Precious Metals are not for the faint of heart. Nor is currency trading. At the moment, the world sees the US Dollar backed into a corner and the scrappy little bugger is starting to claw back from the 83 level. Of course, the Ali head fakes and shuffle might keep a few heavyweight bruisers off it for a few rounds but head fakes don't last forever especially in this global fight where the rounds are endless - never mind the 2 minute breathers between rounds. Some are expecting the Dollar to get decked soon while other more savvy bettors are likely to see a scrappy old pro with a few tricks up his haggard sleeve. Or as the Germans say "Totgesagte leben länger" , or roughly translated into Mark Twain-ese, "Stories of my death have been highly exaggerated". The Dollar can still land a few painful blows I suspect - it's not over yet.

As of this writing, the USD is certainly making a scrappy comeback of sorts. Still 4 hours left in the trading day, but Europe is closed, so I'll have to wing it for today as to how the day ends. But lets look at some current stats for each corner.

In the gold corner we've got a few pluses: the array of geopolitical tensions still on the cards, the Bush-Neocon administration which most of the world is against and is very suspect of (that's just the way it is) especially regarding pre-emptive hawkish behaviour, I've now read that a number of mining companies have and continue to unwind their hedge (forward sales) books thus supporting advancing gold prices and exploration activity, and finally, a number of products such as ETFs and Gold Funds which allow for diversified and easier investment for the average investor wanting to take part in any metals rally. Notice that at this RSI level, each time it has fallen - I'm so sick at repeating this. Of course it doesn't mean it will happen this time, because each time must be taken in its own context - but odds are a gold correction might be overdue.

In the green corner, the US dollar has taken a rather steep dive within the last 10 days (post election) or so and certainly seems to be in the oversold region of the chart. See below. RSI is far oversold and it looks like the MACD is starting to roll over into positive territory, but not quite there yet. The G-20 Finance conference is upcoming and may very well give finance ministers a chance to deny any intervention talk and of course, then do exactly that - intervene. When will the sheeple ever learn ? And of course, if gold "movers" smell an intervention, better to take the gains off the table and pocket the winnings before a solid Dollar reversal.

So, although it surely seems a "Battle Royal" like the much promoted Ali-Fraser "Thrilla in Manilla", my gut is telling me a correction is under way. This may seem to go against the prevailing gold cheerleading faction, but that's how I read it short term. Long-term the US Dollar simply needs to go lower due to long overdue imbalances and that will likely happen - but things never go straight down - and if they do, then surely they need a small reprieve at some point, don't they ?

Randolph Buss

editor@dinl.net

www.dinl.net

timestamp : 19:33 CET / Berlin, Germany

The Der Invest Informant www.dinl.net is a free newsletter. It deals with international issues of The Markets o Economic Outlook o Finance o TA & Charts o Politics o Life, Culture & Technology o Geopolitics o Security o Freedom.

Further dissemination and publication of this document is legal but must contain the full title, date, editor's name and full email address. Otherwise please contact the editor for express written consent.