MARKET FORCE ANALYSIS UPDATE FOR KEY COMMODITIES June 7, 2008
By Adrian Douglas
Here is the latest update on the Market Force Analysis for the key commodities.
The last update was on May 5. Due to a heavy travel schedule the usual mid-month update was not made.
GOLD (Figure 1)
At the time of the last update gold was trading at $872. In that update I said
“[The presence of a massive physical seller] would explain why the MFA does not respond radically to the gold takedown because the cartel supplied a large injection of physical gold via the London “fix”. This becomes extremely interesting. Why did the Cartel have to resort to supplying real gold instead of paper gold? Considering how low on physical gold ammunition the Cartel must be, this must have been an action born of desperation. It means that, as reported in Midas, that the supply of gold in the physical market was drying up. Under such circumstances gold could go up vertically in a heart beat and is in line with my predictions of a “quantum leap” in the gold price coming soon”
This appears to be the continuing modus operandum of the Gold Cartel. As can be seen in Figure 1 the MFA has continued to climb while the gold price has fallen from its peak of $1040/oz. This is extremely interesting because it looks as if the futures market is calling the Cartel’s bluff. 
The MFA has exited the top of the major channel and is following a much steeper one for the moment. With the MFA at such elevated levels this is a “high risk” entry point for gold longs BUT while the MFA remains high and climbing the price tendency is in that direction. Trying to second guess a change in trend can be detrimental as the oil traders on the short side found out this week!
Gold closed at $895.5/oz.
RUDE OIL (Figure 3)
In my last update Crude was trading at $120/Bbl. I said “The MFA trend did reverse and headed up for most of the month of April. The general commodity price take-down of last week hardly made a ripple in the MFA as it remained in an unbroken uptrend and today crude came storming back to make a new all time record high of $120/Bbl. I suspect the general sentiment toward the crude oil market is going to change as corrections no longer go below $100. We may not be there quite yet but two digit oil prices may soon become museum pieces”
The sentiment seemed to change last week as the Government got so scared of the run away freight train that they roped the CFTC into their market manipulation schemes by getting them to announce that they were investigating since the last 6 months whether speculators had driven up the price of crude. I can say from my work that the market is driven by fundamentals and dollar weakness. It was a pathetic attempt at getting the longs to run for the hills and it deservedly back-fired in grand style when crude rose $16 in just two trading sessions!
Crude closed at $138/Bbl.
SILVER (Figure 4)
In the last update silver was trading at $16.72. I said “There is a possibility that the MFA will correct all the way to the lower support line which would be achieved by some volatile market action or it could behave like crude and head back to the top of the channel allowing silver to rally strongly. Considering what copper and crude have just done
I suspect the physical market is a huge problem for the cartel in both silver and gold and significant moves higher are the most likely” 
In fact the MFA did turn around and has started heading back to the top of the channel and silver has rallied to $17.37/oz. There is plenty of potential for silver to behave like crude oil and once it starts moving nothing will stop it. The MFA for silver is a “neutral risk” entry point and I would strongly recommend loading up the trucks because a “low risk” entry point may be a long time coming and will likely be tens of dollars higher.
Silver closed at $16.72/oz today.
US DOLLAR (Figure 5)
In my last update the USDX was trading at 73.06. I said “The MFA has made somewhat of a rising trend which has allowed the dollar to make an unconvincing bear market rally. When the MFA turns south again the dollar move will be ugly. The only thing that will be “strong” about the dollar will be its stench!”
The MFA of the dollar is absolutely astonishing. The MFA fell out of its orderly bear market decline trend in March and has managed to track sidewards to upwards ever since. Unless the MFA makes it back into the previous trend the tendency for a COLLAPSE of the dollar is very real. When the market force on the dollar is seen to be sucking the USDX into a black hole it is hardly surprising that the FED and the Cartel have been overtly manipulating the precious metals in their biggest blitzkrieg since the bull market started in 2001.
When one looks at the elevated MFA values of gold and silver one could be tempted to be cautious about entering those markets but when taking account of the USDX it would appear to me the biggest risk is NOT to be in the precious metals. I can not stress enough how close the dollar is to competing with the Peregrine Falcon for the fastest dive known to man! If the MFA turns down from here watch out below!
The USDX closed at 72.34
Summary
The dollar looks like a space shuttle that has lost all its heat shield tiles. It will not survive re-entry toward the earth’s surface.
Bernanke made a speech this week to a conference of International bankers and said:
QUOTE
Over time, the Federal Reserve's commitment to both price stability and maximum sustainable employment and the underlying strengths of the U.S. economy -- including flexible markets and robust innovation and productivity -- will be key factors ensuring that the dollar REMAINS a strong and stable currency."
END
“Remains a strong and stable currency”!! What the hell is he smoking??? 
Perhaps he is looking at the chart of the USDX upside down .... And what exactly are the “underlying strengths of the US economy”? The only thing that is strong about the US economy is its pungent odor. The banks are collapsing. The real estate market has seen the biggest price declines in history, including those during the Great Depression. The US economy has always been touted as having two thirds of it due directly to the US consumer.
The US consumer confidence has dropped to 30 year lows, the housing boom that allowed the average American to treat his house as an ATM machine has imploded. Monty Python couldn’t have written anything more zany and whacky than Bernanke’s latest comments!
In my last update I said “Just like Wal-Mart limiting purchases of rice to four bags, your local broker may well limit you to buying only 4 ozs of gold. It is a good idea to buy as much as you can while you can” That was almost spot on except it is purchases of silver Eagles that have been limited by the US Mint last week. And this was just after the CFTC concluded that there was no manipulation evident in the silver futures market and that the short sellers likely have plenty of silver!!
The same bunch of clowns tried to “manipulate” the price of oil down by taking the “unusual step” of announcing that they had been investigating possible manipulation of the oil market for 6 months. They have tried desperately to blame speculators for the rise in oil prices and the cartel groupies went short only to get roasted when the longs called their bluff.
The commodity sector is looking like it will deliver a lot more surprises to the erstwhile Masters of the Universe.
The MFA of silver but especially gold remain exceptionally high considering the price declines. Unless the MFA reverses then the direction of least resistance for the metal prices is UP and likely dramatically so.
Adrian Douglas
June 7, 2008
info@Marketforceanalysis.com
