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He
Said
If
he says he didn’t think that his comments were on the record he looks
like a schmuck. If he acknowledges that he is ‘worried’ that traders
‘misunderstood’ his latest
testimony he looks like an even bigger schmuck. In short, Fed
Chairman Bernanke, a mere three months into the job, is going to have to
chalk up his first ‘rookie mistake’ as a learning experience.
Fortunately his remarks didn’t roil the financial markets for more
than a few moments, although his credibility has been taken down a peg.
She
Said
Covering
Mr. Bernanke’s comments was CNBC’s Maria Bartiromo (of “Use the
News: How to Separate the Noise from the Investment Nuggets…”
fame ~ available while supplies last for a
penny). Not one to shy away from the spotlight, Bartiromo appeared
on Kudlow & Company last night and claimed “in his [Bernanke’s]
heart, I did him a favor.” Apparently Mr. Bernanke and his staff
work tirelessly to craft well thought out speeches so that after the
speech is delivered, and while slopping down a few drinks with friends,
Bernanke can convey his up to the second monetary policy opinions to the
‘money honey’.
He
Used To Say?
Unlike
the Dixie Chicks, Mr. Roach is ready to play nice - this after seven
years of playing the heavy. Roach was calling the US housing market a
bubble in 2001, more than five years ago he warned “Over the next
several years, the personal saving rate must go up”, and in 2002 he
climbed aboard the unsustainable current-account deficit train (or when
the US CAD was around 4% versus GDP). Given that each of these
threats/imbalances has grown increasingly ominous, I am sure that if you
met him at a party Roach would tell you that his latest
comments were misunderstood.
Does
Anybody Hear?
Following
Russia, Argentina, and Venezuela (to name three), Sweden recently became
the latest central bank to reduce its dollar reserves. Along with
central bank diversification away from USD, there is the growing threat
that ‘petrodollars’ will start trading in euros, that precious
metals will, or already have returned as being the safest of havens, and
that American policy makers are actually for a falling greenback.
As the world embarks upon the painful practice of ridding their
mattresses of US dollars, it is with surprise that Castro’s actions
have received the strongest
response from America to date. Greenspan used to have a plaque
sitting on his desk that read ‘the buck starts here’. Perhaps
Bernanke’s reads ‘the buck ends here’?
Trees
at Risk of Falling
From
COT week to COT week the price of gold is up by 4.75%. This is the
strongest weekly performance since November 22, 2005. Back in November
the gold commercials aggressively padded their short position in an
attempt to hold gold below $500 an ounce. Today $700 an ounce is
beginning to look like a forgone conclusion as the commercials
reluctantly admit their defeat.
Silver jumped 11.67% last week for its strongest weekly (COT) rally
since February 15, 2005. In February 2005 the silver commercials
responded to surging silver by adding to their short position for four
consecutive weeks. Today the silver commercials have covered their
shorts in each of the last three weeks.
That the commercials are net short (futures & options) 16.9 million
ounces of gold and more than 300 million ounces of silver as precious
metals price soar is big news. And like all important nuggets of
news it is left uncovered by a media interested in sound bites and
rumors.
Is the precious metals bull really about to start spitting out the
carcasses of the evil commercial manipulators? Just so there is no
misunderstanding: It all depends on the dollar…
© 2006 Brady Willett
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