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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: TheSlowLane who wrote (7975)	3/15/2006 7:59:58 AM
From: loantech	Read Replies (1) of 78419

Paul hows the dollar doing? <It is interesting to note the dollar had little reaction to news of the current account number that greeted us this morning at 8:30 AM your time. For a while it appeared the dollar was actually going to rally based on the retail sales number. Though that came in weaker than expected, the upward revision to last month’s number gave analysts a reason to cheer the number and put a positive spin on it. That was enough to justify currency traders’ attempts at fading the current account number and pushing the dollar north. They tried but failed, however it wouldn’t swoon either. It appeared to be stuck in a narrow trading band for a while. What really knocked the props out from under the dollar this morning was a private report issued by Medley Global Investors which postulated the Fed would most certainly raise rates to 4.75%, but after that the issue was not quite so clear. The market has already factored in a rate hike to 5.0% and most saw the Fed pushing the rate to 5.25%. The Medley report throws a glass of cold water on that thinking and forced a major rethinking. In other words, it took what was a market certainty and pushed it into the questionable category. Since the dollar’s recent rally can be completely attributed to higher interest rates and to the utter dismissal of the most egregious structural problems (Trade, CA and budget deficits), the least whiff of uncertainty in this regard was enough to knock it down sharply today. The moment the market becomes convinced the Fed is through with its rate hike cycle we will see the long awaited sharp dollar fall. Europe will be beginning their rate hike cycle with the Japanese following suit a bit later. The focus in the Forex arena will revert back to the structural problems besetting the US economy. Factors such as reserve shifts from dollar based paper to euro based paper instruments which is currently taking place among some mid East nations will no longer receive just a minor mention in the currency commentary. That will cast more of a negative environment about the dollar. Readers should keep in mind the last time we saw the dollar embark on its down leg to the low 80 region that the move was due to the shift of focus back onto US structural weakness. During that period even what normally would have been considered dollar positive news was completely ignored. The exact same thing happened in reverse on the way up. Players chose to ignore every dollar negative news event or data release and instead focused on the interest rate differential. It will be the same this time only in reverse once again. Dollar bulls are grasping their last straw. When their fun with the interest rate differential comes to an end they will be one miserable lot. They had better hope the Fed comes up with a reason to push rates beyond 4.75% or even 5% and that governors are parading their tongues making all sorts of happy talk. If not this thing is cooked. Today’s technical damage on the dollar chart is quite severe. Swing traders will see the failure to hold a strong close on last Friday’s “strong” jobs number and Monday’s and today’s price action as confirmation of a failed rally attempt and a strong sell signal. It is too early to call a double top in the dollar since support down near 88.90 will need to be tested and fail for that to occur. If that support does not hold this time around and we see a penetration of 3% or more on a closing basis, I would anticipate some very strong stop loss selling to begin. Such an event would more than likely give gold the added thrust to challenge resistance up near $570 again.> jsmineset.com Seems like a 3% drop would at least get gold to $570 I would think more BWDIK?

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