Gold did the deed, closing over the $1,000 mark on Friday as the dollar was sideswiped by Senate Banking Committee Chairman Chris Dodd. Mr. Dodd, a man who pontificates on any and every subject under the sun and never lets real knowledge of a particular subject area stand between him and the nearest microphone decided to try out the N word\u2014nationalization! Traders viciously dumped the dollar on Dodd's "deliberation."
The US$ Index tested its old high yesterday. The heightened bad news concerning the Eurozone banking system had dollar bulls (like us) looking for a breakout in Mr. Greenie.
But, as they say, close but no cigar!
The great thing about investing is that you can always find a good story to fit the facts and often your own opinion. And when you add the gift of hindsight you can really weave a good one. Of course these stories are what lead to over‐ and under‐shoot in asset markets; we all know that personally now. But a pattern that continues to perplex us (among many) is the gold‐dollar relationship at late—they are moving in lock‐step up together.
There was a story in Bloomberg last week regarding the potential for China’s economic recovery to have already begun. I believe the evidence rested simply on the effects of the Chinese’s stimulus plan.
The thing is, even though the US is floundering over its stimulus package, possessing the ammunition and holding the economic vantage point apparently allows China’s government stimulus to rescue their economy within a few short months of its introduction.
It's not that we have any interest to defend our newly appointed Treasury Secretary, as it's too late for that anyway. He was summarily savaged by the financial press after his presentation of a "solution" to the financial crisis. And maybe that was justified given the vagueness of what was delivered after building expectations so high. But the driving of the bus back and forth over Mr. Giethner seemed a bit excessive. And I think it goes to the point that many are looking for some "single bullet" or savior to pull everyone out of this mess. There has to be "something we can do" seems the lament.
