In the past I have called gold the Federal Reserve Bank’s worst nightmare. Remember ever since 2005 the Federal Reserve no longer provides the public with the M-3 money supply data. Therefore, the public really does not know exactly how much money is really in circulation or is being created by the central bank. The reason that the Federal Reserve gave for not revealing the M-3 money supply to the public was that it no longer fit into it’s budget and was unnecessary. This comes from an organization that prints money to the moon anytime it sees fit to do so. Who knew that they even had a budget? In any case do not worry if you cannot see the M-3 money supply because gold tells you that they are simply running the printing presses on overdrive. Gold has soared higher by over 300 percent since 2001 and remains in a nine year bull market. Gold is the one way of telling the public how much the value of the U.S. Dollar Index has declined. Gold is the one true currency unlike the paper we carry in our pockets. It has been this way since biblical times and will remain this way until the end of times.

Today gold, silver and most every commodity soared higher at the opening bell. However, once the U.S. Dollar Index caught a bid higher the precious metals and most other commodities sold off sharply. The SPDR Gold Shares ETF(NYSE:GLD) is now trading lower by $1.03 to 136.74 after making a new high this morning at $139.15. A similar move took place with the iShares Silver Trust(NYSE:SLV) which soared to a new yearly high at $28.72 and has now reversed and is trading lower by 0.12 cents to $26.88. This is a major reversal day for the precious metals on huge volume. Often this type of action can lead to further declines, however, this type of action has occurred before and gold and silver have traded right back up after a small pullback or correction.

As many readers may or may not know the European Union is still having a lot of problems despite the $ 1 trillion bank bailout in May 2010. Ireland and Portugal are experiencing major problems and this is likely going to occur with the other troubled nations. Therefore, this could be the reason why the U.S. Dollar is catching a bid higher today. When the U.S. Dollar Index inflates everything in the commodity sector deflates. Gold has traded higher when the U.S. Dollar Index has rallied before. It happened in May and June of this year. Therefore, do not presume that the gold trade is over just because of a one day sell off. As long as the Federal Reserve continues to print money gold and silver will trade higher again. As for now gold remains the Federal Reserve Bank’s worst nightmare.

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