A few observations on the current situation in the dollar and gold:
1/ Major US establishment banking organizations in Europe forecast a Euro
at 1.45 per US dollar.
2/ US Treasury Secretary Snow says that the US Treasury is not concerned
over the decline in the US dollar.
3/ Snow says that currency values are better determined by the market
place, signaling that the absence of the Exchange Stabilization Fund from
the dollar market for five consecutive sessions last week (which is under
Snow's management) is not a single week's aberration but rather the ESF's
obedience to the instructions of its boss.
Forex traders interpret absence of market intervention by the Exchange
Stabilization Fund as the official abandonment of the US strong dollar
policy.
4/ Terrorists in Pakistan, who have made 21 attacks on businesses, announce
that they are targeting US interests. In the last week, three attacks are
clearly al Qaeda and two possibly look like al Qaeda with one major
terrorist event in Israel. One need not be a rocket scientist to see that
the Iraq War was only the "End of the Beginning of the World War Three,"
the War on Terrorism.
5/ Gold is trading on the continent at $360. Gold is coming into the US
market now at $359.50 bid, $360 offered. The gold producer hedgers are
looking at some "Hum Dinger" losses on their hedges. The Gold Cartel of
Common Interest is dead meat waiting to be road kill. The next objective
for gold is $380 as per the maximum break out target from the April 4th
down wedge.
Conclusion:
If the decline in the dollar, which is only one of the major methods of
fighting DEFLATION, is an example of the strategy of the Bush
Administration to avoid losing the presidency in 2004, God help us all when
the Fed turns the FOMC loose with its "Electronic Money Printing Press."
There is hope in Washington that a super weak US dollar will turn the
economy around but that is purely economic whistling in the dark. Europe is
in more trouble than the US with the super low US dollar. Who is going to
buy all our Fords and Chevrolets, the Saudis?
The major impact of the "Snow Super Dumper Dollar" is going to be in the
commodity market, primarily for edible commodities and of course metals. It
is there that necessary commodities for human consumption and the
manufacturing process are being offered at a 30% discount.
If the European Citicorp Forex department is correct in their prediction
for the Euro, the discount might reach 40%. Therefore, any one of those
commodities that might be in a neutral position with regard to supply and
demand is going much higher. Gold bullion is wearing a $380 price tag on it
now. That is before gold puts on its $410 $416 price tag.
Remember all the bearishness on April 3rd? How about all those Elliot
Wavers dragging out their hero again on April 3rd to forecast $200 gold.
How many of you believed that he might be right? Come on be honest. My
emails certainly were not love letters from April 1st through April 9th
2003. One of these messages even spelled "idiot" wrong and that email was
not referring to Mr. Prechter. But who am I to chastise anyone else's
spelling?
I thought I was straining human sensitivities when I suggested to you when
the Euro was well under 1 to the dollar that it would reach 1.20 to 1.23 to
the dollar.
Now the "establishment banks" that laughed at me for such a wild prediction
then are now predicting 1.43 Euro to 1 US dollar.
Looks to me like not only is the Exchange Stabilization Fund ordered out of
the dollar support business but friendly international US banks are talking
the dollar deeper into the dumper.
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