bloodbankbob

Will Gold's Mini Rally Hold?

Gold price has been counterintuitive to treasury demands. It would not surprise me if GS and FED worked together to temporarily boost the dollar when they have a large issuance to unload. The "pennies from heaven" gained (as in "Bonfire of the Vanities"), outweighs the small drops achieved by trading encouraged by the Fed for GS's advantage. I believe it was Bernanke who recognized a simple relationship between manipulating currency by controlling the price of gold. These are short term gymnastics, since the Fed would like nothing more than a controlled increase in inflation in order to lower the debt. In the meantime, until some jobs and the economy can start to improve, GS will continue to make huge gains from the backing and winking of the Fed.

Bullish on All Metals

Inflation is demonstrated by two factors; one is an increase in money supply which lowers the value of currency, and the other is a rise in demand whch causes prices to go up. Oil demand is not falling and now food demand and cost has lead to riots and starvation. Pick one or both. The dollars are partly due to the pegging of oil to the dollar. If oil were pegged to some other currency, it may not rise as much in that currency, but would still rise against the weakening dollar.