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Author Topic: Market Commentary - Feb 10, 2010 - Markets Whipsawed by News  (Read 813 times)
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Capitalist Pig
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Posts: 17830

« on: 2011 Feb 10, 09:07:55 pm »

Today was fairly mild in terms of overall numbers, but the action was crazy.

Let's look at today's numbers:

US Dollar ETFGold ETFSilverDow 30S&P 500
22.49 +0.81%  1328.50 -0.17%‎  30.03 -0.13%  12,229.29 -0.09%  1,321.87 +0.07%  

The market started off the day digsting the better than expected unemployment numbers. Only 390,000 or so new people filed for unemployment last week, so that was less than the expected 410,000 people. The dollar rose strongly, everything else was down, gold was down almost exactly the same amount that the dollar was up. So far, so good.

Then around 12:45 eastern time we got the news that Mubarak is not going to go quietly, and that he will stay in power as long as he can. Well, the Egyptians started marching towards one of his palaces, and the markets started bouncing off their lows. The most interesting part was that the dollar dropped slightly while gold and silver came back to even!

So in the morning gold and silver were acting as monetary commodities inversely tied to the dollar. In the afternoon they were responding in very different ways than the dollar. It would be one thing if they behaved one way all the time, but this change throughout the day is quite vexing.

Warning, speculation ahead.

My interpretation of this is that gold and silver are acting as quality money. When everything is fine, they trade off other currencies just like any other money. When the SHTF though, they are the preferred currency by traders. The flight to quality or flight to safety used to mean the us dollar. Now it's looking like the international markets are passing the torch back to precious metals. If this continues to play out, look for buying to occur on adverse global news.

Happy trading!

Neal McSpadden
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