I suppose the precious metals rallied sharply at 8:30am Monday after the banks and broker-dealers received ratings downgrades, leading traders to figure the Fed Head and the Treasury Secretary would come to their rescue with yet another liquidity pump.
Why are bankers forecasting a higher $USD? They know their situation is dire, which will require more central bank help and they know how that story ends.
Although I have opined that precious metals would come under pressure from a brief rally in the US Dollar, I have to admit that I figured on a longer time between when the banks first went to the well for capital and the second time.
Now, Tuesday we have Barclays bank ((NYSE:BCS) -3.5% to $28.87) stating a need to raise capital. Tell me that the Barclays management didn’t know that back on May 7 when the stock was about $37.50. If you do, I won’t believe it.
What the market needs is for the Fed to state that the previous rescue plan was all she wrote. No mas! Let the weakest of these banks go down and the strongest buy whatever’s left. Isn’t that the essence of a free market?
Bring it on. It’s about time.