By John Galt
November 4, 2009
Well, I think China is the one who might want a smoke now.
You see, India, today, enjoyed the ultimate in the equivalent of geopolitical sex. How good is it to be India today? Let’s check out the headline from the Wall Street Journal tonight:
Move Seen as Effort to Diversify Reserves Away From the Dollar
Whoops. That wasn’t supposed to happen. And how China could not have possibly seen this coming and liquidated their positions in the futures as soon as the news leaked out mid-day indicates that they did not expect it, were shocked by it and now have to decide to either commit to the remainder of the IMF gold sale (about 50% is left) or to allow other BRIC nations to fill the void. Just a sec, India is taking another draw on that stick…..exhale, ahhhhhhh…..
So how bad did India screw China today? Let’s check out the charts….
China which is normally an aggressive investor paused thinking as I did that dollar strength would return on a technical basis and that gold would weaken. Well, so did a lot of other folks but apparently the geopolitical world is shifting overnight. In one day with this announcement, India was able to screw over all of its historical enemies, the Arabs and radical Muslims of the OPEC infested Gulf and China. Take another draw on that coal New Delhi, you’ve earned it.
In one day, the Indian central bank and government put a FLOOR under the price of gold all but insuring that the 50 DMA is intact now for the short and intermediate term and the 22.6% rally in gold could well explode into a 35% plus annual move if not more considering the instability with the Iranian situation and the serious instability located in the D.C.-New York/Wall Street corridor. They blew up every dollar long that wanted to make a serious move to squash the commodity rally, revived Dr. Copper to validate its recent moves and now forced a potential panic in the coming days and weeks forcing a dollar liquidation and panic to buy gold as rapidly as possible to lock in the price above the new floor (I project that at $1016 to $1030 as the lower end of the range now for at least five months barring a shocking development). “Cough”, watch out for that second hand smoke. How did that taste ChiComs?
Understand also that the FOMC of the Federal Reserve reveals their wisdom tomorrow but this move indicates that the emerging world voted today:
We don’t want your stinkin’ dollars.
So be patient if you’re Dell barfs, your delivery is late or your computer gives you a blue screen because that coughing sound is your customer service rep in Mumbai exhaling one of those evil over-taxed American cigarettes Americans used to enjoy after sex back in the old days. The nation of India got everything it could ever dream of and more; like a stable base of insurance to assure their nation’s survival as the Fed and our corrupt financial and political system elects to destroy our currency to avoid the hard choices.
Hell boys and girls down there, light up one for me. It’s not politically correct to celebrate being smarter than the rest of the world or enjoy oneself in America any more.