Sept. 29, 2011
-- While the economic numbers are a little bit of a surprise to investors we must still pay very close attention to the movement of the U.S. Dollar Index. As the U.S. Dollar Index declines the major stock indexes will inflate and trade higher. Generally, good economic news should not help to decline the U.S. Dollar Index; it should increase it, as fewer stimulus should be needed. Lately, unless the U.S. Dollar Index sells off or declines the stock markets cannot seem to trade higher. In fact, when the U.S. Dollar Index strengthens everything deflates and trades lower. Several months ago when oil and commodity prices were soaring higher it was because the U.S. Dollar Index was weak and making new lows. Now we see the opposite occurring when S&P is up the U.S. Dollar Index is down. Considering what is going on in Europe I think that we are heading into a nice stride with Gold and Silver. The Eurozone is trying to frantically pass this emergency fund to help keep Europe well capitalized into the near future with a focus on the major banks. I believe when it passes it will be bearish for the U.S. Dollar Index and Bullish for the Euro which should exert upward pressure inside of the Commodities Sector especially Precious Metals!!