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ENOUGH!!!!!!!!!!!!!!!!!!!!
If it wasn't bad enough on Thursday having to read the WSJ article that was screaming gold is the next best thing, I am now starting to read how the Fed rate cuts are good for the dollar as it will eventually lead to a stronger currency. I call shenanigans on this.
The economy, is in horrible shape. housing and the associated subprime/derivative situation is the sword that is going to slice it through the heart. Fed chairmains usually don't cut rates 1.25 points just for shits and giggles. They do it because they see huge problems in the macro economic enviroment. This, is the not the makings of a strong dollar, especially, when for now, the ECB is still talking tough on rates. Now, when the ECB is proven to be a paper tiger also, and they cut rates, then as previously discussed, both the dollar and gold should rise.
The media tried this tact in December, when they also suggested that rate cuts are good for the dollar. At the time, CNBC was the cheerleader for this novel idea; now Bloomberg is suggesting it. Both news outlets completely forget the US government wants a weak dollar in order to lessen the defecit. No matter how many times you hear Paulson rattle on how a strong US dollar in the nations best interests, secretly he is praying for a nice orderly sell off. Orderly, being the key word.
It will never, ever, be proven, but Friday was a jam job by the Exchange Stablization Fund. No way in hell, would the dollar have ever regained its footing on its own, without some outside help. While, the gov't wants to see a weaker dollar, they want it in orderly fashion. It looks bad when the world's lead currency is in freefall. To better understand what happened on Friday, look at it this way. Assume XYZ (the dollar) is a pharmacy company working on cure for cancer. On Friday morning it was announced by the FDA that their cure is no better than a placebo (the bad jobs number). XYZ starts tanking. Now in the real world, XYZ would keep plunging and not stop until some lower level and maybe it might regain a part of its losses from lower levels. But not the dollar, it immediatley plunged and came right back and was already postive by the time the ISM report came out. Disagree with my explanation? You think of something better.
Friday's action in gold and the dollar was already planned out well in advance. I have often screamed that gold is not a natural market and is controlled by the CB's and the bullion banks, as well as Da Boyz at the Comex. Days like Friday prove me right. If you want to see examples of natural markets, look at Platinum, Palladium and wheat. Those are natural markets, they keep making highs as the fundamentals support those highs. Gold can't even get to an inflation adjusted high.
The economy, is in horrible shape. housing and the associated subprime/derivative situation is the sword that is going to slice it through the heart. Fed chairmains usually don't cut rates 1.25 points just for shits and giggles. They do it because they see huge problems in the macro economic enviroment. This, is the not the makings of a strong dollar, especially, when for now, the ECB is still talking tough on rates. Now, when the ECB is proven to be a paper tiger also, and they cut rates, then as previously discussed, both the dollar and gold should rise.
The media tried this tact in December, when they also suggested that rate cuts are good for the dollar. At the time, CNBC was the cheerleader for this novel idea; now Bloomberg is suggesting it. Both news outlets completely forget the US government wants a weak dollar in order to lessen the defecit. No matter how many times you hear Paulson rattle on how a strong US dollar in the nations best interests, secretly he is praying for a nice orderly sell off. Orderly, being the key word.
It will never, ever, be proven, but Friday was a jam job by the Exchange Stablization Fund. No way in hell, would the dollar have ever regained its footing on its own, without some outside help. While, the gov't wants to see a weaker dollar, they want it in orderly fashion. It looks bad when the world's lead currency is in freefall. To better understand what happened on Friday, look at it this way. Assume XYZ (the dollar) is a pharmacy company working on cure for cancer. On Friday morning it was announced by the FDA that their cure is no better than a placebo (the bad jobs number). XYZ starts tanking. Now in the real world, XYZ would keep plunging and not stop until some lower level and maybe it might regain a part of its losses from lower levels. But not the dollar, it immediatley plunged and came right back and was already postive by the time the ISM report came out. Disagree with my explanation? You think of something better.
Friday's action in gold and the dollar was already planned out well in advance. I have often screamed that gold is not a natural market and is controlled by the CB's and the bullion banks, as well as Da Boyz at the Comex. Days like Friday prove me right. If you want to see examples of natural markets, look at Platinum, Palladium and wheat. Those are natural markets, they keep making highs as the fundamentals support those highs. Gold can't even get to an inflation adjusted high.
posted by Neal | 3:08 PM
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