Justin Thyme

Another week, another potential lifeline. Two weeks ago, it was the weekend OPEC meeting, this week it's the G8 summit in Japan. There's waffle and double waffle about dollar support being fairly high on the agenda but my guess is that what Peter Schiff said here will most likely be the theme running through the colective minds of the delegates. I think this week is also earnings week for the Wall Street banks so plenty of turmoil to spoil the dollar bull party.

Easy, fellas ! The dollar bulls needed something to go into the Independence Day holiday on a high. Let's look at what they're coming back to next week . . . The ECB's credibility is intact, the Fed's is in tatters. The non-farm payrolls and the jobless claims confirmed the economy is in recession in everything but name. GM is worth $6bn. Trading in Ambac's shares were halted yesterday and heavy bank writedowns are just around the corner. The dollar's still toast and gold's still heading up. This time last week we were under $900 . . .

The rate hike had been priced in for about a week and a half so a classic "buy rumour, sell fact" on eurodollar which weakens gold. Trichet's statement apparently wasn't hawkish enough and the payroll numbers weren't as bad as they could have been - even though they were worse than estimates . My guess on the size of the drop is that there were lot of sell orders just in case Trichet held. They were probably positioned - like mine - around $940 although, I didn't figure the hike and worse -than-estimate numbers would trigger it. What a daft world, eh ?

My experiences with spreadbetting firms have been fairly uneventful. After a fair amount of research, there was a general feeling that if you became too successful, the firm might not fill orders, stops etc as promptly or the trading platform would "malfunction" and self-rectify just after you suffered a loss on your position. Although I was new to the concept, I intended to become proficient at it one day so I opened accounts with 4 providers so that in the event of my eventually making more money than I lost, I wouldn't have to suffer too many instances of provider tomfoolery. After a year or so, I'm now making modest profits thanks to tips and reference from GEI contributors (thanks) amongst other sources. Silver and Gold ticking down this morning - assuming light profit-taking and re-positioning ahead of what could be a big move dependent on what the dollar does after the ECB decision and the US non-farm payroll numbers.

Oops ! Apologies for multiple posts yesterday. Computer flipped out . . .

I'm not expecting gold to simply breeze through $950. Gold's correlation to the dollar is almost move for move at the moment and with the market already pricing the expected ECB rate hike into the greenback's price action, I'd expect the classic "sell the fact" activity to cause gold to chop around for a day or so. If, however, Italy, Spain and Ireland's bleating have softened Trichet's heart (unlikely, I know) and he leaves rates on hold, then I'd hazard a guess that all bets are off . . . but my GOD, I hope he hikes - it'd really cement his reputation as a cold, hard central banker !

I'm not expecting gold to simply breeze through $950. Gold's correlation to the dollar is almost move for move at the moment and with the market already pricing the expected ECB rate hike into the greenback's price action, I'd expect the classic "sell the fact" activity to cause gold to chop around for a day or so. If, however, Italy, Spain and Ireland's bleating have softened Trichet's heart (unlikely, I know) and he leaves rates on hold, then I'd hazard a guess that all bets are off . . . but my GOD, I hope he hikes - it'd really cement his reputation as a cold, hard central banker !

Not sure that BV do silver . . .

It's been a good run for gold recently. That $935 - $950 will be tough is a given but there'll be lots of speculators with buy orders on the other side of 936 so wee'll probably get a boost like we did at 900. Even so, I get the feeling that this rally feels a little fragile . . . Maybe that notion will evaporate once the usual NY smackdown attempt passes . . .

Now that the Federal Reserve's effectively shown its hand, there are more rumblings about intervention int he currency markets to save the buck. However, I just read this from Peter Schiff. He says The extent to which the Fed has hobbled itself is startling. I'd imagine the recent talk of relaxing rules governing private equity investment in banks must be in response to a rather less gullible sovereign wealth fund community who fell for Wall Street's and Paulson's assurances that there'd be no "Credit Crunch 2" just before they forked out for stakes in Citi, Merrill and Morgan among others.

