MARKET FORCE ANALYSIS UPDATE FOR KEY COMMODITIES SEPTEMBER 22, 2008

By Adrian Douglas

The last update was a “Flash” release on September 11. This is a follow up report as things are changing fast and furious.

GOLD (Figure 1)

In the flash release I said “The gold MFA has been dropping fast toward lower support. It is not quite there yet but it is getting into “low risk” entry territory and is probably a good time to start layering in some long trades. Gold is trading at $750”

As I suspected, the MFA didn’t get all the way to the lower support before the price turned around. Gold is still in “low risk” entry territory. Gold closed at $903.5/oz.

FIGURE 1

COPPER (Figure 2)

In the last release I said “The copper MFA is holding well at lower support and is less volatile than the precious metals! It is still a low risk entry. Copper is trading at $3.16/lb”

Copper has remained at the lower support level and is still, therefore, a low risk entry investment. Copper closed at $3.30/lb. Copper will continue to be a strong beneficiary of the upcoming and ongoing monetary debasement.

FIGURE 2

CRUDE OIL (Figure 3)

In the last release I said “Crude is looking the best of all with the MFA almost on lower support. The downside is a fistful of dollar while the upside is beyond $150. Crude is trading at $101.3/Bbl”

The following day the MFA bounced off the lower support. Today the market dynamics that I was seeing revealed themselves in grand style as crude exploded to the upside making its biggest one day gain EVER and closed at $115/Bbl! Despite this move crude is still a low risk entry investment as the MFA remains in the lower third of the channel.

FIGURE 3

SILVER (Figure 4)

In the flash release I said “The MFA in silver has not dropped much and is further from its lower support than either gold or silver. This is perhaps not surprising when one considers that this market represents the most dire disconnect between the physical market and the futures market. Silver is trading at $10.56/oz (which is the price of silver as long as you don’t want any!)”

Silver, just like gold, did not wait for the MFA to reach the lower support. The MFA has made an uptick but it still indicates a low risk entry point. Silver closed today at $13.42/oz.

FIGURE 4

US DOLLAR (Figure 5)

In the last release I said “The MFA for the dollar really says it all. This is the end of the superficial, Cartel induced short squeeze rally. The MFA is at the top of the bear market descending channel. This will be all she wrote for now. The USDX closed at 79.93”

WOW! Look at the way the MFA went into convulsions as the market for the USD became unstable and volatile, but the final move was a plunge and that is exactly what the dollar has done. The USDX finished today at 76.2! The market dynamics are so unfavorable I consider that the USDX has a long way to collapse from here. This bodes well for the commodities, and particularly gold, silver, oil and copper. The dollar IS Humpty Dumpty. The Paulson plan of putting toxic financial garbage in a segregated settling tank and paying $1 Trillion for it will not solve anything!

FIGURE 5

(I have switched back to my old date supplier as the noise issues have been resolved)

Summary

In the last report I said “The market internals have improved drastically. The dollar looks like it is now ready to perform a belly flop! “

That turned out to be exactly what happened. All commodities have got a fire under them and the dollar is in free fall. The FED is pumping money into system at astonishing rates for bailouts and general market Viagra therapy. The Cartel has lost control. Billions of dollars are being dislodged from the bond market and the stock market as those assets go south. These dollars are looking for a home where they can earn a profit. The commodities complex is the ONLY place where that can be achieved. The commodity markets are VERY small compared to the amount of capital looking for a new home. The price rises are going to be stunning. The chronically undervalued mining equities will become “born again” darlings!

Adrian Douglas

September 22, 2008

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