Are We Destined For A Gold Standard, Steve Forbes Thinks So
The market ripped higher yesterday. Volume was average during the ascent which was led again by commodities and technology. The gain from the technology sector was especially good to see yesterday. While technology stocks have not lagged the market, they generally have not outperformed either. Any major bull rally will have tech stocks in leadership roles; so the emergence of the sector this week portends higher highs for the future.
In addition to the climb from technology stocks, commodities have also recovered this week. Most metals fell sharply last week and many other commodities followed their decline but to a lesser extent. The commodity group has stabilized this week and holds impressive gains. Oil is back above $100 and gold remains above $1500. Psychologically, both of those levels are important for each commodity and those prices are ones that need to be held this week.
The dollar is knocking on $75 resistance, but has yet to take that price back. A move past that level does not assure further gains, but it goes a long way for building the case against a major decline during the remainder of 2011.
While I have been a proponent of the dollar in the past (less so very recently) Steve Forbes does not believe the dollar can survive the current political state. The billionaire even thinks that the U.S. will go back to a gold standard.
From Human Events: "A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills. By restoring the gold standard, the United States would shift away from “less responsible policies” and toward a stronger dollar and a stronger America. If the dollar was as good as gold, other countries would want to buy it.”
I nflation data reported today was hot in Germany as consumer prices rose 2.7% in April. Additionally, England cut its growth forecast citing pressure on homeowners as well as a decrease in government spending. Unlike the EU, England hinted that rate cuts were unlikely and hikes were probable. The news today should pare back yesterday’s gain in the euro and rally England’s currency.
As many of you who watch the weekend video are already aware, I am short the yen, once again. The currency is under incredible pressure to weaken, and at some point the powers that be will drop it like a lead balloon. The G7 has already intervened this year against sharp increases. Today, Toyota (NYSE: TM) reported earnings, which had profits down 77%.
The auto manufacturing giant was impacted by the Japanese tsunami, but management is furious with the continued ascent of the yen. In a prepared release, management from TM urged Japan’s leaders to weaken the yen immediately.
The yen is in a major long term bull trend - I can’t ignore that. But, there are cracks in the ice. At some point, the yen will break down, but that could still be a year away, for now I will continue to trade near term support and resistance levels, but mostly taking bearish positions only and closing those near support - then shorting again at a higher price.
Watch List
The TradeMaster Daily Stock Alerts watch list is bullish again - and this time it's on technology and China. To receive daily alerts each day before the market opens and for a full list of our trades and video of our current stock watch list CLICK.
