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Author Topic: Market Commentary - Feb 08, 2011 - It's Official, Gold is Money  (Read 722 times)
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Capitalist Pig
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Posts: 17830

« on: 2011 Feb 08, 09:40:47 pm »

So I've been a bit busy over the last few days, and lots of things have happened.

Let's look at today's numbers:

US Dollar ETFGold ETFSilverDow 30S&P 500
22.41-0.12%  1331.40+1.11%  30.20+3.42%  12,233.15+0.59%  1,324.57+0.42% 

Here's a brief recap of the macro news over the past few days. Bernanke gave a speech to the press club, which was very unusual to begin with. One of the key points he made was that inflation is too low, despite miscellaneous commodities rising in price. The market responding by shooting up immediately all over the place. Essentially traders were saying, "Are you F'n serious? Inflation is toppling governments!"

Next up was the unemployment report on Friday. It was a good news/bad news sort of thing. The "good news" was that the headline unemployment rate is down to 9%. The bad news is that this is because hundreds of thousands of people have fallen out of the workforce because their unemployment benefits have run out. Everyone seemed to pull out whatever info they wanted to see.

The third major development was the announcement by major firms including JP Morgan and the Intercontinental Exchange are accepting gold as collateral. This is major. I cannot overstate how big a shift this is. It is the formal acknowledgement of the re-monetization of gold. The big boys are saying that gold IS a bona fide store of value. Gold has made a sizable move upward since.

In related news, the short squeeze is in on silver. Silver closed last week in backwardation, meaning that people want their physical metal, and they want it now. As a result, silver has made a dramatic move higher, and has now closed over the psychologically important level of $30 per troy ounce.

And not to be outdone, Egypt is still in the news as that revolution continues. Today the workers on the Suez Canal went on strike. The Suez Canal is a major thoroughfare for many commodities going to Europe and the US. Let's face it, there is very little going the other direction. As long as this lasts, transport costs for things like... oh, I dunno... Middle Eastern oil... will be higher. This is on top of the Brent Oil price breaking $100.

Happy trading!

Neal McSpadden
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