Import Prices Rise 2.7%, the Most in 17 Years
December 13th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
There’s lots of yammering about gold rising here, but until we break above 845, it’s range bound slop and whipsaws. Congratulations, though, to the Cryptogon falling knife catchers, who have done very well recently.
Let me consult my Magic 8-Ball: All of this nice consolidation around 800… I would expect to see a very sharp sell off, followed by a very sharp rally higher. That sharp sell off is called some variation of, “shaking the apple tree.” The point is to frighten suckers to sell so the smart money can acquire more of the asset at a discount. This is the part of buy low, sell high that you don’t learn about unless you’ve gotten bloody as trader. The translation, for smart money players is, “Induce short term panic to get valuable assets as a discount.”
Now, aren’t you glad that you’re not trading this thing!?
Via: MarketWatch:
Driven by a weaker dollar and much higher prices for petroleum and natural gas, import prices surged 2.7% in November, the largest monthly increase in 17 years, the Labor Department reported Wednesday.
Even excluding fuels, import prices rose 0.5%.
Import prices have now risen 11.4% in the past year, the largest gain in the 25-year history of the import price index. Import prices increased a downwardly revised 1.4% in October.
The report comes one day after the Federal Reserve cut its overnight interest rate target by a quarter percentage point, citing slower economic growth. However, the Fed also said some inflationary pressures remain, which could be an argument against cutting rates further.
The import price index report certainly highlighted the inflationary dangers facing the Fed and the economy. More bad inflationary news is likely over the next two days with the release of the producer price index on Thursday and the consumer price index on Friday.
“Today’s data imply substantial upside inflation risk over the near-term,” wrote Mike Englund, chief economist for Action Economics.
How to buy gold and dodge falling knives.
First: do you think gold will likely more than
double in the next few years? If so, use the following procedure: buy ten percent of your maximum position now and another ten percent when it first hits 880. Then another ten when it first hits 960. Etc.
This helps with several problems. You invest more as it goes up and you gain confidence in the trend. You do not have all your money tied up from the start. If you have to bail out before reaching your goal you do not feel so bad. You are following a mechanical rule, which helps
with discipline. It keeps you in during declines and flat periods. You are not on a time schedule.