The Fed lowering interest rates has not always resulted in a bullish markets...check out market history...many examples of fed pumping money...with no rallies. I remember the Savings and Loan debacle..am still not over the fact that the US dollar was able to rally out of that one. Very similar circumstances to day. However, the stimulus was inflation at that time...to day looks like deflation will be the stimulus to pull up the usd. Are housing prices going up or down? What about the price of copper? Is the amount of credit/liquidity increasing or decreasing?
One day it could be down $20 and the next back up $30. The volatility in gold is just starting up again and many traders will get whacked trying to trade the ole' yeller. It's better to take a position and just sit with it. Tons of losers will try to short and call the top all the way up. Just remember that it is these losers that end up paying the winners at the end of each day...
The bottom line is on inflation adjusted basis its still really really cheap. Crude it starting to get a little pricey.
Ever heard of "pushing on a string"? That's what is at potential here. Gold and oil both sold off on the jobs numbers and the dollar didn't tank. Pound is below $2 and the Loonie has retreated a bit (more to come if recession is reality if it isn't already). Psychology is what's important right now and it looks like it is damaged. You can drop rates as low as you want, but when people aren't spending, it's called DEFLATION. BTW the Euro is such a sham at current levels going forward. Or this time it could be different? I don't know, nobody knows, but China can build all the stadiums and hotels they want for their Olympic bonanza, but when nobody wants or can afford to fly to watch, they're going to have to pack those stands and hotels with poor locals. That's the reality we're facing if the jobs picture prints negative consistently. The only problem we're facing is a Fed behind the curve and a banking system that is currently scouring the earth for more cash for reserves, NOT LENDING. Good Luck!
Bank Credit has expanded at a 16.1% rate over the past 23 weeks and finished 2007 with one-year growth of a record $964bn, or 11.6% (2-yr growth of 23.4%!). Thats not deflation.
Now thats gotta be one of the smartest things I've heard someone say in a longtime bob. Make that * 2
Hmmmm. Could have sworn, there was 6 biilion plus people on this earth, minus 1.3 billion in China and the 260 odd million in the US. By my rough calculations that leaves about 4.44 billion people in the world (a good proportion of which are getting richer as the US gets poorer), who might be possible attendees at the games. Maybe its about time some people realised it ain't ALL about the US any more
Of course that is speculating and perhaps Gold is already advancing strongly in light of this happening (buy rumour, sell news), but let's remember what happened to HS index once Chinese law was changed not so long ago concerning speculations by nationals JReynolds is a tool (sorry mate ), market will teach him to respect the opposition.
Gold recently dropped from $850 to $775...hardly a $20 move. China's economy is dependent on the US market...it is still the largest market in the world. Historically, gold has moved up when interest have also moved up, not down.