Gold

In 1967 the group 5^th Dimension asked “Would you like to ride in my beautiful balloon?” in their song Up, Up and Away.

The way the Kansas City Royal slipped into the World Series with little prior heralding, large speculators have entered the gold market, adding the yellow precious metal to their positions. Strikingly, this includes a wide variety of managed funds across the board.

Before bouncing off its low for the day, back to the high 1230s, we were stopped out of our trade.

It's better to take the profit, especially with the weekend on the horizon and the uncertainty in Europe hovering about for a few days.

Today we witnessed a virtual meltdown in the US equities markets with the Dow Jones industrial average currently trading off about 300 points plus on the day. At the same time we are witnessing the US dollar under pressure.

When the dollar grows this strong, it's almost impossible to resist. As the trading day winds down, the dollar has pulled gold down over $9.00. The dollar is up against the euro by about 0.70%, unusual in some respects because it's clear that the Fed is going to keep rates where they are for some time to come, and certainly the Europeans can't lower interest rates unless they go negative.

The pattern we've seen fundamentally in the current rally is continuing today.

U.S. equities decline and the dollar drops. Although, there is evidence forming that what we are seeing in the stock markets is a dip and not a full-blown "correction." Nevertheless, it has been good for gold bulls, the side of trading we are in on at the moment.

Until Europe acts, as German President Angela Merkel has indicated her country will finally do, the world will be in stasis economically. Europe and the U.S. are inextricably bound together financially, economically, culturally and historically. The resistance to Keynesian market stimulation by Europe is grating on the rest of the world's nerves.

U.S. equities certainly sent their invitation to gold today to act like a high-quality haven investment, but the trading gods went against us late in the day and, after 1232+, we've settled back down for a modest $2.40 rise.

Somewhat counterintuitively, both equities and gold rose sharply today after the FOMC release of its September meeting's minutes.

However, gold should be viewed slightly differently in its rise versus the rise in equities.

First, though, the minutes were dovish beyond predictions.