Tuesday, October 30, 2007

No Time Like The Present

Lost in all the "blah-blah" about the Fed's interest rate "decision" is some pending economic data due to be released at 8:30AM est October 31. The Core Personal Consumption Expenditure (C.P.C.E.) and the first estimate of 3rd quarter GDP. The C.P.C.E. is an average of the amount of money the consumers spend in a month. It is considered as an important indicator of inflation and is closely watched by the Fed. The consensus estimate for 3rd qtr GDP is 3.1%, down from the 2nd qtr GDP of 3.8%. Should the GDP come in significantly below 3.1%, worries about there not being a FED cut will evaporate quickly...and so will the Dollar. A benign C.P.C.E. number will allow the Fed some cover to cut rates further as "signs of inflation" will be absent. The Bank Of Japan also has an interest rate "decision" early AM on the 31st.

The Fed has obviously decided to sacrifice the Dollar to "save the economy". Another rate cut would almost seem certain as a 25 point cut is already priced into the markets. A failure to cut would almost certainly crush the stock markets, and that would fly in the face of "saving the economy". A weak GDP number will quickly be talked up to a 50 point Fed cut. That would be devastating for the Dollar, and hugely beneficial to the Precious Metals.

Gold and Silver both came off their highs today, and held suggested zones of support. Gold at 778 and Silver at 14.10. Should both open weaker Wednesday morning, thoughts should be focused on buying opportunities. 771 Gold and 13.84 Silver should be significant zones of support. Don't try to "catch the bottom". Use buy stops above the market to get swept in should the markets bounce. NOTE: 14.31 Silver -- the next move above here could very well signal "a point of no return" for Silver, and a call from Mission Control for "Trans Lunar Injection" as Silver begins it's trip to the Moon. If the markets open higher Wednesday morning, I'd hate to be short...

Point of Recognition
By: Alf Field

There are still sceptics around, people pointing to sentiment indicators that suggest that gold is over-bought. Numbers such as 92% bulls are suggested as a reason why the gold market should turn around and correct. The fact is that in a real bull market, sentiment numbers can (and often do) remain extremely extended for considerable periods of time. People who rely on these over-bought/over-sold indicators may find that they miss a major opportunity or, worse still, suffer burnt fingers.

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