (margins), cowboy.
Last night’s short-term update from the analytical team over at Elliott Wave opines that gold appears to have completed a wave v of 5 at yesterday’s intra-day high of $1,629 and that a decline under the $1,580 might offer initial indications that the gold rally has turned into reverse (with a large downside potential baked into the equation). As for silver, the breach of $42.13 on the upside could usher in higher values, whilst a successful penetration of the $39.46 level could offer significant downside price potential.