The U.S. dollar index lost more than double yesterday’s gains, treasuries rose, and the Dow, Nasdaq, and S&P fell by the close as optimism faded over whether the fed’s plan announced yesterday will be able to effectively solve ongoing credit market problems. Hawkish European Central Bank comments also helped push the dollar to a new record low while oil topping $110 a barrel was certainly a contributing factor to the Dow turning an early nearly 150 point gain into an almost 50 point loss by the close. -Chris Mullen, Gold-Seeker.com
So, after being force "fed" a shit sandwich yesterday, the Dollar shorts have got to have a bit of indigestion today after getting squeezed out of their delicious short positions yesterday.
Smart Gold and Silver Bulls were snapping up bullion in the final days of the St Patrick's Day Sale Event as the Dollar bears choked on every bite of that sandwich too.
As pathetic as the Fed has been in their response to this "credit crisis", you have to thank them for all that they have done to keep a wind in Gold's sails.
The Fed's in a desperate race with spectre of collapse
The Fed, with its latest $200bn offer of cheap cash, has provided yet more state aid for errant hedge funds and another Washington-backed bail-out for Wall Street bankers. The Bank of England joined in again, further shedding any notion of being wary of moral hazard. But as the bail-outs are getting bigger, then clearly the problems causing them must be getting bigger.
The Fed has saved the day again, but it will only be for a day or so. It was Friday remember when it had to pump $200bn of cash into the system. Yesterday it was offering to lend a similar amount to try and soak up some of the toxic debt out there which has left the lending markets hamstrung. How much further can the central banks go to support a system that is so obviously broken?
The treacherous nature of bear market rallies
However, I would be extremely careful in concluding that rising stock prices after a terrific decline, such as we had in the NASDAQ since March 2000, do signal improving business conditions. For a market, which has become very over-sold, it is only natural to rebound, but frequently these rebounds are merely bear market rallies, which are subsequently followed by vicious declines.
Will Gold Catch-Up With Crude?
As you can see, the oil price is now approaching its all-time high adjusted for inflation at near $105. Simultaneously gold clearly remains at less than half its inflation-adjusted high of over $2300 per ounce. What's more, looking back to the stagflationary 1970s, an era many economists equate with our own, gold rose at roughly twice the rate of oil. Now gold is rising at roughly half the rate of oil. In other words, if historical balance is to be retrieved in the months and years ahead, gold will not only have to rise with oil, it will have to rise faster than oil.http://news.goldseek.com/GoldSeek/1205263969.php
Investors Plan to Buy More Commodities, Barclays Says
March 10 (Bloomberg) -- More pension funds and other money managers plan to have in excess of 10 percent of their portfolios in commodities in the next three years, Barclays Plc said.
Thirty-four percent of about 260 investors surveyed at a conference in Barcelona last week said that more than 10 percent of their portfolios would consist of commodities in the period, Kevin Norrish, director of commodity research, told reporters in London. That's up from 22 percent of those surveyed a year earlier and 19 percent in 2006, he said.
So let's see if we have this right. The Fed is desperate, bear market rallies are followed by vicious declines, Gold will soon rise faster than Oil, and Investors plan to pile into Commodities.
I guess buying stocks and covering our Dollar shorts was not a good idea yesterday. "Well duh, that's obvious." I know, but it's fun to make fun of the fools.
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