The Debacle That Is The Dollar
Wall Street Pit
The Federal Reserve released their FOMC Policy Statement yesterday and for the first time ever, Ben Bernanke held a conference call. To show the lack of faith in him and the Federal Reserve, the Dollar crumbled. Investors ran into gold and silver in record numbers. Today, the Dollar is falling again with the PowerShares DB US Dollar Index Bullish (NYSE:UUP) trading at $20.97, -0.05 (-0.24%). In response to the weaker Dollar, the SPDR S&P 500 ETF (NYSE:SPY) is trading at $135.86, +0.19 (+0.14%). Always remember, the markets go the opposite way of the Dollar. Yesterday, the Dollar fell on the Federal Reserve’s comments and the markets surged. Today the Dollar is slightly weaker and the markets are slightly stronger.
Silver and Gold continue to surge higher. The iShares Silver Trust (NYSE:SLV) is trading at $47.26, +0.26 (+0.55%) and the SPDR Gold Trust (NYSE:GLD) is trading at $149.36, +0.16 (+0.11%).
This morning economic reports were somewhat poor as Jobless Claims were reported at 429,000. A month ago, Jobless Claims were hovering in the 380,000 range and were at multi-year lows. Since then, they have steadily crept higher. In addition to a poor jobless claims number, GDP came in at 1.8%. While somewhat in line with expectations, this number is concerning. The reason for concern focuses on the massive amount of money the Federal Reserve is pushing into the markets through QE2. With the massive stimulus, the growth should be higher. These economic numbers are definitely concerning but have little effect on the markets as long as the U.S. Dollar falls.
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Silver Rally Is No Bubble as Price Will Top Record, Coeur CEO Wheeler Says
Bloomberg
The rally in silver to a 31-year high in New York shows no sign of ending because tight supply and robust demand will send the metal to a record, according to Coeur d’Alene Mines Corp. (CDE), the largest U.S. producer.
“We’re in a legitimate market driven by financial interest in silver and strong industrial demand,” Chief Executive Officer Dennis Wheeler said today at the Bloomberg Link Precious Metals Conference in New York. “Supplies are relatively inelastic.”
Silver surged 168 percent in the past year, outpacing the 31 percent gain in gold. Investment demand for silver jumped 40 percent in 2010 as inflation rose, currencies lost value andEurope’s debt crisis escalated, said researcher GFMS Ltd. Industrial use gained 21 percent last year and may climb to a record this year, London-based GFMS said.
The rally is “very different” from the surge in the late 1970s, when the Hunt brothers tried to corner the market, and in 1980, when prices touched a record $50.35 an ounce, Frank McGhee, the head dealer at Integrated Brokerage Services, said at the conference.
“There is no manipulation going on in this market,” McGhee said. “It does not take a lot to stop the market until this market decides to go. I’d like to categorize silver as a freight train.”
Silver futures for July delivery rose $2.608, or 5.7 percent, to $48.595 at 1:03 p.m. on the Comex in New York. A close at that price would mark the biggest gain for a most- active contract since Nov. 4, 2010. Silver reached $49.845 on April 25.
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Gold Extends Record Run as Dollar Falls
MarketWatch
Gold futures extended their run into record territory Thursday, as the dollar fell further on a jump in weekly jobless claims and data showing the U.S. economy grew at a slower pace in the first quarter.
The dollar had already been hit after Federal Reserve Chairman Ben Bernanke said Wednesday he would hold the central bank’s stimulative stance indefinitely.
Thursday’s reports are likely to reinforce the view that loose monetary policy is still needed to prop up the economy.
A weaker dollar lifts gold’s value as a safe-haven alternative to currencies. It also sent silver futures rallying.
Gold for June delivery GCM11 +0.98% rose $9.50 or 0.6%, to $1,525.40 an ounce on the Comex division of the New York Mercantile Exchange.
The contract on Monday closed at $1,517.10 an ounce, up $13.60, a record settlement for the metal.
“Bernanke basically said, ‘hey, we are going to let the U.S. dollar just get crushed,’” said Michael K. Smith, with T & K Futures and Options Inc. in Florida. Silver was likely to hit a top but Wednesday’s Fed action gave it extra room for more rallying, he added.
May silver SIK11 +4.59% , the most active contract, added $2.24, or 4.8%, to $48.21 an ounce. Silver traded as high as $49.35 an ounce earlier.
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