Bin Laden, A Macro Event
We try to keep our focus on the Macro Picture. The markets yesterday tried to hang on to micro factors but the macro eventually moved to the forefront. You have to look at when the gold market started its upmove in 2002-2003 as a reflection of the U.S. moves into Iraq and the so-called war on terrorism. Removing Bi Laden is a factor in a changing macro.
QE2 has been kind of the capstone of this whole macro move-funny money on top of macro factors. Precious metals and by definition commodities will gradually become less valuable. Winding down the QE2 will add momentum to the process (maybe rereading Hussman’s comments that we highlighted last week will more firmly imprint this coming event).
The stock market which became a de-factor precious metal market (valued in gold, stocks are same price they were on April 7, 2009, right after the market bottom) will naturally follow gold in a macro sense.
And the lonely dollar will start to gradually catch a bid, our beginning of the year range forecast for the dollar was 71.50 to 94.50, at the moment it is around 73.50.