Enjoy Boredom While It Lasts

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"A wild card that could cause bullion to soar is the prospect of the dollar being unseated as the world's reserve currency."

Last week's tedium seems to have gotten the speculative juices flowing in the Rick's Picks chat room. Stocks, bonds and gold did practically nothing all week, a condition that invariably causes market-watchers to expect something to happen the next.

That's how Bollinger Bands work: Stretches of boredom in the markets cause the upper and lower bands to constrict to an isthmus, supposedly foretelling the next explosive price movement. From a Hidden Pivot perspective we see trendlessness somewhat differently, in the form of "dueling" impulse legs that are characterized by minor rallies on the lesser charts matched by minor declines of equal magnitude. In other words, tit-for-tat.

But whereas Bollinger Bands effectively store up tension between bulls and bears, dueling impulse legs alleviate it. From an analytical perspective, we like to think the Hidden Pivot System allows us to predict boring stretches more comfortably than most other technical methods.

Regarding gold, it has held up quite well so far despite a full-court press of happy talk from the Obama Administration and an absence of thoughtful scrutiny by the news media to rebut it. A wild card that could cause bullion to soar is the prospect of the dollar being unseated as the world's reserve currency.

This is being discussed as though the outcome was somehow speculative, and the Treasury Secretary remains in denial. However, we see the dollar's fall from grace as inevitable, imposed on the U.S. by a world no longer willing to sustain an economy that consumes much, saves little and which has hocked its future 'til kingdom come. These are interesting times, for sure, and tedious markets may be as much relief as we’ll get for years to come.

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