Tuesday, March 13, 2007

Goldilocks and The Three Bears

By now everyone has heard about our "Goldilocks Economy"...An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. Everything in the Goldilocks economy is fine until the three bears (or bear market) come home for their porridge! The three bears obviously got Goldilock's address wrong today, but they were in the neighborhood. The three bears showed up at the homes of Gold, Silver, and Oil this afternoon.

Gold, Silver, and Oil are the enemies of the US Dollar...and that is why they were attacked today. Overwhelming Dollar negative news and data today SHOULD HAVE BEEN hugely positive for the precious metals. Unfortunately, the crooks on the Plunge Protection Team [PPT] chose to attack all three shortly after the London Exchanges closed [like we've never seen that before]. They had too. Allowing the dish [gold] to run away with the spoon [silver] would have been akin to pouring gasoline on the fire. Gold, Silver, and Oil are all barometers of inflation and measure the weakness in the US Dollar.

IMO, the PPT will throw the towel in on saving the stock market from the Subprime Mortgage Meltdown. A crashing Dollar would encourage all the foreign money invested on Wall Street to skip town. The foreign money sells their stocks and the stock market crashes...they then sell their dollars from those stock sales to take their money home and the Dollar crashes. But believe this: The PPT and their croonies at the Fed and US Treasury will find it impossible to defend BOTH the Dollar and the Stock Market. They will have to defend the Dollar and it's status as the World's reserve currency. To do otherwise invites certain economic catastrophe. Too bad for the PPT, economic catastrophe has been holding it's invitation to Goldilock's house party for several quarters now. And Gold Bear, Silver Bear, and Oil Bear will do little to help avert the demise of Dollar...they'll only make it worse. It's called a short squeeze...and the mother of them all is lurking. The gold and silver cartels at COT will be destroyed.

Short Squeeze: A situation in which a lack of supply and an excess demand for a traded commodity forces the price upward. If a commodity starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say gold rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the metal. If enough short sellers buy back the gold, the price is pushed even higher.

Investigate the oil companies for "excessive profits"? I vote to investigate Goldman Sachs... This from their report of "record" profits for Q1:

Revenue from trading fixed-income, currencies and commodities rose 20 percent to $4.6 billion. Equities trading revenue climbed 26 percent to $3.1 billion.

It pays to be on the PPT...Hey, didn't Hank Paulson, current US Treasury Secretary, used to be Director at Goldman Sachs. My mind is wandering now...


Silver Resistance: 12.80 / 13.03 / 13.24

Silver Support: 12.68 / 12.55 / 12.27


Gold Resistance: 647.70 / 650.70 / 658.30

Gold Support: 642.60 / 637.10 / 624.70

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