The Dollar is Dead! Government Under Military Control! Details Inside! - Commodity Commentary

A day of hot and cold news, across the board. It was hot- really hot -inFiji - a bit of info, in case you were contemplating escaping there with your stash of Krugerrands, while the USof the future (in some newsletters' views,at least) turns into ascene from 12 Monkeys orsimilar. Its economy collapsing, its government being run by this pleasant fellow,

the tiny South Pacific archipelagonow stands on the brink of the abyss. Not a time to contemplate this: as much as one would like to get away from it all. Here is a case of piracy in the high seas. The boat? The very island(s). Escape from Fiji, more like it. If you could only avoid the heavy-duty foreign-exchange controls Mr.I-can't pronounce-let-alone-spell-his-name-right has now imposed on the Fijians. Now there's a place where a boat and some gold (or maybe some fish?) would come in very handy just about now...

Over in the US& A, it's Jagshemash? as we look at the -still cooling- economy. The answer is: Not so well. The Fed's Beige Book still shows that shrinkage was alive and well across all sectors -even if its pace appeared to slow in some districts being tracked. More importantly, we learned that consumer prices showed their first annual decline since...1955, and industrial production cratered in the biggest recessionary drop since...VEDay(!). So much for the Weimar-style inflationary effects of the Fed actions, thus far. Ah, but we had told you so. There is enough slack in this system to fill the circus pants of five clowns. Inflation cannot and will not be a concern, perhaps for years. Nekkid deflation on the other hand,...

Notwithstanding the poor Beige Book news, the dollar kept glued to the 85 mark on the index, and oil hung around the mid-$49 level for another day. There is still cause for optimism, as we noted this morning. At least among those who watch these things and also among those who publicly talk about them. More rounding bottoms were spotted in the global economic crisis, than at the beach in Cap d'Agde, France, on an average summer day. That such a parade of economic cycle bottoms may/will occasionally be interrupted by less than attractive full frontal nudity displays among some members of the global economic community, goes without saying. It just comes with the territory.

Bottom-spotters include President Obama, who -albeit cautious- sees the US economy back on track quite soon, and China's pulse-takers at Merrill, Cantor Fitzgerald, and Credit Suisse, who see the last quarter as the nadir of the crisis as far as that country is concerned. Oh, and it was reaffirmed today that China (yes, China!) bought more US securities even while certain of its spokesmen were jawboning about the safety of such debt. Let's see now... what was that headline in a newsletter in recent weeks? China to abandon the US dollar and pile into gold. Or similar. Surely, you'll find it. It's in the archives.

With diminishing worries about any imminent collapse of the global system, also comethe rationales for diminished holdings ofgold among investors. Note that 'diminished' is not the same as 'none' before you sharpen your keyboards, those of youover at the various tinfoil-hat clubs. Analysts atGerman-based QCRand NY's RBC Wealth Management Group note that net speculative long positions have 'eased' by a massive 17% as of a week ago. Kudos go to GoldMoney founder James Turk today, for his sage advice to his followers (and there are throngs of them) to consider gold as a savings vehicle, and not an investment.

Hallelujah. We have been arguing for years that if it is your hope/expectation/strategy to make a killing in gold you are in effect expecting a killing of another type: that of all of your other assets. Unless, of course, you and the nine others who expect the same outcome, are already holed up in your bunker,12-gauge at the ready, and MRE's on the stove. And 100% out of paper money. You know, kind of like Fiji today.

As for New York gold, well it once again triedanassault on the $900 citadel this morning. Chipmaker Intel has dropped a cold and wet blanket over markets this morning, and such malaise was seen as contributing to sporadic gold buys among spec funds. Meanwhile, at least a small part of last week's drop in gold can be explained by one single fund that dropped 2 million ounces (not a typo) out of its legacy coffers and went on to 'greener' pastures. And you thought is was Darth Vader again...

Spot bullion was showing a gain of$3.10at $892.40 per ounce at last glance, while silver added 3 cents tostallnear $12.76 an ounce. Platinum turned up and added $14on the day,last seen at $1217 per ounce. Palladium rose $4 to start at $235 per ounce and was still stuck at the same level in the afternoon hours. The US may/will soon see a palladium bullion coin gracing the lineup of St. Gaudens and Eagle -themed offerings that the Mint already has on the shelf. About time, we say. And, sell it will. Palladium offers many an allure.

Actually, the greenback is now at risk of losing some of its gloss in the near-term, at least if the analysts over at Standard Bank have their periscopes lined up correctly. Dollar-beneficial capital inflows have slowed, and may show a flight pattern developing. Not the 'death throes' you are being offered by every Armageddonist pundit out there, but a retracement nonetheless. Oh, and such a leakage also does not guarantee four-digit price tags in gold.

Well, the certainty of global economic death is less certain today. Except in Fiji, that is.

Over in Italy, on the other hand, someone is about to compose an e-mail that will go out to all bullion firms. It will read something like the one this writer just got last night:

For immediate sale we offer, 500 Kg Au bars, delivery to bonded warehouse in Switzerland. Okay, this one might be real, and it is not so because the offer is not for 5000 tonnes (in fact last night's e-mail offered 14,000 (!) tonnes for sale). Why?

Four masked robbers stole gold worth an estimated €10 million ($18.27 million) from a precious metals company in northern Italy. Carabinieri police told The Associated Press (AP) the robbers broke into the Coppo Luigi SRL company, in the small town of Valenza, north of Genoa, overnight and stole gold weighing 500kg. They apparently got in through a window after the company's chief, Pier Giuseppe Ponzano, arrived at work and deactivated the building's alarm system. The robbers hit Mr. Ponzano on the head, bound him to a chair, and locked him in an office while they cleared out the safe, AP reported. The carabinieri told AP they made off with the gold, most of which was not insured.

Surely, the masked gentlemen will accept a heavy discount under the London Fix from any interested buyer. We suggest sending the first batch of such 'fire sale e-mails to Somalia. Or Fiji.