Oil Fires Up Gold

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Buffett, ranked the world's richest man by Forbes magazine, praised the Federal Reserve's rescue of Bear Stearns. He said the move avoided financial market chaos. "I think the Fed did the right thing in stepping in on Bear Stearns," Buffett said. "Just imagine the thousands of counterparties around the world having to undo contracts." The central bank helped broker the buyout by JP Morgan, after financial institutions became reluctant to lend to Wall Street's fifth-largest investment bank."

Gold bulls may take comfort in the fact that Mr. Buffet expects the US dollar to continue to be weak although such weakness would not be the result of the passing of the credit storm, but rather of US policies as regards their impact on the currency. In the interim, the G-10's Trichet sees continued global growth but acknowledges that inflation is a global-scale problem and points squarely at oil, commodities, and food as the culprits. Solutions? None were evidently offered by Mr. Trichet at the BIS meeting in Basel.

The other opinion comes from Jim Cramer, who, in a TV interview with TheStreet.com's Simon Constable, noted that real estate is showing signs of a turn. His take? Foreclosures have not been the main driver of the cratering in real estate. Stubborn sellers who refused to get off their price targets and reluctant buyers who avoided paying ridiculous numbers for houses were the root cause of the impasse, according to Cramer. He now sees new homes coming onto market and being offered for 30% less by new home builders, and he also sees the NY area bedroom communities finally coming into the realm of realistic pricing following the contraction in the financial industry in NYC.

On a final note, Australia's Business Day reports that:

"India may have to suspend trading in more food futures as political pressure grows for action to tame inflation, Finance Minister Palaniappan Chidambaram said. ''If rightly or wrongly people perceive that commodities- futures trading is contributing to a speculation-driven rise in prices, then in a democracy you will have to heed that voice,'' Chidambaram said in an interview with Bloomberg Television in Madrid yesterday."

Look for a continuing push to the upside and mind closing levels at 5:15 pm. A most welcome day of recovery after three weeks of gloom, this. Longevity of this move remains the focus.

Happy Trading.