A man who has committed a mistake and doesn't correct it is committing another mistake.
Confucius, BC 551-479, Chinese Ethical Teacher, Philosopher
The dollar as expected has mounted a very strong rally, and it just missed its target of closing above 82 on a monthly basis by a few points. It did, however close above 81 on a monthly basis which indicates that it is going to trade higher before a top is in place. As long as it does not close below 78.00 on a weekly basis, the odds of it trading to the 85-86 ranges are rather high. If it manages to close above 82 on a monthly basis, it would move the final targets to the 90-92 ranges. While a lot of noise is being made about the Aid package that the EU members have in place for Greece, the Euro is still not out of the red zone as many members are still facing huge budget shortfalls. Potentially Spain, Portugal or Italy could find themselves in the same place Greece is now in.
Despite the strength in the dollar, the commodity's sector has held up remarkably well and this suggests that the smart money is deploying new funds every time this entire sector pulls back. It also a very ominous warning that inflationary forces are going to unleash with a fury in the years to come. We still believe that individuals all over the world, especially in the developed countries are going to experience a shock in the next 2-3 years. We have spoken of this many times in the past 12 months. The economic pain right now is being masked by the gains in the stock market.
Interest rates are slowly rising and the long term charts are indicating that they have nowhere to go but up. We also believe that the bond market is going to experience a crash as rates soar to eventually match those of the 1980’s. For those who have no positions in bullion, use pull backs to establish a position and use strong pull backs to add to your position.
Under normal circumstances Gold would have mounted a stunning correction given that the dollar has mounted a very strong rally over the past few months. This is not the case this time around and Gold has only mounted a mediocre correction and…
