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Gold, Crude Oil and Equities and, indeed, the U.S. Dollar are at Major Inflection Points. Volatility has increased dramatically for the aforementioned “Big Three” as they have continued to trend upward, albeit punctuated with sharp down spikes, as in Equities on November 1, 2007. For the U.S. Dollar the question is when and where it can find a bottom, at least temporarily. But are these current trends durable, even for the next few days? Many of the fundamental and technical indicators for the “Big Three” are bullish. The HUI, for example, has recently broken out above its trend channel. Fundamentals for the Gold and Crude Oil Markets are quite bullish. Gold bullion has recently made new highs in spite of the Tuesday, October 30, 2007 sell-off. Crude Oil has likewise surpassed record highs, and there appear to be no nearby limits to the upsides of Bullion or Crude. Dow, S&P and NASDAQ stochastics have recently been giving intermittent “buy” signals. At worst, Equities Markets indicators can be characterized as “mixed.” Price Inflation in the Monetary Metals, Crude Oil and other key commodities is not, however, positive for the U.S. Dollar which has continued to make record lows. There is, of course, a strong inverse correlation. But on the technical side there are also bearish indicators. Market breadth is not supporting higher equities prices for Gold, Equities and Crude. The chip stocks typically lead the market but the SOX (Semiconductor Index - Philadelphia) has recently made a major downward breakout from a bearish head and shoulders pattern. Similarly, market leader Merrill Lynch has also dropped below recent resistance. As well, consumer sentiment has hit unexpected lows. And the Dow and NASDAQ stochastics have recently also given intermittent sell signals. Even the “gold bugs” 30-day HUI stochastics are giving a “sell” signal. The Interventionals. The Repo Pool is holding steady and, most notably, has not been significantly increasing recently. The currency-adjusted Crude Oil price chart appears to be losing just a bit of upward momentum. And the $40 trillion in Foreign Exchange Derivatives contracts reported by the BIS (December 2006) are available to The Cartel* to make any desired U.S. Dollar and/or other currency adjustments. Thus we are at a watershed point. Will the markets move up or down out of their trend channels? At such points The Interventionals become crucial. Given what we know of the Interventionals, if The Fed-led Cartel* were still entirely in control it would have been surprising to see the recent breakouts for Gold and Crude and recent record lows for the Dollar. Or would it? Record highs for Gold and Crude Oil could be merely another lure to get hard asset investors very much committed to long side only to have them taken down into the abyss by some “managed” event or development, aided by The Cartel’s multi-trillion dollar derivatives colossus [see The Bank for International Settlements (the Central Bankers Bank) website - - www.bis.org>statistics>derivatives>Table19]. Moreover, the August, September and October, 2007 Fed moves have all been followed, at least initially, by positive market responses. And The Fed has made no recent POMO* injections (see Deepcaster’s November 2007 Letter at www.deepcaster.com) as there would likely have been if Gold or Crude were seriously threatening to break out to the upside. Is the foregoing just a set up? Does The Fed-led Cartel have Monetary Metals and Tangible Assets Investors long, long, long, just where they want them? Will a Major Takedown ensue? Or is that merely “conspiracy-talk nonsense?” Deepcaster responds to these questions in its November Letter and Forecast posted at www.deepcaster.com/LatestLetter. Clearly, recent increasing volatility in all these aforementioned Markets foreshadows Major Moves Coming. And, likely very soon.
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