Friday, June 24, 2011
Gold Being Sold
They always get to the strongest at the later innings of a selloff. Gold has gone down hard the past 2 days, of course oil weakness doesn't help. I expect us to bottom either Monday or Tuesday next week. And then we will probably rally on Wednesday right before the austerity vote in Greece. That should create enough of a cushion for a disappointment to not crush the market too far below the year's lows. If they pass the austerity measure as is most likely, watch for a big squeeze higher.
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Watch China here... FT article on Premier Wen Jiabao declaring inflation victory... this plus Greece tighten is over and China A-shares do what they like as mainly about domestic liquidity.... all these people trashing US listed China... this will squeeze the hardest and the shorting interest is days and weeks of turnover in some stocks.
I don't know. With this market, to me Greek austerity passing is just as likely to be a 'Sell the News' event.
I don't think so. This time, the austerity vote is not a gimme, there is definite uncertainty this time. And with this vote, there will be a definite bailout of Greece. Not so with the vote of confidence. This is all really silly because Greece doesn't mean jack sh*t. And the contagion fears are WAY overblown. Spain and Italy are not Greece. Greece is like a third world country using a first world currency.
the underlying theme to this correction in US equities is a weakening economy and soft jobs. this has been conveniently tucked away in the media with greece news front and center with each passing vote a squeeze bid. this is how the coordinated western world order politicos and central banks play the psy op game. on a side note, interesting there is cooperation from the US to england to korea to release 2mm barrels of oil/day into the supply chain. this also bids the dollar somewhat. i am convinced the fed hasn't a clue on the longer term effects of the US dollar. recall the spiking dollar in may 2010 causing the flash crash. they print endlessly for 2 years without a concern and crude quadrupled. all of a sudden they care about high crude. they never understand the ramification of the dollar, never will. dollar may be the asset class of choice from here, and it may keep a ceiling on equities for the remainder of the year
Agree this has nothing to do with Greece as otherwise Gold and Silver wouldn't sell, this isn't sov risk, this is mainly a strong dollar trade, this is good for the EM's where inflation had been killing them as a strong dollar will mark a inflation peak for the near term.... until Ben decides we have deflation risk but this is at least 6 months away unless oil really crashed.
the fed no longer is in the business of having the s&p's go to the moon everyday. as long as the s&p does not crash, the fed no longer cares what it does. they do care about high commodity prices, however.. and they are willing to accept marginal losses in s&p in exchange for lower commodities. is it a coincidence that bin laden death in may was the exact date commodities topped and silver dropped like a b*tch. it was also the a 2 year high & top on the s&p.
the dollar index also made a significant long term bottom there.
The dollar is in a structural decline. We will have pullbacks in that downtrend. The current PIIGS drama is keeping a bid on the dollar for the time being. It is temporary.
The US has a perpetual trade deficit with the rest of the world, the only way to equalize that imbalance is through currency movement. The dollar has to stay weak in order to keep that trade imbalance from getting out of hand. Until the US can go from a trade deficit nation to a trade surplus nation, the dollar will stay in a long term downtrend.
Look at Japan. It has a horrible economy but have consistently had trade surpluses. That is why their currency stays strong in the face of a weak economy.
agree, but participants cannot differentiate a 25-40% temporary move up on the dollar index which can last 6 months - 2 years to a secular dollar bull market. The US equities market has been in a 100 year + secular bull market chock full of 70% corrections.
basically dollar can enter a bull market within a secular bear decline
my fault, when i said the dollar index also made a significant long term bottom there i meant an intermediary bottom. i agree dollar will one day be worthless but we may not be alive by then.
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