I don't know about you, but this holiday season is wearing me out...
The Precious Metals have been stuck the past two weeks. That is, until today.
Gold and Silver climbed higher through the night and into the early CRIMEX trading as the US Dollar swooned overnight. However, beginning at 6:30AM the Dollar began a surprising rally that lasted throughout the day. The rally in the Dollar however did not undermine the overnight rally in the Precious Metals. It did appear to stop the rally in it's tracks though.
The US Dollar rally off a six week low this morning appears to have been entirely based on weakness in the Euro as both the Japanese Yen and the Chinese Yuan rose today to near 7 week highs versus the US Dollar.
The euro fell against 15 of its 16 major counterparts after the European Central Bank said it failed to fully neutralize the extra liquidity created by its bond purchases for a second time since the program began in May.
Claims that the US Dollar recovered today on rising interest rates is wishful thinking. Interest rates rose to 3.5% on the 10 year treasury note today following a miserable $35BILLION 5-year US Treasury offering.
With US home prices falling for a fourth straight month, and consumer confidence tipping over in December, it is difficult to fathom any strength in the US Dollar today.
The Precious Metals certainly weren't selling off on the Dollars amazing strength today. The TRUTH is out there.
There were countless headlines today touting "record holiday spending" this Christmas season. Tell that to Best Buy. Strangely, none of the holiday spending reports offered numbers that were adjusted for inflation. Growth in spending is just a myth perpetrated by a desperate retail industry in an effort to convince Americans that everybody is "still" spending money...why aren't you?
Best News So Far? Consumers' Holiday Spending Tops Pre-Recession Level - NPR (blog)
Retail sales during holiday season rise 5.5% over last year - Los Angeles Times
Holiday spending nears a record in overtime -msnbc.com
Holiday Retail Sales Surge For Second Straight Year -The Consumerist
Funny, there wasn't much hiring done in December to account for all this spending. Maybe everything just costs more this year, OR maybe the discounts were so deep that Americans couldn't pass up the "bargains". It is doubtful that retailers "giving away merchandise" will amount to much in the way of profits on their bottom lines. Just ask Best Buy.
The REAL story of this week is the one receiving the most ignorance. The interest rate increase that China announced on Christmas Day. If you want to know the real reason why Gold and Silver lifted off today, look no further than this news.
Rising interest rates in China will inevitably lead to a rising Yuan. And as I have shown in the past, a rising Yuan results in a rising Gold price.
Analysis: As China raises rates, don't forget the yuan
(Reuters) - China was Grinch-like in raising interest rates on Christmas Day, but in fact investors have good reasons to be grateful.
The government provided much-needed reassurance that it was determined to rein in price pressures -- and a salutary reminder that more yuan appreciation than the market expects could be in the offing.
Richard Russell - We Will Have an Upside Explosion in Gold
+74% later, Wall St. Journal notices silver only to try to talk it down
Class action against Morgan, HSBC specifies silver manipulation mechanism