The Economy Guy

 Issue: 11/23/07 Friday

The market was closed yesterday – and I hope you all had your fair share of turkey, cranberry sauce and pumpkin pie. I did with my family.  Today was a short day and the market went wild jumping up 183 points.  As I said last Wednesday, you must ignore this week as far as anything technical is concerned, as the trading is too light to call it a REAL market.  Wait until Monday and Tuesday, and we’ll be back in the swing of things.

The big news today was GOLD.  It finally took a deep breath from those profit takers, and jumped up $26 dollar an ounce.  Gold is back, and should be powering forward in the near future if not for the rest of the year.

Oil and gasoline jumped up a little, but hasn’t hit that magic $100/ barrel yet.  Wait for it.  You’ll love it if you’re betting on it, and you’ll hate it when you purchase your next tank of gas.  The currencies just stood still today, so nothing much to report.

For those of you who love technical analysis, the Bond futures are at a critical point today, and could easily fall in price next (meaning the interest rate would climb) as the bond prices fall back into their normal trading range.  I personally ignore the technicals, and just get cerebral about why the rate is so low in the first place.

Here’s what this all means to you:

1. Gold (and possibly silver) and poised to continue their flight to high prices.
2. Oil will break through $100 in the short term, but then retreat again below that.
3. Currencies are still in a great place to appreciate against the dollar.  The Canadian Loonie has lost some of its luster and stood still as other currencies powered ahead over the past 2 weeks (for example, the Yen and Swiss Franc). The Euro continues to move slowly upward.  There should be concern that Europe follows the US economically, and if we catch a cold, you should be able to hear Europe sneeze soon afterwards.
4. Heaven only knows what the stock market could do.  I can support both its increase OR decrease in value; depending on what the US economy does 1Q 2008.  One thing I can be confident in is that the mortgage meltdown will continue to have a negative pressure on the market throughout the remainder of the year.

Here are Friday’s closing details:

DJ30 – 12,980 (Up 182 points)
10 year US Treasury Bond – 4.01%  (Down 0.01%) – it fell again.
Euro $1.4838
Gold closed at $825 per ounce.   (Up $26) – a recent record jump up
Oil Closed at $98.18 (Up $0.89)
Gasoline is $2.47  (Up $0.03)