If you are worried about the action in gold, silver and mining stocks just read this…

“We Don’t Know”
December 19 (King World News) – Peter Boockvar:  With all due respect to Jay Powell, he seemed in the press conference to be wandering around in a hall of mirrors, trying to find his way in reconciling all the puts and takes, reading from prepared answers to expected questions and rationalizing the Fed’s policy moves. On the path to a ‘neutral rate’ he admitted again that ‘we don’t know exactly where it is,’ I paraphrase. On the VERY easy financial conditions we’ve had, he was dismissive again of them essentially saying inflation and the labor market are their main focus. Of course on the flip side as seen over the past few decades, they did everything they could to ease financial conditions when they tightened up.

The markets response reminded me of the children’s book “If You Give a Mouse a Cookie” which I’m sure you read to your kid or grand kid or niece/nephew as I did to my son. If you aren’t familiar, a boy gives a mouse a cookie. The mouse then wants milk with the cookie and the boy gives it the milk. The mouse then wants a straw to drink the milk and gets it from the boy. The mouse then asks for a napkin and you get the point. The Fed gives the market some guidance on rates and the market then goes too far with pricing it. After the 50 bps rate cut in September, the fed funds futures market then went on to price a December 2025 rate of about 2.80% and it was within a day of that meeting that a Fed member had to reign in the market. That rate today stands at 3.97%…

ALERT:
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Going into yesterday’s Fed announcement and dot plot, the December 2025 contract was pricing in EXACTLY 50 bps of cuts next year, thus 2 more of 25 bps. And the dot plot went to EXACTLY that. Instead of accepting that the Fed is now more in-line with the market pricing, market pricing took it even further and now there is just a 44% chance of a 2nd cut by year end 2025. The first cut for next year is now fully priced in by July.

A Market Priced With No Room For Error
So, yesterday’s bond and stock market move was not on some shock thing by the Fed, as again, the Fed just shifted to what the bond market had ALREADY priced in, but maybe a reversal of a market that got way too giddy over the past month, that got way too frothy in certain parts of the market and priced itself for no room for error.

That said, at least still, higher for longer interest rates is a real thing.

More “Transitory” Inflation
By the way, on food inflation, the CRB food index closed yesterday just 2 pts from the highest level since October 2023.

If You Are Worried About Gold, Silver, Miners, Read This…
King World News note:  With inflation ramping higher as central bank fiat currency debasement policies engulf the world, expect more stagflation and higher gold and silver prices in 2025.  The HUI Gold Mining Index was very close to a major breakout just two months ago before being pushed back down to major support (shown below).

HUI Gold Mining Index Has Retreated To Major Support At The 50-Weekly Moving Average. HUI Was Very Close To A 10+ Year Upside Breakout (375) In October Before Being Pushed Back Down To Major Support At 275

Darkest Before The Dawn
For those frustrated with the high-quality mining and exploration stocks, sentiment is about as bad as it gets ahead of the next liftoff.  When the HUI Gold Mining Index finally breaks above the 375 level, which will represent an 11-year upside breakout, the mining stocks will see a massive acceleration in upside gains.  For now, everyone invested in the sector is extremely frustrated and feeling like this torture will never end.  For those who are mentally tough enough to conquer their emotions and remain patient, you will be glad you did when we enter the upside acceleration phase above 375 on the HUI.

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