Strong Dollar Policy? P U

And so the battle begins...


Gold and Silver have been stuck in their boxes going on four months now. Bulls in both metals sense a breakout from their trading ranges may be imminent. The bears can sense it as well as they are reluctant to press their case now that every fundamental imaginable favors the Precious Metals bulls as we head into the "second half" of 2008. Today's reversals across all the markets, Precious Metals, Currency, and Stocks were quite revealing. The Plunge Protection Team got stuffed today. The Truth can be ugly sometimes, and for the US Dollar and US Stock Markets that Truth may down right hideous.

Stocks advance as rising dollar sends oil lower
Monday July 7, 9:58 am ET
NEW YORK (AP) -- Stocks advanced in early trading Monday as investors showed their relief over falling oil prices and waited for the arrival of second-quarter corporate earnings this week.

There's little economic news expected, so the drop in oil prices appears to be drawing some investors back into the stock market after weeks of losses. Oil at times fell more than $5 to under $141 a barrel as the dollar gained strength.

Stocks fall on worries about financial sector
Monday July 7, 5:39 pm ET
NEW YORK (AP) -- Wall Street lost more ground in extremely volatile trading Monday, as investors recoiled at a cautious economic outlook from a Federal Reserve official and the possibility of more financial troubles of Fannie Mae and Freddie Mac.

The market found only slight solace in retreating oil prices.

What a difference a day makes. Stocks advance at the open of trading on the "notion" that Oil prices falling to "just" $141 a barrel is "great news" only to be slapped down by the Truth about the economy and the financial sector. A $4 a barrel decline in Oil prices is NOT going to make a damn bit of difference. $141 or $145, Oil is VERY expensive at either price. Even a $40 a barrel decline still leaves Oil prices at a very expensive $100 a barrel. Headlines touting stock rallies on declining Oil prices are nonsense.

San Francisco Federal Reserve President Janet Yellen said in a speech the financial markets remained fragile, and that it will take time for conditions to improve. "My expectation is that market functioning will improve markedly by 2009," she said. "But things could get worse before they get better."

The comments added to concerns raised in a note by Lehman Brothers analysts that Fannie and Freddie may need to raise more capital as the credit crisis continues.

Ms Yellen's "wish" is that market functioning will improve next year, and her fear is that that wish may be hopeless. The Stock Markets turned down on the voicing of her wishes and fears, the Dollar lost it's bid, and Gold bounced hard. Silver was dragged down all day by lower Oil prices. The Precious Metals Bears are not quite as bold today as they were just three weeks ago. The bid the Dollar had this morning had little to do with falling Oil prices as many commentators would have you believe. Weakness in the Euro once again explained the bid in the Dollar as German Industrial Production numbers were down along with Investor Confidence in the Eurozone. It escapes me why Forex traders rush to the Dollar when the Euro shows any weakness. The geniuses should be buying Gold. The US Dollar is NOT a safe haven. It is a little brown turd floating in a toilet bowl that is yet to be flushed.

Gold was very stout today refusing to fall below 915, and ended the day with a significant close above 925. Silver got kicked around pretty good, but still managed to close above near support at 17.70. The Truth is spreading, and should soon result in new investor demand that will push these two Precious Metals through resistance at 952 for Gold and 18.50 for Silver as investors seek protection from the forthcoming ravages of inflation. A $4 drop in Oil prices can doing nothing to thwart the rising tide of inflation that is about to swamp our shores as the unwanted Dollars spread around the planet find their way home and smother our economy.


Bush says backs strong dollar policy
TOYAKO, Japan, July 6 (Reuters) - U.S. President George W. Bush said on Sunday the American economy was not growing as quickly as he would like and that his administration supported a strong dollar policy.

"Our economy is not growing as robustly as we'd like," Bush told reporters at a news conference after meeting Japanese Prime Minister Yasuo Fukuda ahead of the G8 leaders summit. "We had positive growth in the first quarter, we'll see what happens in the second quarter."

"We're not as strong as we have been during a lot of my presidency," Bush added.
http://www.guardian.co.uk/business/feedarticle/7633720

Strong Dollar Policy? Say again? Um, Mr. President... Sir... The US Dollar has fallen 40% since you took office. It is difficult to believe that a "strong dollar" is at the top of your list of priorities in the waning weeks of your LAME DUCK Presidency, or that it ever was for that matter. The only thing strong about your Dollar policy Mr. President is its odor...it stinks!


The International Forecaster
And then there is the whole derivatives market of credit default swaps and interest rate swaps, which are simply extensions of the bond market through "financial engineering" to provide a form of insurance for the bond market based on bond performance in terms of repayment of both principal and interest. As defaults have accelerated, these swaps have multiplied like rabbits and will soon reach about one quadrillion dollars worth of notional principal. This is the financial version of the China Syndrome waiting to happen. First there will be trouble with credit default swaps as banks and large corporations fail due to a severe recession, a horrible real estate market that grows worse by the minute, hyper-stagflation, insolvency, negative yields on investment, a collapsing dollar and a complete and utter collapse of consumer spending and confidence which will continue to set all-time lows. These circumstances will then send real interest rates into double digits, after which the interest rate swaps will implode, taking the entire world financial system down with them. This quivering, quadrillion dollar caldera of molten death is what distinguishes our current debacle from all previous financial disasters. When this caldera erupts, it will make what happened in the 1930's look like a picture of prosperity. Americans have no idea how bad this situation really is. Unfortunately, they are going to find out very soon, after it is too late. Do not be like them! Buy gold and silver, take physical possession of it, and wait for the financial mushroom clouds to appear. What will be a disaster for the uninformed will be the greatest profit-generating event of all time for the informed.
http://news.goldseek.com/InternationalForecaster/1215410760.php



Will Arabian investors do a Hunt to silver?
But why should silver out perform gold in this environment? From a technical point of view there is a very large outstanding short position in the Comex futures pit. That means a sustained rise in the price of silver will be amplified by the shorts running for cover, and having to buy silver at whatever the price.

There is also a more fundamental reason to be confident about silver: the market is considerably smaller than gold. The gold market is estimated to be worth something north of $4 trillion while the whole silver market is reckoned to be valued at between $16-25 billion. Therefore, it takes considerably less money to move the silver price higher than it does gold, and that is one reason for silver’s price volatility.

Over time the long term silver to gold ratio is 15, that is to say gold is worth 15 times more than silver. Except not at the moment, the silver to gold ratio is 52, which means historic undervaluation. If you throw in the oil to gold ratio, which shows gold to be historically undervalued as well, then silver looks even cheaper. But silver has been catching up with gold and is up 283 per cent over the past five years, ahead of gold’s 156 per cent rise. It still looks cheap.

In March a 1,000 ounce gold bar would have set you back more than $1 million, while the same amount of silver could be had for a mere $22,000. Silver has still not crossed its all-time high of $54 reached long ago in 1980 or even the average selling price of $24 an ounce 28 years ago. It is the most undervalued of all the commodities.
http://news.silverseek.com/SilverSeek/1215438577.php