Bill Cara: $USD weakens again, Thurs., Aug. 17, 2006, 9:59 AM

« Writing puts as part of money management, Thurs., Aug. 17, 2006, 9:38 AM | Main | This market rocket soon to run out of fuel, Thurs., Aug. 17, 2006, 10:56 AM »

August 17, 2006

$USD weakens again, Thurs., Aug. 17, 2006, 9:59 AM

As has been my opinion all along in recent weeks, the $USD has weakened this week. It did rally a bit after the econ data that was released at 8:30am ET; but should the U.S. Consumer Confidence data show weakness tomorrow, I expect further weakness.

This ought to be good for gold. I continue to believe that gold is being wound like a spring here, and when the jack is out of the box, the gold price will soon re-test the $730 highs of the previous weekly data cycle.

I have interest in the junior miners and developers like Alamos Gold, Crystallex, Guyana Goldfields, U.S. Gold Corp, Aurelian, High River, and a few others.

Yes, I see the $USD weakening.

But so too is gold, which makes no sense to me. That makes me uncomfortable, but as you know, I follow my good sense until I feel comfortable. And then I start to relax.

I interpret the gold selling to be a shake-out before a significant move. Let's see if the spot price can hold at 621.

In a sense, right at major turning points, the market plays like a poker game. One bluff after another.

Well, I'm playing my Dollar Short card, and I will until when it gets to the end of the month and I'm not. (just kidding).

Posted by Posted by Bill Cara on August 17, 2006 09:59:50 AM | Category: Cara Today in the Market

Discourse

An excerpt from one of my favorite technicians.

Market's Next Fear Factor: The Dollar
By Helene Meisler
RealMoney.com Contributor
8/17/2006 9:31 AM EDT

"......But now that the government tells us there is no inflation, we must be having a soft landing! A soft landing is the old Goldilocks story of conditions being just right, right?

Well, I want to share with you what I think the next big fear factor will be. I don't think it will be a hurricane -- too obvious. It probably won't be more tensions in the Middle East -- too obvious as well. It probably won't even be September and earnings-related fears.

I think it's going to be the dollar. Have you looked at a chart of the Dollar Index lately? It shows an index on the verge of breaking down. Looks to me like $84.50-ish will do it.

**Chart omitted**

Should this chart break, it measures to $81, which is where the dollar was in December 2004 when everyone was worried about it. There were so many dollar bears back then that the trade got too crowded and we had a rally. I don't hear too many folks who are too concerned about a weak dollar now.

For the past few weeks at least, the weak dollar has not helped gold. I thought gold wanted to break out across $650 but instead it collapsed to $625. Now it's struggling to hold on to that level. Gold really ought to hold in here, but if it doesn't it's headed to $600."

Posted by: glenn-mp at August 17, 2006 10:53 AM [link]

Regarding one of the few others, Lake Shore Gold i believe was mentioned by you and on Rob TV by Sprott, doing quite nicely today.

Posted by: tgifbipo at August 17, 2006 11:08 AM [link]