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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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From: heinz4411/11/2007 11:52:07 PM
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What is going on? In our opinion, the banking problems are old news. What is new is the significant strength of the Japanese yen. The yen has now reached an 18-month high against the US dollar, a level which caused serious yen carry trade unwinding in May 2006.
The yen is actually rising against almost every major currency. Last week’s rise of over 3.3% in the yen is causing another round of unwinding, pressuring the leveraged players to sell their positions to avoid margin calls.
It seems that the major driving force behind the equity markets is not earnings or technical conditions, but the yen’s exchange rate against the dollar and the euro. If the upward move in the yen continues, the equity market is unlikely to stabilize at current levels. If on the other hand, the yen forms a double-top formation , the equity markets will undoubtedly be poised for at least a short term rebound.

Already, we are seeing something exceptional – the strength of precious metals despite the yen’s surge. This is exactly the opposite of what happened in May 2006 and August 2007. This time may indeed be different! Gold is rising in all major currencies and silver has finally joined gold by hitting a new high
It appears that not only precious metals but also gold and silver related equities are starting to be viewed as alternative or safe haven investments
B Sobolev
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