You could do a lot worse than pay attention to Marceau's occasional musings. I don't mind admitting that I took some of his short-term bearishess on board and tried as best I could to avoid the dyed-in-the-wool goldbug mentality and as a result, I've banked some very handsome profits this week both on gold itself and long positions on depressed miners. For example, Randgold Resources had taken an absolute pounding last week - got down to £18 - a long trade was a no-brainer with the Fed hold just around the corner - It closed today at £22.60

Not so sure . . . $920 - 921 holding fairly stiffly but tightening stops just in case. Think we'll see more upside today - commodities seem to be the only play at the moment. A lot of longs got on board at $900 so I think tthere might be a little more meat on the bone here

Very nice day for gold, yes and very encouraging to see the $910 resistance looking like becoming support. Incidentally, has anyone heard from Dr.B ?

They appear nigh on incredulous that GS could even dream of hosing their rivals so they can buy up their stock nice and cheap ready for the next bounce The Fed statement was so wishy-washy that, frankly, they'd've been better off hiking cos looking at the Dow's numbers off 230 points so far this morning, at least the dollar would be firmer against the euro. Brent Light Sweet is showing more expensive than WTI - I've not seen that before . . . has anyone else ?

Surprisingly not. CNBC reckoned there was a wave of autostop buying as soon as gold hit $900. It's looking ok at the mo . . .

Well that was all a bit of an anti-climax. Oil sold off and then rallied to 134. Gold did diddly despite a weak and wet Fed statement and rightly or wrongly, for me, this is cause for a little concern. The way I see it, the markets were expecting a LOT more hawkishness from the statement in the absence of a hike so, realistically, gold should have done more than the equivalent of opening one eye before drifting off back to sleep. Ah well, maybe things'll take off tomorrow eh ?!

Although I'm far from pleased with gold's action today, I inadvertently made a cheeky profit on the surprise drop. In an uncharacteristic display of discipline, I set up a sell order at $895 in preparation for any unexpected Fed rate hike this week. Couldn't believe it when I got back in and gold was trading at $879. As the drop was so fast and as I simply couldn't believe that some soft IFO numbers from Europe could cause a sell off of that magnitude, I closed out the trade expecting a bigger bounce than we got. I sincerely hope this is a forced sale situation otherwise, as Marceau says, a heavier correction could permanently scare new blood outta the market. Oil's looking like the only game in town at the moment . . .

This may be remembered as the first of many . . . http://www.telegraph.co.uk/news/newstopics...discontent.html

You're right there but I think it's just a matter of time before we start seeing RPI-based wage demands from the public sector. I'd be very pissed off if the nurses get less than the RPI but the rozzers can whistle for it as far as I'm concerned . . .

Just "one more" pull back to support. God, I can't wait till this is all over . . .

Looks like the Iranians got their money out in time, eh ? http://edition.cnn.com/2008/WORLD/europe/0...iref=newssearch

Point taken but can anyone guarantee that gold wouldn't sell off if the Fed did raise by 25bp ?

Hmm . . . But just to be on the safe side, I'll think I'll play safe and have a hedgie in place like the last time the Fed kneed us where it hurts with the 75bp cut instead of the 100 everyone was expecting. If, for whatever reason, the Fed were to sling another 25bp on the funds rate, gold would see something of a dip . . .

Courtesy of the Fat Prophets

I'm gutted I wasn't here to add to what sounds like it was a heck of a party on GEI - a good few pages of quickfire posts complete with a rollercoaster of emotion. A genuine pleasure to read I did, however, have a cheeky buy stop order on WTI come in at $134.55 with an 85pip trailing stop which took profits at $137.50. A fantastic Friday night on the lash in Bangkok and a nice profit at the expense of the greenback as well . . . perfect.