Today's magic, golden number: $1199.80 was brought to you courtesy of Dubai, Japan, and China. In short order, it was first learned by markets overnight that Dubai reckons that half of its debts are 'stable' - making last week's mini meltdown look like a possible mirage. One that sure made for a good trade for some, but one that we think will still make a return engagement before too long. Then, news that China's manufacturing activity grew at the healthiest pace in five years added fuel to the risk appetite bonfire as Tuesday trading got underway.

Finally, it was revealed that Japan was embarking on a fresh quantitative easing sortie to help itself climb out of the economic hole that seems have no bottom. This, at a time when other central banks in Australasia have begun to implement exit policies - see Oz, where the central bank hiked rated for a third consecutive month. The above, all conspired to dent the US dollar and rev up risk appetite to at least the levels it was gauged at, one week ago. To put it quite bluntly, we need look no further than the words of a credit analyst at SocGen in Paris: We are close to the end of a remarkable year for risky assets, and this is probably the last chance for fast money to make a quick turn. If that is how a credit analyst feels, imagine how a speculative hedgie saw today's opportunity to use some carry-trade dollars with which to make a fast buck or more...

Yes, it was all in the (same) cold, hard numbers on this first cold December morning. Risk appetite was manifest in a gain in precious (gold almost touched the $1,200 mark) and base metals (copper traded near a 14-month pinnacle), emerging market stocks (the MSCI World Index gained 1%), oil (back up above $78 per barrel), and even battered Japan's Nikkei (rising 226 points after the accommodative stance of the country's central bank was announced).

Normally reserved-in-tone Markewatch described the latest action in gold by pointing out that: while gold is traditionally seen as a safe-haven investment, it has lately been trading as a risk asset, meaning that it has tended to gain when stocks and other commodities are trading higher. Risk assets trade not on fundamentals, but on fundamental greed. Risk assets trade with wild swings and are impacted by the slightest news. Risk assets offer a window of opportunity that is time-sensitive and a degree of danger whence they get their name. As the SocGen analyst quoted above implied, after last year's asset meltdown, there are any number of funds wanting to make it all back before the carry-trade clock runs out on them. You are witnessing them in action.

New York bullion trading opened the first session of December with a $13 gain in gold, which was quoted at $1191.90 basis spot bid, against the US dollar trading at 1.507 vis a vis the euro and at 54.53 on the trade-weighted index. Silver addded 22 cents to rise to $18.69 (still not managing to make ultra-bull predictions for corresponding records to those in gold come true) and platinum gained $11 to $1464.00 per ounce. In any case, the r-e-c-o-d keys are now well-worn on the keyboards at most financial media outlets, and G. Gordon Liddy's image is permanently screen-burned on most consumer televisions.

Palladium climbed a hefty (for it) $13 per ounce, to reach $377 per ounce, and rhodium was seen $10 lower per ounce, quoted at $2640.00 at last check. Take a poll on what's next, and talk immediately centers on the next $100 higher target. It should be an easy achievement, we are told. However, just as quickly, in the same breath, a conditional link is made with the dollar. In other words, the most optimistic of gold bulls (and it's the only species currently roaming this market prairie) recognizes that when the dollar turns, it will be a notable game-changer.

What is the current sentiment temperature reading in the dollar camp? Well, Jake Bernstein, proprietor of Trade-Futures.com and a 40-year veteran of futures trading, reports that his Daily Sentiment Index (DSI) is at an extreme low of 14% bulls, as of Nov. 20. That means an overwhelming majority traders polled think the dollar is going lower. And typically, that precedes a low in the market. -Marketwatch.

In the interim, consider the same gauge in, say gold. Not only are the numbers aligned in perfect unison, but they are all in one corner. And then, we have the overlay of uber-bullish chatter coming from all corners. Stories, fables, fairytales and plotlines that would make Isaac Asimov green with envy (were he alive) are saturating the background environment, bewildering existing as well as would-be investors. Consider the one about thousands of tonnes (eight or more) of gold bars that are really lightbulb filament material. Who would want to consider even remotely touching a gold market which is nothing but an alleged movie set? Not anyone we know.

For a thorough debunking of such schoolboy fantasies, all you need to really do is to read the following http://www.321gold.com/editorials/moriarty/moriarty113009.html editorial piece by Bob Moriarty over at 321Gold. As with Ned Schmidt, we often do not find ourselves on the same page when it comes to certain issues in the market, or about the potential outcome of other issues, as regards price, etc. People will be right, people will be wrong, but at least they undescore the word 'opinion' in their disclaimers. However, when it comes to a large mass of susceptible readers being potenially subjected to unsubstantiated pulp fiction writing, and then being offered the same as factual reporting, well, someone has to ring some alarm bells. Bob just did. Prove him wrong. Should be easy, if the facts are facts.

