Economic and Investment Trend Analysis

Dollar and Gold Outlook

''Among the hazards of speculation is the happening of the unexpected - I might even say of the unexpectable-
ranks high. There are certain chances that the most prudent man is justified in taking-
chances that he must take if he wished to be more than a mercantile mollusk."
--Reminiscences of a Stock Operator--

Dollar and Gold Outlook
Saturday August 9^th, 2003
5:00 AM

Recently Investor’s have broadly moved back into dollars . While many ‘talking heads’ are calling for a continued dollar rally, the Long Term trend for a lower dollar has not changed. Especially as weak dollar remains one of the tools to boost what now should be termed a structurally problematic manufacturing sector of the US economy .. structural problems that most likely are spreading to the service sector. …

Generally speaking the dollar tends to weaken from Mid August thru the end of September thru early October. Most prominently, the Swiss Franc over the last 28 years has gained from the end of July to the end of September 19 times .The average gain has been 269 pts while the average loss was 102 pts. On a narrower basis, over the last thirteen years there were 10 gains --Sell dollar rallies ---

The Yen has not moved much all this year and traders should expect it to maintain pretty much the same range. Just as the MOF in Japan wants… The danger is , no market participant can indefinitely keep a large liquid market sideways for any extended length of time as a large break out either up or down could undermine the reasons for keeping it sideways... The seasonal tendency is for the Yen to gather some strength over the next two months as the dollar enters a period of normal broadly weaker tendencies

Gold bucked the stronger dollar on Friday gaining $10.10 an ounce for the week to $ 357.90. Still a bit under the pre- war 368 levels it of January and about the same level it was in Feb of 1997. During the dollar weakness in 1985 to 1988 Gold moved from 280 to 500 or about 200 dollars an ounce before topping out …

I am going to make a bold call here and say the chances of that happening again are more likely than not .. Gold stocks have been getting coverage on Wall Street…Re-investment the gold market as a theme may be just underway and could last for sometime as China’s fosters domestic entry in to the world market.

The Euro heavy, trade weighted US Dollar index has an 80% inverse correlation to gold. Australia is the third largest producer of gold in the world. The Aussie has an approximate 75% positive correlation with gold prices as does the Canuck Canada is the fifth largest producer of gold in the world. The Canuck has about a 50% positive correlation with gold prices…One has to wonder if the latter two will regain prominence of years past ..
-What goes around comes around –
I see no reason to change posture at this time. ..Stay tuned for Updates in all markets.

A Ship in Harbor is Safe.. But that is not what ships are built for –

Happy Trading!
Bill wil@futurescom.com

1-561-433-2995

Saturday August 9th, 2003

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