Breakout Day for Commodities
By Roger Wiegand

Today was a breakout day for futures and commodities mostly in reaction to new record lows on the U.S. Dollar Index and a record high for crude oil. Credit crunchies at the global investment banks and those lenders heavily involved in real estate have reached crisis proportions. The day started with an overseas essay from a UK reporter that Citigroup was technically insolvent. This bank is holding, by far, the largest percentage of suspect derivative paper, which some analysts claim is over $1 Trillion dollars. The Northern Rock Bank in the U.K., it was reported today, has been supported by government backing to the tune of $30 Billion (U.S.) dollars. The United States Federal Reserve pumped in an emergency $41 Billion into the American system last Thursday with little fanfare. Their next official meeting is on December 11 to decide upon another rate cut. Bond traders have "baked another 25 basis points into their trading cake," but we think the FOMC will provide another 25 basis points cut before the December 11 meeting on an emergency basis. Of course no one is talking about anything but smoothness and control but we think the entire world-wide banking system is on the verge of a major event. This was hinted at today with major reactionary breakouts in precious metals, crude oil and the usual on-going geopolitical events in the Middle East.

http://www.kitco.com/ind/Wiegand/nov062007.html