Gold showing losses after rally fails

In the Lead: “The Price of Friendship”

Ultimately, with all of its flaws and structural issues, the dollar is breaking out because the euro is breaking down and because other currencies offer little more than temporary refuge and investors know this. For additional analysis, you might wish to read the Marketwatch article by Wall Street Sector Selector’s John Nyaradi on the subject of this shift. He titled it “The Dollar Makes an Epic Breakout.”

Over in Athens, the Merkel-Sarkozy-Papandreou trio met today to try to come up with something (anything) that might soothe the on-edge global markets about Greece’s imminent prospects. Germany is seen as holding the key to what might eventually happen, but Monsieur Sarkozy also has his job cut out for him as the markets have been punishing certain of his country’s banks with a big selling stick in recent days. The US Treasury’s Mr. Geithner is heading to Poland this week to attend an ad-hoc meeting of the European finance ministers on the subject of…you-know-whose debt and/or default.

Mr. Geithner told TheStreet.com’s Jim Cramer this morning in a live Q&A session in New York that “we need to do whatever it takes to solve economic problems.” Starting with the US, Mr. G admitted that the US has seen weaker growth than had been hoped for, while it received “incoming” from the year’s events in Europe and Japan.

Ultimately, said Mr. Geithner, we need to “put the economy in front of politics” and do the right thing, whether in the US, or over in the Old World. He defended Mr. Obama’s jobs plan (something the American public appears to be as yet not sold on, if recent polls are correct). He will however, only likely be quoted for his unequivocal remark at the session, for the rest of this news day: “No more Lehmans.” – referring to what Europe must do at this time, and to what the US is committed to do in the event of a similar development on the domestic front.

He also said that Europe is tackling a monumental problem but that he is convinced that Germany’s commitment to resolve the crisis gives him comfort and a good dose of optimism. As noted earlier, Germany does hold the key. Now, if it can just turn it and open the door to daylight…

Finally, on the same topic, we have a bit of clarification on China’s intentions when it comes to lending (literally) support to the beleaguered PIIGS of Europe (Italy in particular). Premier Wen said that while China can offer a friendly, helping hand to certain countries in Europe he also made such assistance conditional on the same countries to “first put their houses in order” as opposed to simply relying on his country to be bailed out.

The price of eventual Chinese financial friendship as quoted by Mr. Wen? “Responsible fiscal and monetary policies and the prevention of the spreading of the crisis.” Pretty fair price, eh? The quid pro quo expressed by Mr. Wen is the same one that other Chinese officials have previously implied: there is a cost to money, our (obvious) vested interests notwithstanding.

Make sure you tune into the CPM Group Platinum Group Metals Seminar live on the Kitco website, commencing today, at 2:00PM New York time. You will likely be happy that you did.

Jon Nadler is a Senior Metals Analyst at Kitco Metals

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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