Monday, June 25, 2007

Should I Stay, Or Should I Go

U.S. Dollar Bulls Turning Bearish on the Buck

For whatever reasons traders classed as “commercial” on the New York Board of Trade (NYBOT) who trade large numbers of U.S. dollar index futures contracts have been vigorously exiting what had been a considerable collective net long dollar position just a few weeks ago.

In the latest Commodity Futures Trading Commission (CFTC) commitments of traders report (COT) issued Friday, covering trades through Tuesday, June 19, those veteran commercial interests reported what has to be viewed as a massive exodus out of long-dollar positions, which means that the commercials are no longer confident of U.S. dollar strength following a move up for the greenback of mediocre proportions (against a basket of other fiat paper currencies).

In a one-week period the commercials repositioned OUT of a huge 7,042 USD net long contracts (from 9,853 to 2,811 contracts net long). In other words the commercials were getting out of a bunch of long positions even as the index was headed south! Since the Tuesday COT cutoff the index followed through 20 bps lower, showing a last trade Friday 6/22 of 82.34.

Since May 1, when the NYBOT commercials were then a colossal 23,380 USD contracts net long with USD at 81.63 they have all but gone net neutral as the index itself only managed to test the 83.20s to the upside and only turned in an overall gain of 130 basis points as measured on COT cutoff days (81.63 to 82.93).

Who can say why the commercials saw fit to get the heck out of “USD Longville,” but we can certainly say they have done just that as of Tuesday, which means that the largest traders of U.S. dollar index futures are no longer confident of a higher greenback. If they are right, then the buck should head lower which would in theory be more supportive than not for gold metal.

It is amusing that all the "reasons" for Gold being down lately, today were reversed, and Gold was down again. Something STINKS! Sentiment couldn't be more bearish. The PPT has you right where they want you if you're considering bailing out on your position. The two simple weekly charts above speak for themselves.

Charts courtesy of Please click on to enlarge.

Should I Stay, Or Should I Go ---the Clash

The "clash" of the Bulls vs. Bears for the control of Gold, and the Truth, is upon us. It may as well be Good vs. Evil. Gold is the Truthsayer...the only "real" barometer of Inflation. Many lies will soon be exposed. A nation will be shocked, dismayed, and then desperate as its economic house of cards and US Dollar hegemony implode.

Silver Resistance: 20 WEEK moving average at 13.37

Silver Support: 65 WEEK moving average at 12.64

_____________________________________All prices SPOT

Gold Resistance: 20 WEEK moving Average at 665

Gold Support: 65 WEEK moving average at 637

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