Flight to the Dollar Keeps Pressure on Gold and Silver

Even in the face of a new report from Citigroup’s (NYSE: C) FX Technicals division which expects to see Gold rise to $3400/oz over the next two years, Wednesday saw another round of margin-related panic selling as the only Bull market (except in Gov’t hot air that is) left in the world shaved another $55.50 to close at $1579.70/oz. Silver followed along at one point shedding almost $3 but was able to hold onto $29 and close at $29.02/oz.   This action was mirrored in the broad commodity complex with the CCI (Continuous Commodity Index) sloughing off 3% to close at 547.77, putting it danger of a complete free-fall.  The CCI tested its 50 day moving average four times in the past 6 weeks and failed every time.

It is safe to say that the flight to dollars is destroying the markets of everything right now as fears of European debt defaults hang over the markets, especially in light of further comments by Fed Chairman Ben Bernanke that they have no plans to bail out Europe.  For once I agree with him in principle.  But we all know that the Fed works for the U.S. money center banks and vice versa, so the idea that they are going to let them twist in the whirlwind of a European insolvency is laughable on the face of it.  Bernanke and the Fed want the ECB to carry the first round of water in this crisis since they have a similar one brewing at home.  U.S. withholding receipts are dropping like a rock signalling that the Keynesian Stimulus-driven ‘recovery’ is nearly over, meaning it’s either QE3 or the massive devaluation of all debt.


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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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