Gold, Silver, Metal Prices: Commentary (10/9/2009)

Jawboning (and More) by Proxy

Good Day,

Gold prices dipped to under the $1050 level overnight, and for the better part of Friday’s NY session, as interest rate hike-oriented comments by Fed Chairman Bernanke lifted the US dollar and dampened enthusiasm in crude oil and other commodities as well (such as copper). On Wednesday, we warned that ’shoe-pounding’ style dollar-oriented statements might come from Mr. Bernanke following the resounding lack of success of the pro-dollar jawboning attributed Mr. Geithner within the last week.

However, we also probably cannot take Mr. Bernanke’s Thursday words to mean that he will unleash the interest rate hike solution to sterilizing the potentially inflationary outcome of the last two years’ worth of liquidity injections today or next week. But, it’s a start, and, the ‘bogeyman’ that such a reversal of course represents for the speculative bubbles that have developed among dollar short-sellers and legion of commodities longs is quite real.

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