Jim,

Everything is going to hell in a hand-basket. Is there any explanation about the major miners decline and gold?

CIGA Joe.

Dear CIGA Joe,

The following is what has pressured gold and caused short covering in the dollar/euro:

Media has convinced the public that the Fed will go hawk first by decelerating the drop in interest rates. The deceleration has been attributed to the Fed having done the right thing.

Media has convinced the public that the ECB will reduce interest rates now faster than the Fed and thereby boosting the dollar versus the euro.

Although the business statistics are negative, the media has held out the carrot that it takes six months for the Fed's action to materialize in the economy so all will be well in six to nine months.

The idea that the credit crisis is over is the message that firming financials are communicating as media supports that position.

Media has declared gold as DEAD.

90% of the above is raving BS. There is no way the Fed can go hawk without causing, via an equity market yak, the revelation that nothing has changed for the better. There is no mention of the impact lower Federal Tax revenues will have on the US Federal Budget deficit and its negative weight on the dollar. There is no mention of the desire of many central banks to diversify out of the dollar when a short covering rally presents itself.

I feel whatever gold has to do on the downside will be covered by the end of the first week of May. I have written recently on junior gold shares which you can review by clicking here.

Regards,
Jim