Gold and the dollar: The one sided markets.......

I really don't even bother to check gold before I go to bed anymore. What's the sense? For the last few weeks it has done what it ever it wants when it comes into Europe and lately it has done nothing but get beat up.

I knew gold was in huge trouble when the first thing I heard driving in this morning was how weak economic conditions are in Europe. That told me the ECB was going to cut and of course that meant the euro was going to be weak. Right I was, as the dollar was very strong and gold was getting clobbered for $15.

So, I arrive at work and I see the futures are down about 3 points, the dollar ripping and gold tripping. Beyond pissed off would be an understatement as to how I felt. Now keep in mind, the only gold position I have on is NSU, as I believe that to be a take over candidate, in fact, I came into the day short. No, I was pissed off because we are in the period where all news is dollar bullish and disasterous for gold. So, if Europe is weak,and the ECB is going to cut, doesn't that mean even more money being poured into the system and isn't that gold bullish? Obviously not.

Ok, the futures were down 3, then all of a sudden they started to tank hard as evidently the ISM number was "leaked" early. Before you could say, "manipulation" the futures were down 12 and falling hard. The ISM was released an hour early and it sucked monkey balls to put it midly. The futures were now down 20.

Now in a rational, natural market, a number this weak would cause the dollar to weaken, as the number clearly indicates the economy is in recession and the FED will have to cut even more. (In fact Merrill came out and said the Fed will cut intra-meeting; forget the fact they cut 1.25 points over the last week). So, did the dollar give up all its gains. No, of course not, remember this is not a natural freely traded vehicle. The dollar gave back a tiny fraction of it's gains. (I bet a coworker a dinner that the dollar would go out on its highs. I can't wait to collect.) That lasted for about five minutes and the dollar weakness was reversed and gold sunk to the lows. The S+P futures were now down 20.

Gold pretty much stayed on its lows for the day until about noon where it slowly tried to crawl out of the pits of zool. It actually was doing a pretty good job and the gold stocks were acting pretty well all day in the face of a market down over 200. Around 1pm, it looked like gold was going to rise to the occassion as it was only down $9 and above $900 while the HUI was only down 6. Then the gold market showed its true colors. Around 1:15pm, the floor fell out of gold. The gains that the market had amassed over the last two hours were gone in 12 minutes. At the close gold finished a hair off the lows of the day, down $18 and gold stocks shit the bed with the HUI down 13+.

What are you going to do? The shorts, the CB's and bullion banks are clearly in control of the market now. This is the part of the gold market that truly embarrasses me. Not only do I have to look at the action today and be disgusted by it, I have to listen to every moron on TV tell me how I should be selling gold here as in a slowing economy gold is useless. Whenever I hear these clueless idiots, I want to through a brick through the TV.

Back to the dollar for a second. On Friday, the jobs number was god awful and the dollar tanked. That was the correct action until five minutes later it was flat. A little later, the ISM came out, slightly better than expected and the dollar took off never to look back for the day. Today, on and attrociously bad number the dollar did not react at all. This is not natural for any type of security. You cannot have a security react, in a natural, freely traded market, react the same way to good and bad news. It is an impossibility.

So where to from here? Prolly down to retest $850, thats where it bottomed two weeks ago before it reversed. However all the fundamentals, more than ever point to gold. When can we look for a turn? My guess is when the gold stocks act better. They acted shitty when gold was doing well, so no reason they shouldn't act well (one day) when gold is puking.

I have made another wager with the same coworker, that is the Fed will bring the Fed Funds down to 1%. Let's see the dollar rally on that.

Sorry for any spelling mistakes, but the spell check seems to be on the fritz.