After showing strong resolve last Thursday and Friday, Gold Bulls have gone on the offensive this week. Thumbing their noses at Bumbling Ben and his Round Table of Fiscal Fools, Gold Bulls have retaken, once again, the key 880 hill and have set their sites again on a breach of 900. A poor number from the pedestrians counting initial jobless claims today [Thursday] could be just the catalyst to vault Gold back over 900. Expect "profit taking" going into the weekend however. Gold Bulls should note that the Japanese Yen has been sitting on it's 200 day moving average for the past four days now: http://stockcharts.com/h-sc/ui?c=$xjy
Silver has been shadowing Gold for weeks now, and that trend continues. Silver today broke back thru key resistance at 17.02. It is interesting to note that almost 2 million ounces of Silver found it's way into the COMEX warehouses yesterday. Could this signal a massive short covering in it's infancy? Time will tell. Silver must now book a close above 17.46 to further pressure the shorts into taking Silver back thru 18. As with Gold, expect "profit taking" going into the weekend.
As Bumbling Ben's rate hike "threat" is looked at more closely with "fundamental vision", the line for the Dollar exit once again appears to be lengthening. When considering the consequences of ANY Fed interest rate hikes at this time, traders are quickly becoming less convinced that Benny is serious.
The Fed's Rate Dilemma
By Robert Novak
Washington PostMonday, June 16, 2008
Speculation that the Federal Reserve is about to begin inflation-fighting interest rate increases appears to be dead wrong.
Fed Chairman Ben S. Bernanke is worried more about runaway oil prices contracting the global economy than inflating it through a wage-cost spiral. According to sources close to him, America's leading central banker has no plans for a raise.
Bear bailout shows Fed doesn't follow normal rules for its own books
The Federal Reserve is just days away from completing the financing for its bailout of Bear Stearns Cos., after which the central bank will have another big decision to make: how to account for it.
Flip through the footnotes to the Fed's latest annual report, and you'll come across an open secret. The Fed doesn't follow normal accounting rules, as promulgated by any of the major standard-setting boards. Rather, the Fed writes its own, in a document called the Financial Accounting Manual for Federal Reserve Banks.
If you ever wanted to design an accounting regime to help a bank cook its books, the Fed's would be perfect. This doesn't exactly inspire faith in the U.S. financial system, at a time when a good example might help a lot.
Wall Street's credit crisis heads into second year
NEW YORK (AP) -- There are new signs that the worst of the global credit crisis is yet to come, and that banks and brokerages caught up in the market turmoil may lose $1 trillion by the time it has passed.
Major U.S. investment banks this week announced yet another painful quarter amid the implosion of mortgage-backed securities and risky credit investments. Regional banks have scrambled to secure fresh capital to stay in business, and by Wednesday there was new talk that embattled investment bank Lehman Brothers might be forced into a sale.
With each passing quarter, Wall Street's top bankers have indicated that the worst of the market turmoil was over -- only to face more pain months later. The uncertainty has caused already battered investors to lose confidence in financial companies, and expectations have increased that more layoffs, asset sales and capital raising will be needed in the weeks ahead.
"We thought this was going to be the kitchen-sink quarter, and we're finding out that CEOs and CFOs still don't have a handle on the credit crisis," said William Rutherford, a former state treasurer of Oregon who now runs Rutherford Investment Management. "We haven't disinterred all the dead bodies. What else is out there?"
RBS Issues Global Stock and Credit Crash Alert
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
"A very nasty period is soon to be upon us -- be prepared," said Bob Janjuah, the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
A "Lot of Money" Heading Back into Gold?
...looking at the technical action on its charts, "any meaningful bounce from the 200-day moving average could bring back a lot of money into gold," ...
The 200-day moving average, as the name says, measures the average price of an asset over the last two hundred days. It's called "moving" because, as time rolls ever onwards, so too does the average – used by chart-loving technical analysts to see what the deeper, underlying trend is up to.
And why 200 days? Because that's roughly the number of trading days during one year. So the chart here, therefore, shows both the daily Gold Price as well as its 12-month trend. And you can see how the 200-day average has indeed acted as "strong support" during the bull market so far.
Well, kinda. Most of the time.
Nine times since Gold quit its 20-year bear market in 2001, the price has either bounced off or moved sharply higher through its 200-day average. The following surge – lasting an average of 21 weeks – delivered a 28% gain before the price of gold tipped lower again, back towards that ever rising up-trend.
Hanging on for another pullback from today's current Gold Price and so trying to nick a little extra off your investment outlay might prove expensive, in short. If you're looking to take a position in Gold for longer-term or deeper fundamental reasons, the kind of low-profile flat action we're seeing this June could offer your best chance to get in.