We had some serious down action in gold and silver today, along with many grain markets. When tons of funds and latecomers get into markets that have been hot for months, the days come when someone starts selling and more selling seems inevitable for a while.
It is good to consider a few things about last week's action. Over the number of months the Eur/Usd attempted to approach the psychological 1.5000 zone. Finally, it was crossed last week on news: bad economic news from the US and amazing good news from the European community.
Even though they are experiencing similar disadvantages like negative exchange rates influencing foreign buying, very high energy cost, and taxation up the wazoo-- they're supposedly doing just great. I personally don't believe it, but hey- the Europeans wouldn't lie about it, would they?
The Non-Farm payroll info is out Friday. Maybe we'll see a market move that gives us a better indication of which financial group is telling more truth. What is great about large reports like this is the fact that all the major players are forced to play “a” hand. Maybe not at full strength, but there is always some risk to all players, even well capitalized ones.
Until tomorrow.
Joel Rensink
www.infiniteyield.com
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Tuesday, March 4, 2008
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