The problem with this is "Greenspam" is still obsessed with the market, so may just pull a bonehead move to attempt to
control this perceived "exhuberance". I say once again, Greenspan has no business in the market, and it should not be one of
his priorities to control it.
looks Like Greenie has more problems to contend with <ggg>
Heres a scenario
Greenspan may put himself in a catch-22 with all his jugling trying to perfect a soft landing.
1. The US dollar drops to 107.40 this morning on weak emplyment numbers suggesting the economy is indeed slowing down.
2. Gold spikes up $9 at the same time that the US dollar plunges. Gold is priced in US$ and a falling US$ makes the price of
Gold cheaper in other foreign currencies.
3. A falling US$ causes import prices to rise in relative terms in the US thereby helping spur inflation.
4. Greenspan does not want to have inflation rise , so one alternative is to support the dollar by raising rates but that would
put the last nail in the coffin for the expansion resulting in a guaranteed recession and a swooning Us$ dollar. So that option is
out
5. Greenspan waits for next economic numbers and hopes that they are strong enough to support the dollar but weak enough
to suggest that the direction is still neutral, because a strong report would boost inflation fears again . Inflation fears would be
met by a rate hike and that would again result in a recession next year followed by a swooning dollar. Another weak report
and the dollar slides . His ONLY hope now is to get a neutral report and do nothing with rates, anything else is Bulish Gold ,
bottom line.
Oh yes, there is one more option for Greenie, that would be to call his friends overseas and ask for more Gold sales, but I
believe the time will come , very soon, when they will reply " Not this time Greenie" , its a lost cause , " We need to raise the
bar a higher for this to work."
Poor old greenspan has boxed himself in with no where to go IMO.
I think they allow gold to rise to $300 over the next little while with a few sharp Spikes to $350 on short covering.
The Stock markets are Bullish with weak numbers , and Bearish with strong Numbers. Greenspan needs the markets in his
perfect equation to stay stable (not crash and not run away). Unfortunately that is a fairy tale , so if he were to choose one or
the other , I bet he lets the markets rise again (just a hunch)
So we may see strong markets accompanied by strong golds.
Vitalsigns |
