Weekly Markets Thoughts – September 09, 2007

Last week finished with a significant decrease for the stock markets which could scare again some of the investors. After a drop like the one we witnessed in August these fluctuations are normal. We have all the fundamental reasons to expect an imminent and long lasting bear market. However, we are human beings and thus very emotional and most of the time not rational at all. September is going to be a month of consolidation and such sharp ups and downs are going to be a part of the game.The good news is coming from the Gold market. The yellow metal is the only one which achieved a recent high. It also broke the $700 mark and looks very well positioned to reach soon a new 26 years record in price. The gold shares though are still quite far from the highs and their performance will be mostly related to the broader market direction. The other metals and Crude Oil are still in a consolidation mode.The stock markets finished the week lower compared to the previous week. The important message here is to keep in mind that all of them are still holding over their respective one year uptrend lines. A more cautious investor should still wait for a confirmation of the renewed rise. The speculators, on the other hand, should take advantage of these decreases to start building up their positions. Keep always in mind that the risk is proportional to the profits or the losses, depending on which side of the game you will find yourselves.The US dollar index is not looking very good. We are most probably on the verge of witnessing a historical break down. After holding over 80.00 for several months, it starts looking shakier. It is time to start a new chapter, never seen in history. The US dollar has a lot of room to go down further and additional decrease of 25% from here is easily attainable in the years to come. It could go even lower than that but my projections for now show a target of 60. This in turn means a flourishing life for the currencies and the resources.For those of you who have not been following my markets publications I would like to just enumerate them once again. The best currencies to hold in the years to come are basically the resources related ones, namely the Canadian dollar, the Australian dollar and the New Zealand Dollar. The best performer in this intermediate move is the British pound. You can also invest in Euros as well. From a more speculative point, watch the Japanese Yen as it looks ready to start a long term ride. The move is still to be confirmed but all indicators start pointing to it.Good investing and best regards,Stefan Penkov