Good Morning,

The price countdown we alluded to in last week's closing comments accelerated overnight as the precious metals recorded fresh gains across the board. Amid ideal (for them) conditions in the financial arena and on the geopolitical scene, gold, silver and the platinum group metals rose in concert. This, as the US dollar traded at more than $1.52 against the euro and 73.6 on the index, and as crude oil hovered above $101.00 per barrel. Geopolitics are showing a mounting heap of potential trouble. To wit: Venezuela's Chavez massed tanks on the border with Colombia and kicked up the inflammatory rhetoric a few more notches, violence continued in Gaza, and the list could go on, with Pakistan, Armenia, Kenya, and pending UN Iran sanctions as well as Ahmadinejad's rhetoric heard in Iraq.

New York spot gold opened significantly higher and continued to rise, showing a $12.50 gain at last check - at $986.80 bid. Participants were focused on the release of fresh US economic statistics, leading up to Friday's February employment report. First out of the gate, the ISM manufacturing index number, which is expected to have fallen back significantly to about 46.0 in February. Contraction is the name of the game thus far, and very few expect that the US economy has done an about-face just yet, despite the aggressive rate slashing campaign offered up by the Fed since September. The speculative crowd remains firmly fixated on the fulfillment of the four-digit price tag being affixed to a one-ounce chunk of gold. A price that has been talked about for roughly one generation now. A price we may even witness today.

Adding to the volatile market mix, the upcoming OPEC meeting and the unfolding of the situation in Latin America. Also among the background factors, a 615-point loss in the Nikkei overnight (Dow watchers may be donning their hard hats today) and the news that HSBC's N. American profits were almost obviated by a foray into..subprime. Edmond Safra may be turning over in his grave. Silver gained 50 cents to $20.31, platinum rose $16 to $2177.00 and palladium added $13 to $580.00 per ounce. The noble metals received a mixed bag of news this morning, as the platinum and palladium deficits were seen as rising in the current year, but also as news out of S. Africa was that full power to the mines will be restored as soon as the contingency plans being studied by the government take hold. Some kind of announcement on that front is expected by mid-week.

So, what may be next for markets and corresponding asset values? At least in the opinion of one observer (Bill Donoghue) the sure-fire sign that there is more turmoil to come is seen in the FDIC staffing up of late. Make of it what you will. Others, however, are not so sure this is all a one-way street, even if they have not declared themselves as bullish on alternatives just yet. Here is a sampling of the weekend's punditry, courtesy of Marketwatch and Bloomberg:

First, on the dollar/euro (or dollar/pick-your-currency) situation:

Currency experts, however, argue that the dollar will remain under pressure at least through the next month or longer. If next Friday's February employment report is as bad as economists are anticipating, argues Joe Francomano, manager of foreign exchange with Erste Bank in New York, the greenback could possibly hit rock bottom at that point.

You are going to see the momentum of this week carry over as far as dollar weakness goes and culminate next Friday, said Francomano.


Even the most bearish currency experts agree that the pressure on the dollar should abate some time around the middle of 2008, after the Fed winds down its rate-cutting campaign and as the sluggish U.S. economy starts to perk up.


The risk is the euro appreciates too far, choking European sales abroad and pushing up the price of imports to the U.S. The currency has climbed 15 percent against in the past year, rising as high as $1.5239 yesterday.

And finally, Marketwatch's Kevin Kerr on commodities

Now no market continues higher forever, eventually all markets correct. The same holds true for the commodities markets and the record buying we are seeing. The best part about trading commodities is that it is as easy to go short (sell) as it is to go long (buy). I am not advocating shorting any of these commodities just yet, but I will say I have taken out my bear hat and am dusting it off. In the meantime there are still good reasons to buy many of these commodities even at these nosebleed levels.

For the moment, none of the commentators are willing to step in front of the commodity bus and hope that someone will apply the brakes. The week will be dominated by momentum trades and the focus on the economy. The Kitco price boards could make for some ecstatic attendees at the heavily-populates PDAC show in Toronto, even if not yet those whose brokerage account statements are full of mining shares. Patience.

Happy Trading.