IMF Gold Sales Don't Change Anything

Boris Sobolev writes the following:

"Many pundits have been calling for gold to correct since October. But the rally in gold has been strong, steady and without any sizable corrections. Much money is still sitting on the sidelines, waiting for a cheaper entry point. It is quite possible that this entry point is coming soon as the G7 has just agreed to allow the International Monetary Fund (IMF) to start selling a portion of its 3,200 tonne gold holdings to cover its running deficits. The details of the sale will not be known until April, but the most mentioned figure for the total tonnes up for sale is 400 or about one eighth of total IMF holdings.

It is difficult to guess gold’s reaction to the news, but it is clear that the metal’s fundamentals remain sound. Paper money is in oversupply, gold is in demand by investors and especially countries looking to diversify away from the US dollar. Undoubtedly, buyers for extra gold offered by the IMF will be easily found. IMF sales don’t change anything."

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The War that Never Thawed

'A new phase in the arms race is unfolding' says Putin

Vladimir Putin has used one of the last major speeches of his presidency to deliver a defiant message to the West, accusing it of unleashing a new arms race that left Moscow no choice but to retaliate in kind. Less than a month before presidential elections that his hand-picked successor is almost certain to win, the speech removed any lingering doubts that Russian foreign policy might become less aggressive after Mr Putin steps down.

"It's clear that a new arms race is unfolding in the world," said Mr Putin, one that Russia did not start. And he vowed that Russia would respond to the threats by developing newer and more modern weapons that were as good as if not better than those possessed by Western countries. "We are being forced into retaliating ... Russia has and always will have the answers to these challenges," he said.

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Casey's Daily Resource Plus - 12/02/2008

Precious Metals

Gold seems to have found a new level around which to gather itself, as it meandered either side of $920 during the New York session on Monday, before settling at $922.55/oz., up $4.35. Overnight, gold has been flat.

Unstoppable platinum had another monster day, propelled to a record close above $1900 barely two weeks after first breaching $1700, as it ended at $1934/oz., up $52. Overnight, platinum has pushed higher.

Silver spiked sharply from mid-morning through until noon, after which it backed off about 15 cents, but still closed at $17.40, up 29 cents. Overnight, silver is trending higher.

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Economics Teaches Us Not To Fret

In a world of scarcity, every choice requires that something else of value must be given up, and the highest-valued alternative given up is the opportunity cost.

That opportunity-cost emphasis focuses on the question of what is actually being given up when a choice is made. Its purpose is to ensure that we don't mislead ourselves with basic errors, because if we misunderstand the relevant costs, our understanding can well be incorrect even if our theory from that point on is correct (following the maxim that logic only means making no more mistakes than you are already committed to).

Equally important, it helps ensure that others can't mislead us with their confused understanding, as so often happens when people try to sell government "solutions" to perceived problems (e.g., ignoring the cost to society of the taxation required to fund some spending program).

FULL ARTICLE

FMM Comment: On the other hand, you SHOULD fret when people vote for warmongers, socialists, fascists, welfarists, big spenders, inflationists, thiefs and liers.

How to Stimulate Yourself - Part 2

The Stimulus' Short-Term Purpose
Christopher Westley

The Wall Street Journal's Mark Gongloff quotes Lehman economist Ethan Harris in this morning's "Ahead of the Tape" column:

In the rush to enact a timely package, politicians may have stopped a 2008 recession, but they have ignored a risky letdown -- after the election. [The U.S. faces ] another brush with recession in 2009" [for this reason].

Gongloff adds that once the "stimulus cocktail wears off,"

...home prices seem likely to keep falling, weighing on consumer balance sheets, confidence and spending. The expansion after the the 2001 recession ... was partly fueled by more than $1 trillion in borrowing against home equity. It is hard to see the economy getting that lift this time.

Even if the stimulus package serves to help the political class survive the November elections, it remains that (as Hazlitt pointed out) the longer and indirect consequences of policies or actions are those that the good economists will focus on. Unfortunately, democratic capitalism produces politicians and the economists who focus purely on short-term results.

Until the rank-and-file realize that it is the expanding nation-state itself, with its monetary inflation and government spending, that has created this mess, and that more of the same can only prolong the inevitable (and make it worse), then the next few years will look like the 1970s all over again. This time, could we at least be spared the disco?

