Economic collusion? Bailout Ben Bernanke needed some help before September meeting on U.S. interest rates. He needed economic numbers to justify an interest rate cut intended to bailout the banks. U.S. Department of Labor(DOL) apparently was quite willing to aid the FOMC. DOL reported, before FOMC meeting, that U.S. employment fell by 4000 jobs. With this report, the FOMC moved to lower U.S. interest rates. Now, we beam forward to the September report from the DOL. The employment report revised the previous -4000 jobs to a +89000. Huh? DOL reports -4000 before FOMC meeting, FOMC cuts rates, U.S. dollar collapses, and DOL then reports a revision to +89,000 jobs created. Economic collusion or simply ineptness?
Two weeks ago, when we last visited, U.S. dollar was rapidly moving to an over sold condition. More recently, U.S. dollar put in place a short-term bottom, and the oscillator is turning up. That situation should be more negative for $Gold than has been the case. Fund buying, momentum chasers, those expecting another U.S. interest rate cut, and impending Turkish invasion of northern Iraq have been dominating Gold market, preventing a needed correction. $Gold price oscillators, both short-term and intermediate, had been moving toward over sold. Was hoping for buy signals in next week. However, momentum chasers have prevented a correction and an over sold condition. Given weak nature of buying in the past week and topping-like action in GDM, lower price might be expected. Gold investors should wait for an over sold condition rather than chasing a market driven by people that believe GOOG is worth $200 billion.
GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html. Ned will be exploring the Gold Super Cycle at The Wealth Expo in NYC, 19-21 October. For information go to www.wealthexpo.net/.