It seems clear that someone does not want gold to go up, at least too fast. But their success has been amazingly weak, at least in light of past successes. The IMF has basically agreed to let the dollar weaken, or decline from an overbought level. The weaker dollar is the main factor in the primary trend in the price of gold. It will persist for some time, several years I expect.

Yet Bush continues to stand for a strong dollar, while his minions and our nations monetary authorities engage in concerted efforts to bring it down. The accumulated trade imbalance is threatening a fairly rapid adjustment, and exporting jobs is no longer politically feasible. The policy implications are obvious: Maintain the dollar as the world's reserve currency, while engaging in graduated competitive currency devaluation. So will they be successful, or will the dollar crash?

The US wants this process to be orderly. This includes keeping the gold market orderly. And our so-called friends in the world have been enlisted to help. But this help seems half-hearted or ineffectual. The gold in the coffers of central banks has approached historic cyclical lows. And if opaque gold swaps and derivatives are taken into account we may be well below these lows. So with the bulk of gold out of the hands of central banks official sales may be less effective: The buyers of gold are fairly dispersed and not subject to undue political influence.

In fact I expect that many have a hidden agenda: Russia is openly considering pricing oil in Euros. And the Middle Eastern nations are rumored to be planning the same for early next year. It has been my opinion that Saddam Hussein's overt call to price oil in Euros was a significant factor in the US decision to invade. The establishment of the petro-Euro would be a seminal event. It would indicate the beginning of the end of America's Imperial over-reach. The American empire will not begin its decline on the military battlefield, but on the field of financial warfare. Even the effect of terrorism is largely economic, with the imperial dollar being the primary target. And China is being remarkably coy: A sleeping giant watching and waiting for its enemies, in the dollar and the Euro, to float downstream.

So Mr. Market has begun discounting this macro environment I expect that the next down leg in the dollar will continue to new lows. And there is potential for the process to become rather disorderly. Hyperinflation is becoming a real possibility. What does that mean for us Yankee debt slaves? Buy gold, silver and their shares as insurance.

Much of my false dawn hypothesis of last winter has come to pass. The general stock market in particular has done quite well. And the talking heads have the masses convinced that a recovery is at hand: The volatility index is obscenely low. Yankee bonds and the dollar have coughed and sputtered but rebounded of late. And gold has performed superbly from its March lows, but taken pause in the past few weeks. I had expected that even the staunchest of gold bulls would capitulate as gold made a false break to the downside. And that this would mark the end of the false dawn scenario. But Mr. Market has a way of making us all look foolish, so I have recommended staying long with the primary trend and been quite pleased. Fat and happy along with many other gold bugs. But Mr. Bear has taken notice, and has ambled our way.

Bears are interesting creatures: Very opportunistic, and very efficient. They will seek out capital to devour wherever it is created. Even gold bugs are not immune. I once watched a community of giant brown bears feeding on swarms of tiny bugs, even while other more traditional food was readily available. A tremendous hatch of insects was drifting down wind across a shallow muddy lake and landing on rocks and small logs dotting the shoreline. The bears were lapping them up greedily, ignoring early run salmon, caribou calves, seagull eggs, tidewater clams and other fare. They seemed quite pleased by this tasty diversion. But the concentrations were soon consumed, and the population dispersed to the point where it was no longer energy efficient to seek out the tiny bugs. And the bears moved on.

The emerging gold bulls have not been swayed by the bears. But the primal instincts of many gold insects have been triggered during this feeding. Especially among the technical analysts, many of which have capitulated on the long term using short-term trends. Seems odd, given the fundamentals and the strength of the longer-term primary trend. Is this the false dawn capitulation that I had expected? Maybe, but it still seems a bit weak. Most likely this is a technical respite, and a good entry point. The Bear will resume feeing on larger fare soon: the financial markets for currencies, stocks and bonds.

This Kondratieff Fall feeding may be frenzied with liquidity suffering dramatically. As such the Bear may well charge a resurgent gold bull, resulting in even stronger capitulation. But this new gold bull will be strong and bears will typically veer away from a strong animal. Making only a false charge. If it comes to pass this will be a time to stand strong. Those who do will be the legends of this Kondratieff Fall.