FMM Comment: My recommendations still stands on How to Stimulate Yourself

How to Make Enemies and Influence the Truth

The Propaganda of Lies vs. The Propaganda of Truth

YOU DECIDE

Ron Paul: Presidential Campaign Update 11/02/2008

Going the Distance: Dr. Paul gives another update on the campaign



Here's the article Dr. Paul is referring to: The Mouse that roared: Why Ron Paul won the election

I like the way how Dr.Paul is using YouTube of late to distribute important information regarding "The People's Campaign". ;-)

SCREW YOU MSM !!!

If you are a Ron Paul supporter, spread this message A.S.A.P. !

FX Insights Trade Team Update 11/02/2008

By FX Insights Moderator,

Well, not a whole lot of excitement in the market today, but we do have some issues to cover, starting with some Eurozone fundamentals...

This morning's economic data out of France and Italy's industrial sectors was weak, as we forecasted which certainly kept some downside pressure on the euro today...

We can identify three variables that kept the euro above the 4500 level -- commodities, equities, and the 10-year yield...

Both oil and gold were well supported today, especially oil, which is very euro supportive. The Dow and S&P/500 managed to stay in the green and close in the green, in addition, the 10-year yield cooled off from its recent highs... so, we had all of those factors which kept the EUR/USD above the 4500 level and helped today's signal to pay out, as it always does...

Fundamentally we get ZEW data tomorrow morning, which I firmly believe should disappoint to the downside and keep continued pressure on the euro... my research is not showing a high level of investor confidence in the Eurozone under present market conditions...

In addition to those market correlated variables giving us decent trade direction, it seems some of the old familiar EUR/USD price actions are finally starting to return to the market with more frequency and more reliability...

I'd like to give you a really good example of how we used price action and tracking the EUR/USD 30-minute opening prices to take a short at the top of today's range and rode it down for an easy 70 pips...

At 2:54 a.m. EST this morning we took a EUR/USD short at the price of 1.4570. The best indicator we used to determine to take the short was price action and using the 30-minute EUR/USD price openings... in addition, the time of the day what another key factor in determining to take this trade...

Lets look at the 30-minute price openings that led us to the point of taking this short:

(All times listed are EST)

11:00 p.m. -- 4527
11:30 p.m. -- 4543
12:00 a.m. -- 4538
12:30 a.m. -- 4550
1:00 a.m -- 4556
1:30 a.m. -- 4542
2:00 a.m. -- 4557
2:30 a.m. -- 4548

Now, if you were to briefly glance at that price opening pattern it wouldn't look like much, but allow me to explain how we used it to take the trade...

In addition to using the 30-minute price openings we were watching the real-time price action and observed the EUR/USD struggling to stay above the 4550 level, which was a key level...

Between 11:00 p.m. and 2:30 a.m. it didn't make an exactly perfect string of 7 higher openings, however, it never opened lower than the 11:00 p.m. price of 1.4527 but it couldn't open higher than 1.4557, so that right there was a great indicator it was likely to open lower the next several timeframes...

The other indicator was time of day... the EUR/USD was making those price action patterns and we were getting close to the European opening at the same time it was struggling to move higher, so we basically put all the pieces of the puzzle together, knowing with a fair degree of confidence that the euro would likely come down during the early European session...

Time of day indicated the euro needed to be shorted... price action indicated it needed to be shorted... it's failure to sustain a break of the 4550 level was an indicator... forecasted weak fundamental data was yet another indicator...

So really, it was a no-brainer trade... we decided to close this short at 10:44 a.m. EST at the price of 1.4499 after the euro displayed price action patterns of likely finding a bottom for the day somewhere between 4502 and 4478.

A short time after this short was closed our system triggered a signal, then we bought the euro back and closed our euro longs at 1.4525 this afternoon, again, based on the price action patterns...

Hopefully the example above sheds some more light on using price action and will help you in your quest to use it as a trade indicator...

EUR/USD Trading:

I'm still cautiously biased towards the downside for the euro until the market shows me otherwise... as we mentioned the euro has been unable to sustain a break of the key 4550 level which I believe keeps the doors open to more downside testing...

I think there's a fair probability to see downside testing in tomorrow's trading... the market appears to be setting up that way... we'll certainly be watching closely as we approach the 3:00 a.m. EST timeframe...

This morning we had another great live audio Q and A session in the chat room, so thank you for the questions and the participation.

There's a very important post about our SMS system and some solutions to make sure you receive the buy signal alerts on your email... please click here to read this important message.

That's all for now... see ya in the chat!

-FX Insights