Gold And Silver: Don't Panic!

Yesterday’s decision by the Fed has caused a landslide in the two monetary metals, however, nothing has really changed. The bloodbath evidenced last night and through today’s UK session has seen gold lose the $1800 level, and silver into the mid $26.
 
On the face of it, this is a classic market overreaction. Silver went from within touching distance of its highest weakly close since 2013 to losing over a dollar in value. Gold on the other hand tanked. Usually when headlines like this break the market overextends in one direction, and it settles out a few days later. The direction of gold and silver following nonfarm payrolls or Fed meetings can take up to three days before traders work out the data, and the trend is formed. This at present seems to be what is happening.  
 
From a fundamental perspective, not a lot has changed. The Fed will increase rates nominally in around 18 months’ time and that is heavily dependant on the economic situation. If this is just a rebound, and the higher it rebounds quickly, the more difficult it is to keep up in the following quarters. We are still sceptical that this is anything other than a rebound. The Fed has been epically bad at predicting inflation over the years, and also managing it. There is nothing to suggest that this will be any different, and the inflation we are seeing is indeed “transitory”
 
The cynic in me says that this is nothing more than a smokescreen for the big boys to paper dump mass unallocated positions before the looming deadline for Europe and the US for the June 28. We will no doubt see this price manipulation continue well into Q3 of this year while we wait for the paper shorts to fully unwind.
 
Volatility is expected in this market, as is patience. Remove the emotions and remember the bigger picture. Our view is this is nothing other than a buying opportunity.