Fundamentals have been thrown out the window and technical analysis over the past few months have been at best a frustrating black art. With the dollar being hammered left, right and centre gold has raced past the $1,000 mark and is now steaming ahead with very little resistance.

The gold play seems to be re-enforcing the systematic devaluation of the dollar and as the dollar drops equity risk taking rises. This seems to be the stable and reliable trade till the year end. With inflationary pressures under way and China urging the US to increase rates the FED are in a tough spot. Jobless figures have eased but not to the extend that an improvement can be measured or to the extent that job creation is on the cards.

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There has been a huge amount of speculation over the end of the recession and the V shaped recovery that may ensue. The apprehension in the market comes from the uncertainty of the fourth quarter this year and how the Christmas shopping season will pan out. From my vantage point I see what could be the basis of a good recovery but then a set of figures comes out like the US monthly consumer credit report which adds to the doubt in my mind. I can’t balance the equation of rising unemployment, consumer retrenchment with rising corporate profits and runaway equity prices.

I think the resilience of the consumer is something that can’t be underestimated. The fact that consumers have been enduring economic turmoil for over a year now may also create the need for an emotional break in for form of splurging at Christmas. For this reason I think spending will hold up into the shopping season and whilst consumers are savvier and shrewder I believe that most will let their hair down over the holiday period and ignore the perils till next year.

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