Dear CIGAs,

The CCI is knocking on the door of the 50% retracement level – the reflation effort by the Fed has hot money pouring into that sector to the extent that it has recaptured half of its losses from July 2008, when the fallout from the credit meltdown began in earnest and the Japanese Yen carry trade began its unwinding process.

The Yen carry has now been replaced by the Dollar carry trade which is the cause behind the effect of rising commodity prices. The price rise is speculator driven as fundamentals in many of these markets do not support prices at current levels. Demand for the real product however, which in some cases has not been particularly impressive, is being supplemented by speculative demand which is forcing commercial hedgers to back away from many of these markets.

In a perverse manner, the US monetary authorities have set in motion a process that will gut the middle class, robbing it of purchasing power as the cost of energy and food begins to rise in an environment of stagnant to falling wages. Stagflation is coming back in full force with unsuspecting consumers watching in dismay as their paychecks are eaten up by this vile, insidious process that the parasitical money masters have unleashed upon them.

Click charts to enlarge today’s hourly action in Gold and the CCI Index in PDF format with commentary from Trader Dan Norcini

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