By Jon Nadler
The weekend pledge by President-elect Obama to undertake the largest US public works program since the 50's gave many a market quite an optimistic boost today. Mr. Obama did not place a price tag on the plan, but estimates range as high as $700 billion. Spending for infrastructure on such a scale is no longer some kind of Band-Aid designed to give the economy a temporary jolt.

This...concrete effort could well result in the creation and maintenance of a significant number of jobs and bring the state of deferred maintenance that America finds itself in, to a close. Nowhere does this state of affairs show up in contrast than right here in Shanghai, where after a 430 km/h magnetic levitation train ride from a state of the art airport terminal, one takes a ride on an ultra-modern highway while looking up at a skyline lifted from a science fiction film. Time to catch up.

New York gold prices spent the session within a $20 range, having started out near the $760 area overnight. The highs came in just above $780, before mild profit-taking brought values back to $765 (at last check). Silver spent a portion of the day trading above $10 but was trading at just under that figure as we went to posting. Platinum enjoyed a robust $34 boost to $839 and brought palladium along for the ride (up $11 to $172) on hopes that the Big Three will live to see another day.

The commodities complex was helped by a near- $3 rise in crude oil (in part, based on OPEC production cut expectations) , and -with the return of a modicum of risk appetite- a more than 1 point drop in the dollar index to the 85.80 level. Stock market surely appeared to warm up to the Obama plan, staging a 411 -point rally in Tokyo, and a 220-point one in New York. However promising today's action seems, the recent trend of de-leveraging by speculative funds is not quite finished, despite what some overeager observers feel. Thus, commodities could still be manifesting false breakouts while giving short-term players some isolated opportunities to make a buck.

In the interim, the sideshow goes on and its actors are more vocal than ever. Who cares about technicals when you can make a case for the imminent default of the exchange? Who cares about fundamentals when you can argue that the market is rigged? Some have even gone so far as to unequivocally label the market as being obviously manipulated. This, while they cheerfully disclose being long in...the same market. So, let's get this straight; the market is suppressed and appears hopeless as far as being able to make gains, and that's why we are buying into it. Makes perfect sense.

Speaking of manipulation, here is a debate that took place quite recently and features two well-known figures in the industry. If you did not have a chance to see it live, we bring you the Memorex version via this link:

http://www.newsthattrades.com/?p=22

Yes, you have to make up your own mind on this one. Though it ought not to present too many difficulties.

We remain on alert for the economic statistics that the week still has in store for market participants. We also remain cautious. The automakers' salvation rally could carry over another day. After that, back to the day-to-day.

Regards from the aluminum sausage.

Jon Nadler is Senior Analyst, Kitco Bullion Dealers Montreal

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook