If you look at a 5 yr. chart of $USD, you'll see that any close below 72 signals a breakdown in the dollar, so it was a good bet the dollar would be defended there, or somewhere nearby. The effect of that was what you saw today - dollar/gold and dollar/silver pair trades were unwound.

For those of you unfamiliar with the term, it's fairly simple. If I see gold going up and the dollar going down, I short the dollar (sell) and go long (buy) gold in the futures market. The proceeds from the dollar sale pay for the long gold position with the aim of a net zero cost, or close to it. When the trade runs in my favor I make money on both, but when it turns, I have to quickly close both sides. The effect is to add fuel to both sides in the direction of trend.

You can do this with silver, oil, anything that moves against the dollar. You can do it with other commodities as well, but the trade de jour lately has been short dollars, long PM's.

You can argue that it isn't right (and I'd probably agree) but it is what it is, so you have to be aware of these things if you don't want to get blind-sided.

I'm going to repost something that someone on a different board recently said to me because I think it speaks clearly to what most of us here are trying to do:

"Traders are used to being wrong and hearing opposing views. IN fact, confusion is what makes a market. Certainty can not create a market. Traders will hold their own convictions until convinced otherwise by sound counterpoint. They will also turn on a dime if they change their opinion.

Words on paper do not threaten me, instead they help me strengthen my own trading positions if I merely search for the truth or soundness of the debated points. If I feel any emotion by someone else’s points, for me personally, I look inside and ask why that is. One can really learn things about one’s self.

FOFOA and Rick do us all a favor by debating key points. We should respect both and look beyond mere human failings and concentrate on the argument only. Let he who is without sin throw the first stone.

Remember, a wise trader once said, there is no bull side or bear side, but the right side. Keep those counterpoints coming and help us all make money on our opinions and limit our risk!"

cheers!

ebear