"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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This cross, after notching a recent high, moved lower the last two trading sessions of this week as nervousness over the US fiscal cliff issue brought about selling in the crosses at the expense of the Euro and some of the other "risk" currencies. That allowed a bit of a safe haven bid to come into the yen and pushed some shorts out of that market allowing this particular cross to move lower.
If the cliff issue begins to look as if there is not going to be any sort of agreement worked out before the end of the year, we could see some further safe haven flows into the Yen at the expense of this cross pushing it lower.
That being said, if traders become more and more convinced that next year, the global economy will improve, we will see a strong appetite for risk and I suspect this cross will move higher. If it does, my guess is that the Yen carry trade will be quite large and this should produce a rather healthy appetite for "risk" assets such as commodities in general.
The thing to keep in mind about this commodity trade will be that while there will be general fund flows into the entire sector, those commodities with STRONGLY BEARISH supply/demand scenarios will still move lower. The fund flows will slow the descent from an otherwise faster rate but the price will still move lower in those sectors which have an oversupply or lack of demand factor.
In other words, we will see the CCI ( Continuous Commodity Index ) move higher with specific commodities either outperforming it or underperforming it depending on their own specific set of fundamentals. Either way, I would expect silver to be one of the outperformers, especially if copper resumes its uptrend which was derailed this week.
Please click on the following link to listen in to my regular weekly radio interview with Eric King on the KWN Markets and Metals Wrap. We will be discussing the price action of both gold and silver this week and the technically significant levels on the price charts.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2012/12/22_KWN_Weekly_Metals_Wrap.html
