Many of the issues we track moved faintly against the forecast yesterday. Gold shares showed a weak buoyancy that barely qualifies as a holding pattern – in a downtrend, to be sure -- while the dollar pulled back slightly after last week’s strong run-up. Quotes for February crude fell too, but not before cracking the $47 level for the first time since early October. The rally hasn’t been attracting as much attention as the one last autumn, probably because the specter of $50-a-barrel oil was more fearsome the first time around. Prices will probably need to push above $50 and stay there for a while before the news media elevate oil into the headlines again.  

Regardless, my best-case scenario – for the beleaguered consumer, that is – would be for quotes to linger around $40-42 for a while rather than ratchet up to $50, as they appear to be doing. None other than Boone Pickens, who’s made some great calls on energy in the last few years, sees $40 as the new floor for crude. If so, enjoy the “good times” while they last, since a $40 base implies a move up to a higher one around $50 somewhere down the road.

For now, though, I won’t hazard a guess as to exactly when and at what level the rally in the dollar will sputter out. But probably sooner rather than later. We remain wary nonetheless of a violent lunge before that happens. How else can speculators be brought to heel? For many of them, shorting the dollar has been easy money for all too long. Goldbugs shouldn’t lose heart, though, since the dollar’s rise can continue only for as long as the law of gravity remains in abeyance.