[D.P.Roberts]

There are four stages to a selloff like this.

Stage one- quiet accumulation of gold by insiders.

Stage two- institutional interest in gold.

Stage three- public notice and charts go vertical at which time the game is up and

Stage four- All investers flee the currency and the losers haul out the wheelbarrows.

[GodGunsGuts]

Very well put. And for the record, when the FED starts doing what Volcker did back at the beg. of the 1980s, it will be time to exit gold! In the meantime, PMs will continue their upward ascent.

[GodGunsGuts]

Speaking of Volcker:

Stormy end to November may spell disaster for the dollar

By Edmund Conway and Ambrose Evans-Pritchard Last Updated: 7:40pm GMT 28/11/2006

Market report

Markets worldwide are braced for a stormy week of trading, amid fears that the plunging dollar will cause stocks and shares to tumble.

With the dollar expected to fall further, some are even forecasting that the pound could sail through the $2-mark in the days ahead.

After the long Thanksgiving weekend, the US wakes up today to concerns that Europe and Asia may not be able to be engines of global growth if America slows next year.

The Dow Jones has remained robust, recently hitting a high on hopes that the US housing slump would prove short-lived. However recent data has suggested that the plunge in new home sales could have serious knock-on effects for the wider economy. This has prompted fears that US corporate profits could disappoint next year.

Expectations that the Federal Reserve may soon start cutting interest rates, and hints from the Chinese central bank that it might diversify its currency reserves, have prompted funds to sell off dollars, causing the greenback to fall last week to an 18-month low against the euro and the pound. Michael Metz, chief investment strategist at Oppenheimer & Co, said: "We may be entering a period of trouble for stocks and a sharp drop in the dollar may provide more excuses to sell."

advertisementAmerica fears falling house prices will drive shoppers away from the high street. Retail giant Wal-Mart said its like-for-like sales dropped 0.1pc in November. However, a survey yesterday showed sales on so-called "Black Friday", the busiest shopping day of the year, rose by a healthy 6pc.

Many market watchers had been anticipating the dollar's slide for months, none more so than Paul Volcker, former Fed chairman. He said: "It's incredible people have gone on so long holding dollars."

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/11/27/cnecon27.xml

[arthurus]

And all of it goes back to W's Devaluation that he announced in his first months in office. Actually it had begun in, I believe the 2nd or 3rd quarter of 2000 but W was the one to proclaim it. That Devaluation is not a one-time thing but a signal that the FED was embarked on a long inflation. The rise in the price of gold was a direct measurement of that inflation until the late spike to $727 or so. That represented the unease in the market as the finance people thought the inflation had gone on long enough and worried that it wasn't going to stop. So the FED didn't raise rates for a couple of times and the market cooled but the inflation is still happening and China is still sucking it up. And the price of gold is continuing to rise on a higher track than before the spike as if the inflation-money creation rate has actually increased. And forget that nonsense about trying to control inflation by fiddling with the interest rates. The fiddling is done in response to inflation.

[redgolum]

So, which stage are we in?