USD/Metals Complex : Decoupling Begins

"Commodities as a rule are rallying fairly aggressively, whether it's oil, copper, aluminum or zinc," he said. "Across the board, commodities are gaining a lot of strength and for no particular reason."

The metals have been trading "tick for tick" with the dollar for a couple of months. Yet, prices are strong considering the dollar is not terribly far from its recent highs, he said.

"They (gold and silver) are very much driving themselves, as there is fairly decent fund buying and short covering going on."

[...], sources said, there were no fresh fundamental factors to drive the price action.

"One thing I think I know for sure is this: An investor who ignores the risks faced by Fannie Mae and Freddie Mac under the assumption that a federal bailout is certain should there be a problem is making a mistake."

William Poole
President, Federal Reserve Bank of St. Louis
St. Louis Society of Financial Analysts
St. Louis, Mo.
Jan. 13, 2005

I see inflation as the only way out and I think the FED realizes this very well. So, in that regard, they're going to keep doing the only things they can do....issuing a lot of debt, and disguising inflation as well as they can. Remember, I think it was last year when the chief BLS economist was quoted by John Crudele in the NY Post as saying that the CPI does not accurately reflect increases in the cost of living. So as I have said, I think it's moving from that realm to the "Constant Price Index". In other words, it's going to get worse and I suspect that going forward even large increases in the cost of living will not be captured whatsoever in the CPI. In fact, I'll predict that no matter what really happens in the economy, the CPI will show a 2-3% increase annually. Never more than that. (CH)

The GEM landscape has shifted; various valuation metrics are at/near decade highs. Hence, it is now a relative game, not one of absolute values.
Sentiment and, as a consequence, price action, in Austria and Poland will likely revert to their historic correlation versus Germany.

XETRA DAX file