We close today with a rearview mirror piece on the emerging (and already being labeled as 'has been') crisis in Dubai, by the NY Times' Andrew Sorkin. That which Mr. Sorkin describes, reveals that not only is greed blind and borderless, but that at the end of the day, plus ca change... This is why Dubai is not only son-of-subprime, but potentially a story which will stick aournd, and could involve other 'national' players whose names one dares not fathom today.

The investments were supposed to be blessed, and the bankers were desperately looking for more people to bless them. It was about two years ago, and I was in Dubai to cover an investment conference at a hotel along Jumeirah Beach. Hundreds of Western bankers dressed in Savile Row suits were packed into an enormous room to bone up on the intricacies of the next new thing in financial products: Shariah-compliant investments.

They wanted to sell them to wealthy, oil-rich Muslim investors who needed a way to increase their fortunes but whose options were limited. Any investment vehicle needed to conform to the spirit of the Koran, which forbids any investments that pay interest. No mortgages. No bonds. No clever derivatives. Just tangible assets in the so-called real economy. It was a big honey pot - worth as much as $1 trillion that could yield billions in fees - and the bankers were determined to find a way in.

One discussion was led by a British banker from Barclays who had moved to the region to create an entire Shariah-compliance team. He shared tips about various ways to create structured products that would pass muster with Muslim investors. (To me, the investments looked like bonds, walked like bonds and talked like bonds - but he never called them that.) The bonds that Dubai World is in jeopardy of defaulting on, by the way, are Shariah-compliant sukuk. Just don't call them bonds.

He was struggling to hire enough Shariah scholars, he said, and he needed them to literally bless the investments - apparently there was a shortage of properly trained Islamic scholars who did this kind of work. With the benefit of hindsight - and you didn't need much - there were plenty of other signs back then that Dubai was building a financial mirage in the desert.

With hours to kill before a late-night flight, I ventured over to the Ski Dubai indoor ski run. It's a pretty good bet that a city with an average temperature of 90 degrees and an indoor ski slope is probably living a little too large. On one ride up the chairlift, I sat next to a 7-year-old from London who had just moved to town. With a big grin, he proudly told me that his father was in the real estate business.

For the last couple of years, the running joke on Wall Street was Dubai, Mumbai, Shanghai or goodbye. If you were the C.E.O. of a troubled investment bank desperately looking for cash, you made a pilgrimage to one of those three cities with hat in hand. They were the places most likely to write a quick billion-dollar check; their eagerness should have also been a tip-off. Now you have to wonder about Mumbai and Shanghai, too. Are they next in line to take a fall?

Willem Buiter, a former Bank of England official who was hired as chief economist of Citigroup on Monday, says that Dubai's credit crisis is just the natural progression of the massive build-up of sovereign debt as a result of the financial crisis. He wrote on his blog on The Financial Times's Web site that the contraction of credit makes it all but inevitable that the final chapter of the crisis and its aftermath will involve sovereign default, perhaps dressed up as sovereign debt restructuring or even debt deferral.

With all the money pouring into the region, it would have been hard for any doomsday types to make themselves heard. But there were whispers here and there, pointing out the obvious. David Rubenstein, the co-founder of the private equity giant Carlyle Group who was in Dubai at the conference, remarked to me at the time: You know, they don't have any oil here.

That fact was overlooked by many investors who didn't want to miss out on a quick buck. What about the risk? The view was, and apparently still is, that if Dubai gets in trouble, its oil-rich neighbors in Abu Dhabi will bail everyone out to avoid damage to their collective reputation and, by extension, the region's economy. Just as the United States stood behind its banks, in part, to avoid losing the confidence of foreign investors, Abu Dhabi might have to do the same.

That had to be what Citigroup, with its firsthand expertise with bailouts, must have been thinking when it lent $8 billion to Dubai last year. Oh, and here's an interesting fact: Citigroup made the loan to Dubai on Dec. 14, 2008. Take a look at the calendar - that's after it received tens of billions in TARP funds. Citigroup's chairman, Win Bischoff, said at the time, This is in line with our commitment to the U.A.E. market in general, and reflects our positive outlook on Dubai in particular Good call. And what became of all those Shariah-compliant financial instruments that were the hot topic of that panel I attended? It turns out that many of them that were sold prior to the crisis weren't compliant at all.

The Shariah Committee of the Accounting and Auditing Organization for Islamic Institutions, which is based in Bahrain, ended up changing the rules to make them stricter because of widespread abuse. As Mr. Buiter described them on his blog, these were window-dressing pseudo-Islamic financial instruments that were mathematically equivalent to conventional debt and mortgage contracts. Blessings, alas, can do only so much.

Keep alert for residual Dubai news, fallout from same, potential overseas central bank currency market intervention, and - as usual, the dollar/euro/ dollar/index combo - stretched to within a hair of breaking. Watching this one unfold from a safe distance with dark glasses on could pay off.