MOPE (management of perspective economics - the new economics) worked overtime to seek new lows in gold but their accomplishment has been minimal at best.

Keep the following in mind:

1. The price of gold is all in the dollar and has been since we met. Itwill continue to be.
2. China is quite upset with the disrespect received and what is perceived by them to be the Western element in the recent disturbances in remote provinces and an NGO believed to be financed by the West.
3. The weak position of the dollar could easily be an Achilles heel.

I suspect we are at a turning point in the affairs of MOPE as the front page of the Economist says by illustration. The meltdown in new economics can only be the inability to maintain confidence as management of perspective economics folds into the effects of the CIT walk away bankruptcy, the hubris of the mega-profit investment banks and the people that are being thrown out of their homes in groves.

We are nearing a breakdown in the US dollar with a target towards and under .7200. That means we are nearing the visible result of a currency event in terms of prices in general commodities.

The CIT failure means without any doubt upwards pressure on short term interest rates. The Fed will cave into Administration pressure, increasing Quantitative Easing to a level best described as infinite.

Gold will take out $1000 on this try with a very temporary retreat before it moves fully through. Gold will move to and through $1224 with a temporary battle. Gold will move toward $1650 but meet serious temporary opposition in the $1400 area.

All of this will occur starting quite soon. Hold on tight to all that is precious metals.

Stay the course.

Respectfully yours,
Jim in Dubai