Persistence + Patience = Payoff

If I had to select one quality, one personal characteristic that I regard as being most highly correlated with success, whatever the field, I would pick the trait of persistence. Determination. The will to endure to the end, to get knocked down seventy times and get up off the floor saying, ''Here comes number seventy-one!''
Richard M. DeVos
1926-, American Businessman, Co-founder of Amway Corp.


Today's mid-morning spike in Gold prices can be attributed to the Federal Reserve's vice chairman all but admitting that the Fed is debasing the Dollar and will inflate the money supply rather than die. Unfortunately, misconceptions in the "rate of inflation" that were released just prior to the vice chairmans comments, kicked the legs out from Gold's rally. US CPI may have fallen a record 1% last month, nut that's consumer "prices" that fell folks. The increase in the monetary base last month is quickly becoming legendary. As for inflation, we ain't seen nothin' yet...

Dollar Down As Kohn Mentions Deflation, Quantitative Easing
NEW YORK (Dow Jones)--The dollar fell sharply across the board Wednesday morning as Federal Reserve Vice Chairman Donald Kohn said there's a small risk of deflation and said the central bank is engaged in quantitative easing.

Quantitative easing is when central banks use money supply as opposed to interest rates to supply funds in the market.

Kohn said after a speech in Washington on Wednesday that the Fed is doing both quantitative easing and monetary policy. But with the bank's benchmark rate at 1%, there's only so much more rate-cutting it can do.

His comments caused immediate dollar-selling as investors began to wonder whether the Fed is debasing the dollar.

This pushed the euro to as high as $1.2805, more than two U.S. cents up from its intra-day low.

"The move (down) in the dollar began as a technical move, but the comments by Kohn aren't helping," said Geoffrey Yu, currency strategist at UBS in London. "The market is going to ask if the Fed is trying to monetize the debt."

Despite the dollar's losses Wednesday, Yu said that global risk aversion related to the banking crisis and economic slowdown may continue to provide some offsetting support for the dollar as investors buy it as a safe haven.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=2b1dc6b4-b2c0-43e9-b092-a9554c9bba28

Consumer prices drop record 1 percent in October
WASHINGTON (AP) -- Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount.

The Labor Department said Wednesday that consumer prices fell by 1 percent last month, the biggest one-month decline on records that go back to February 1947. The drop was twice as large as the 0.5 percent decrease that analysts had been expecting and marked the third straight month that prices had either fallen or been unchanged.
http://biz.yahoo.com/ap/081119/economy.html


Goldman Shares Sink to Lowest Price Since 1999 IPO
Nov. 19 (Bloomberg) -- Goldman Sachs Group Inc. closed at its lowest price since the firm first sold shares for $53 apiece to the public in 1999, as the profit outlook darkens for a company that set a record for Wall Street earnings last year.

The stock fell $6.85, or 11 percent, to $55.18 in New York Stock Exchange composite trading, giving the company a market value of $26 billion. The New York-based firm's value reached a high of $105 billion, or $248 per share, on Oct. 31, 2007.
http://www.bloomberg.com/apps/news?pid=20601087&sid=auj5LVDoDGSs&refer=home

And God willing, Goldman shares will go to ZERO.

World Currencies Play 'Meet Me at the Bottom'
From a purely technical standpoint, the Dollar’s rally is already on borrowed time. It is important to understand that the overwhelming majority of the rally has been driven by the ongoing global liquidation and triggering of credit default swaps and other OTC derivatives. This has created a dream scenario for anyone wanting to purchase real assets. Oil has been reduced to $55/barrel, gold to the low $700’s, and silver to single digits. The situation is similar across the full spectrum of tangible assets.

In short, there is no fundamental reason whatsoever for the Dollar to gain value. The current situation is an opportunity to get real. Get real assets and buckle your seatbelts because the currencies of the world are about to play a good old-fashioned game of meet me at the bottom. Lucky for us Gold won’t be participating in the game.
http://seekingalpha.com/article/106226-world-currencies-play-meet-me-at-the-bottom?source=email

For gold, a tussle between two groups of investors
NEW YORK (MarketWatch) -- Retail investors sharply increased their demand for gold bars and coins in the past few months as they struggled to find a safe place for their money amid the financial crisis, research shows.

But institutional investors have kept the upper hand, according to Wednesday's report from the World Gold Council, a gold mining industry association. Heavy selling by institutions has more than offset retail buying and pushed gold prices to their lowest level in more than a year.

Moves by retail investors, including demand for bars and coins, resulted in a net inflow of 232 tons (7.46 million ounces) in the third quarter, compared to 105 tons in the same time frame a year ago.

The figures, compiled independently for the council by GFMS Ltd, a precious metals consultancy, show strong bar and coin buying in Swiss, German and U.S. markets.
Meanwhile, gold holdings in exchange-traded funds rose 150 tons, compared with an increase of 4 tons in the second quarter and 139.5 tons in the third quarter a year ago. The peak in ETF inflows occurred in late September after the collapse of Lehman Brothers.

Including industrial and dental use, physical gold demand in dollar value hit an all-time high of $31.8 billion in the third quarter, the WGC reported. In tonnage terms, it stood at 647.6 tons, the highest since the second quarter of 2007.
http://www.marketwatch.com/news/story/Demand-gold-hits-a-record/story.aspx?guid=%7B215A671B-98AE-4094-A87C-A782BB2B3F49%7D

China PBOC Mulls Raising Gold Reserve By 4,000 Tons
BEIJING (Dow Jones)--China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn't elaborate on the plan.

China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=82afe43d-8d3c-494d-894d-113c196ed750

Transitory Trading Puckering Prices
“Time is nature’s way of keeping everything from happening at once.” – Unknown

Gold and silver prices do not turn around on a dime or, a dollar. First they must correct and sell. Then, price seeks a new base. Sometimes this base travels sideways for many days or weeks. The longer we go sideways after a major correction, the higher and more violent the follow-on rally becomes. Today, we sit in sideways Transition City. Tomorrow we’re on a precious metals rally to the moon. Have patience.
-Roger Wiegand
http://www.kitco.com/ind/Wiegand/nov182008.html

Today, 11/19/2008, I boldly predict that Oil is within 5% of it's low. Oil closed today at 54.88 on stockcharts.com.

A move below 86 on the Dollar Index will set in motion a correction in the Dollar to at least 81.50 and a minimum 15% rally in the price of Gold will result.

A move back above 8150 in the DOW could set this scenario in motion.