Monday, June 18, 2007

US Dollar Strikes Out Swinging, Gold On Deck

Home builders' confidence falls to 16-year low
Contractors say market probably won't improve until next year

WASHINGTON (MarketWatch) -- The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders' housing market index fell by two points to 28 in June, the lowest since February 1991.

The market probably won't turn around until next year, said David Seiders, chief economist for the builders. "We expect housing to exert a drag on economic growth during the balance of 2007."

Jeepers! I could have swore we were told back in March that the housing sector has hit it's low...guess not. This news was Dollar negative, and helped treasuries bounce off their morning lows keeping interest rates in check.

Oil tops $69; benchmark contract at 9-month high

SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed past $69 a barrel Monday, with the benchmark contract marking its strongest closing level in nine months as further violence and threats of an oil-worker strike in Nigeria renewed production concerns and traders continued to worry about the slower-than-usual pace of U.S. refinery activity.

Oil is accelerating higher after finally breaching resistance at $67 last week. The battle at $67 lasted for 2 1/2 months. Old resistance should now become new support for Oil at $67. This does not bode well for those looking for a deceleration in inflation going forward. Rising Oil prices are historically bad for stocks. Coupled with rising interest rates, rising Oil prices may be the straw that breaks the Dow's back. An obvious double top is forming in the Dow. It could be the "Mother Of All Double Tops". The one that sends stock investors fleeing from the markets and into the Safety of Gold. This bears watching closely (pun intended). A lot of dumb money poured into the Dow last Friday

As noted in April's TIC report Friday. Most foreign inflows of capital have been into stocks and corporate debt. Should the Dow tank, this money will flee quickly. And as the foreign investors retreat back to their own shores, they will leave their Dollars behind...A falling Dow will be very bad for the Dollar.

Rising interest rates, rising Oil prices, and foreign investment capital fleeing the Dow. Three strikes against the Dollar right there. Doink! And the Dollar goes down swinging. Next up Gold. Gold will be swinging for the fences this trip to the plate. Dem Rat Bastids will have to work overtime to quash whats ahead for Gold.

GOLD and SILVER had solid moves overnight that were faded by the crooks in New york as the COMEX opened. The weak housing survey and strong Oil prices put a floor under both as the day progressed. Both continue with the technical repair of their respective charts. Expect this choppiness to continue for the balance of the week...with prices higher, on balance, by the end of the week.

Silver Resistance: 13.26 / 13.39 / 13.50

Silver Support: 13.16 / 13.08 / 13.03
________________________________All prices SPOT

Gold Resistance: 655 / 658 / 662

Gold Support: 652 / 648 / 643

Gold/Silver Ratio at 49.65

A good read for those still sitting on the fence, waiting to enter or add to their Gold and Silver positions:

A Unique Era
By: Mary Anne Aden and Pamela Aden, The Aden Forecast

The gold market has been under pressure lately and some investors are feeling a little nervous. But the major trend is clearly up. That being the case, let’s stand back and look at the facts...

Gold has been rising for over six years and it’s gained 158% since then. That works out to 26% per annum, which has consistently been better than most other markets. The recent weakness is a bump in the road and it’s not unusual. We continue to believe that gold will likely rise for years to come, eventually reaching at least $2000 and it’ll probably go even higher.

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