It hasn't really been any longer or shorter than any other year, it just seems that way. The difference, of course, comes from the events of 9/11. Before 9/11, the U.S. was careering headlong into recession for perfectly clear and simple economic and financial reasons which the Administration was having an increasingly hard time denying. Since 9/11, the U.S. is still careering into recession for exactly the same reasons, but the Administration has a ready made scapegoat for the process - namely 9/11.
As anyone who pays any attention at all to the U.S. media now "knows", the source of all the economic and financial ills which plague the U.S. was 9/11 and nothing but 9/11. According to the party line, if 9/11 had not happened, then by now, the U.S. would be basking in the glow of economic growth which the Fed's rate cuts prior to that singular date would have made "inevitable".
Remember back in January when the Fed began to cut rates? The rate cuts were then "sure" to cut in in the second quarter. Then it was the third quarter. Then it was the fourth quarter. Now, after eleven rate cuts which have seen the Fed Funds rate descend from 6.50% to 1.75%, the "stimulus" is going to be felt in the second quarter of 2002.
Very few are asking the ominous question: "What if it isn't?". To do so is decidedly unpatriotic, to say the least. And to try to prevent the question from even arising in the minds of most people, the U.S. government is assuring all and sundry that they will borrow and spend whatever is necessary to keep the wolf from the door. Any student of economic history will find such "assurances" anything but reassuring, having read about countless instances in the past (including the U.S. past) when they have been made - to no avail. For those whose historical timeline does not stretch back too far, the ongoing example of Japan is all that is required.
And so, the end of year "holiday season" is finally upon us. After falling ominously over the week of December 10 - 14, the U.S. Dollar has made a remarkable comeback this week, aided by the thin markets. On U.S. stock markets, the Dow is back (just) above the 10000 level. And the "financial disaster du jour" - Argentina - has seen its stock markets spring back by more than 20% in the past two days as Argentinians frantically convert their bank deposits into stocks in an attempt to protect them from the musical chair government which now rules their land.
Gold itself has had two $US spikes this year, the first in May, the second in September in the aftermath of 9/11. Both spikes have been duly driven back down again, but on the charts, $US Gold has been in an unbroken uptrend, albeit a very gradual one, ever since April 2001.
The lastest "cap" on the Gold price occurred on December 19, the day after $US Gold had regained the $US 280 level for the first time in six weeks. Gold slammed down $US 4.90 from $US 280.40 to $US 275.50. The problem for the "Gold controllers" is that hardly anyone noticed. Gold stocks, especially in Australia, hardly registered the Gold price fall at all and ended the week at highs for the year. The other precious metals (notably silver) regained all their December 19 losses, and then some more, by the end of the week. And, of course, given the strengthening of the $US this week, Gold improved greatly in terms of all other paper currencies even while standing still against the Dollar.
There are five trading days left this year. Then, there is the whole year of 2002 looming ahead. In 2001, the Fed had room to cut rates and increase "liquidity". There is no such room in 2002. And in 2002, a CREDIBLE challenger to the U.S. Dollar's status of sole global reserve currency takes the final steps into the light of day as the CASH Euro is introduced.
We will confidently "predict" that it will prove impossible to hold Gold down next year. We don't know when the break in $US terms will come, but come it will. In the meantime, we wish all of you the best of the holiday season. And with you, we look forward with eager anticipation to the new year.