Wednesday, August 1, 2007

More Monkey Business

But what if The Fed cut interest rates next week? That would certainly be a shock to the system. And man Gold would catapult as the Dollar sank like a stone in the ocean. Somebody pinch me...

The Stock Markets here in the good 'ol floundering U.S. of A. are the ONLY thing attracting foreign held funds into the country. Me thinks the Fed would sacrifice the Dollar to further prop up the stock markets'd be cheaper than printing money. Well..., maybe.

The rising cost of Oil is savaging the Dollar. And this price rise in Oil could be the straw that breaks the donkey's back.

The dollar and oil tend to move in opposite directions. This is partly to be expected if the price of oil is in US dollars. If dollars depreciate then commodities priced in dollars will tend to rise. However, that doesn’t begin to explain it all. The dollar has dropped 33% in value since 2002 but oil has not increased by 33%, but rather has almost quadrupled in price as oil gets more expensive to extract and China leads explosive Asian demand.

Please read Roland's entire essay to get the real picture of Oil's influence on the Dollar's demise.

Jim Willie CB, has another scathing essay up for your entertainment this week. Fed Funds & Other Signals, you can read it here:

A quick review of signals surely can be both encouraging and confusing. They point to higher physical prices, calmer stock prices, and a continued housing crisis & mortgage debacle. The big banks and Wall Street broker dealers are breaking down very badly. The USDollar bounce is already running out of steam, hampered by a restored expected interest rate cut. Remember: whatever is vigorously and repeatedly denied is almost surely to occur!!! Deception sells products.

Today in Gold and Silver. More laughter really as more fools run from the metals across the globe seeking safety in the US Dollar and an aversion to risk. Yeah, well, whatever...fools. And look, the metals were higher in the after hours market? Oh, and look at this...a late afternoon rally in stocks. Coincidence? And the air leaked out of the Dollar after the sun came up today. What a crazy world we live in. Predictions right now are useless...a lesson learned long ago: "When your unsure of what to do in the market, it's best to do nothing." Yup, it ain't a lot of fun... and often uncomfortable, but sitting on your hands is sometimes the best thing to do in a volatile market. Volatility often precedes a change in trend as the Bulls and Bears duke it out for control of the trend. Gold and Silver are caught in the vortex. Remain confident that no matter which side of the fence the dust settles...Gold and Silver will be moving higher. They have been for the past 6+ years, and the fundamentals to sustain a move higher are stronger today than when this Bull Market in Precious Metals began in 2001. It just amuses me how the price of Oil has hit "record highs" and the media has basically turned a cold shoulder to this lurking economic bone crusher. $80 Oil should change that...$100 Oil could ignite a panic.

Interesting that Gold and Silver's after market rise hit a wall hard as the Asian Markets opened this evening. What this could portend is anybody's guess. But last nights drop in the Asian/London markets was unusually "extreme". Then again, their Stock Markets got pasted overnight. Fools running from their risky Gold holdings? I suspect more monkey business...remember, every seller has a buyer and every holder still has his Gold and Silver. Hang on to yours!

Briefly... Gold did well to hold 659 and it's daily uptrend line off it's June 26th low. 50 day moving average on my charts is 660.28. Though pushing on it for the past six trading days, it has so far held up as support. A move though 668 could put a little pressure on the paper pushing Vermin on the Comex.

Silver, below it's 50 day moving average at 13.00 has kept it's head up, but would do well to open up that 6-pack of Whip Ass stashed in the trunk. A Reverse Head & Shoulders bottom has developed on the daily chart of Silver. Silver shorts will get pasted on a break of the neckline near 13.40 . Just an observation...paper pushers be damned!

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