Dear Friends,

Yesterday was actually a dark mistake of sorts by the PPT and a misunderstanding of the money supply acting as cover for loans to investment banks for as much as asked for.

The thought that the Fed is going to a POLICY of draining liquidity is brainless due to the credit problem. Even if they talked hawkish, the implosion would be worldwide.

The purpose of yesterday’s spin on the two major investment banks borrowing funds and concerted intervention in the euro/dollar relationship was to further communicate that the Fed open window to investment banks has been a function policy that would go far in settling the credit market. Apparently some people at the Fed were not talking with the others when the dark error hit the marketplace.

Apparently three things happened. The spin on two major investment banks going to the Fed was to show no stigma and therein fell flat on its face. Intervention in the euro, energy and gold accompanied by the mad idea that the Fed had embarked on liquidity draining helped the general commodities to crater and the stock market melted down.

The last thing that the PPT and the Fed wanted was the Dow in the red by about 300 points.

Apparently the fact that the hedge funds were up to their respective ears in grains and gold did not dawn on the PPT, which looks to the health of the equity markets.

The Fed must have had a coronary after going to such efforts to say nobody will fail because they will create the funds required to bail out a move into an assumed policy contraction, nullifying all that bluster inherent in the willingness to lend to all comers in the investment industry.

Gold is going to $!650.

The US dollar is going to .5200

The Fed is not moving to a policy of draining liquidity.

M3 is the key to what is happening with the Fed and looks not to technical occurrences, but to trends.

With present credit market still frozen, there isn’t a snowballs chance in hell of the Fed turning hawk by draining.

Major support is of course the Angel at $887.50 but gold need not get anywhere clear that.
 
The number to pass on the upside for technical repair is $934.50
 
Nothing has changed.
 
Regards,
Jim