The dollar as it is traded on the exchange as the DXY is rallying hard on what news? First China buys American debt, now China will buy all of Europe's debt. China is also buying as much gold as possible. How much longer will China buy up the world?
China'a growth is slowing. This is evident by the Baltic Dry Index crashing, again. Maybe the BDI does this every once in a while but the rhythm has been like a dancer lately. The swings are wide, like a hula dancer moves her hips. If China cools, and tries to pull back the dollar, what would happen? The Fed will continue to monetize the debt, which creates inflation, but China would tighten policy, which would create deflation. As the two sides rise like opposing tsunamis, the world watches with a cold beverage. The world is not an oyster, but entertainment. The climax of the story is unfolding, but any good writer knows this is the point to change pace. The storybook of history has many twists to its drama.
I think the Central Bankers of the world need a mascot and I think it should be the Anaheim Angels "Rally Monkey". The Rally Monkey has the name and image to inspire hope in whatever recovery has been mustered from the loins of the global cartel. The Monkey dances on the Fed dugout, and cries to 'Sell gold, buy dollars!' Little does the monkey know gold supply is decreasing, and the law of economics states its price must increase with demand. The demand is there. The only thing keeping demand from piling in en masse is oil production is still at an all time high. The oil is the easy credit for the system, as it does the hard work for the people. The cartel hopes to mitigate easy credit with "new" oil in Iraq.
Iraq oil has become the new punch bowl titled 'easy monie'. Iraq thinks it can increase production from the one or two million barrels a day it does now to twelve million as of this year and next. I have no idea how they think they are going to get production in line that quick. And they will need to to mitigate oil production. MK Hubert had oil peaking in 2010. Even if the oil reserves in Iraq are substantial, best case scenario is the bumpy plateau remains in place for another two years.
In the meantime will the global Central Banks continue to buy all paper assets in an attempt to squeeze control from the ponzi? The paper ponzi is in full effect, and the wind's are picking up. The consequences will be seen when credit dries up. Iraq or not means now or later. Later is only years away.
Or in the case of US National Debt it is months away. Geithner pointed out that the US must raise their debt ceiling, otherwise suffer the consequences. The Fed would not mind as the could monetize existing paper and further reduce holdings. But the American people would have the biggest spending freeze ever. America would blackout over night.
Gold and silvers are dragging on the bottom of this range like a hoe on the field. Platinum has stayed flat today. Platinum is confirming the bottom. The buyers have emerged on dollar strength, and the weak hands are selling in the cold winter month. Resource demand is not in question and the world likes gold. It is interesting that gold is loved by so many, but owned by so few. Now that equilibrium has seized the metal from the manipulator, the sky is the limit for its price. Supply/demand would not have it any other way.