Russell On Gold Bull The great primary bull market in gold is finally beginning to heat up. In fact, gold is now straining against its boundaries of resistance. This morning gold was selling for as much as 843, or within easy "shooting distance" of its 1980 record high of 850. This may be the time to repeat the words of W.D. Gann. Mr. Gann is considered by many professionals to have been one of the greatest commodity and stock traders (and thinkers) of all time. Here are Gann's words (courtesy of my old New York friend, Ron Rosen). Russell Comment -- If gold can close above its 1980 peak price of 850 -- it will have overcome a resistance level that has held it back for 27 years! Thus, a decisive closing about 850 could bring about at least a doubling of the current dollar price for gold.
Investors Shred Bernanke's `Balanced' Outlook, Bet on Rate Cut Federal Reserve Chairman Ben S. Bernanke failed to convince investors that there's no need for further interest-rate cuts soon. Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter, and warned of ``upside risks'' to inflation. Futures traders focused on his growth comments, increasing the odds of a quarter-point cut in the benchmark rate on Dec. 11 to about 90 percent, from 70 percent a day earlier. The speculation may complicate Fed decision making, raising the risk of a sell-off in stocks and bonds should officials keep the main rate at 4.5 percent. Bernanke and his colleagues may try to reinforce their message of a neutral stance on borrowing costs between now and their next meeting, economists said.
The Dollar Crisis No matter how many warnings have been issued, an economic crisis always takes a country by surprise. The most urgent task is to somehow prevent policymakers from doing evil things to "correct" the crisis. Every form of intervention can only make matters worse. The best policy is to adopt a laissez-faire policy through regulatory cuts, sound money, and eliminating legal restrictions on trade. The liquidation must be allowed to happen on its own to provide a suitable foundation for a future recovery. How can we help this happen? One way is to make sure that the right books are front and center. We might start by reviewing the great event that still inspires today's most fallacious countercyclical policies: the Great Depression.
The American empire is falling with the dollar The US dollar is still officially the world's reserve currency, but it cannot purchase the services of Brazilian super model Gisele Bundchen. Gisele required the $30 million she earned during the first half of this year to be paid in euros.Gisele is not alone in her forecast of the dollar's fate. The First Post (UK) reports that Jim Rogers, a former partner of billionaire George Soros, is selling his home and all possessions in order to convert all his wealth into Chinese yuan.Meanwhile, American economists continue to preach that offshoring is good for the US economy and that Bush's war spending is keeping the economy going. The practitioners of supply and demand have yet to figure out that the dollar's supply is sinking the dollar's price and along with it American power.
Oil's long tail Let the consumer beware: Costs are going up on almost everything the average American family consumes. Blame it on crude oil. The rocketing price of crude oil is not only sharply hiking the costs of fueling the car and heating the home, but is bidding up prices on the raw materials that go into goods from produce to perfume. At the same time, the push to develop ethanol as an alternative fuel through corn and similar products is inflating the cost of feed for cows, pigs and other farm animals - and that also increases the prices consumers pay. "Oil affects everything from top to bottom," said Phil Flynn, energy analyst at Alaron Trading. "Most people wear crude oil every day."
U.S. Oct. import prices up 1.8% on higher oil prices Prices that U.S. residents paid for imported goods rose 1.8% in October, the biggest increase since May 2006, the Labor Department reported Friday. Imported petroleum prices rose 6.9%, but prices of other goods rose a more moderate 0.5%. Excluding all fuels, import prices rose 0.3%. Meanwhile, export prices jumped 0.9% in October, including a 3.9% rise in agricultural prices. Excluding agriculture, export prices rose 0.5% in October. In the past year, import prices are up 9.6%, including a 41.4% increase in petroleum prices. Excluding petroleum, import prices are up 3.2%. Fed officials are watching import prices closely to see if the weaker dollar is fueling U.S. inflation.
Wachovia warns of more bad loans Stocks plunge after the banking giant says that it lost another $1.1 billion in October. Barclays denies a rumor of a $10 billion write-down. Merck will pay nearly $5 billion to settle Vioxx suits. Wachovia sent more jitters through the markets this morning. The bank said that it suffered a $1.1 billion pre-tax loss in October because of the continued problems within the credit markets. The company reported in a filing with the Securities and Exchange Commission that it is setting aside between $500 million and $600 million to cover losses in the fourth quarter. "It's Wachovia's turn. This is something that is going to continue to happen with a lot of banking institutions," Matt Zeman, LaSalle Futures Group trader, said on CNBC this morning.
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