The US dollar pulled the rug out from under gold's Monday advance and sent the metal back to one-month lows near $773 overnight. Fresh solid gains in the greenback's value brought the currency to 83.72 on the index and to $1.32 vis a vis the euro. Suddenly, the talk of 'fair value' at $1.15 no longer seems that far-fetched. You will recall that in mid-summer we recorded projections of $1.319 against the euro only to elicit howls. And now, it is down to (our) two cents' worth... New York spot trading opened Tuesday's session with a $20 loss at $775 per ounce, as the euro still continued to slip lower against the dollar, and as crude oil gave up earlier OPEC cut-back related gains and declined to under $73 per barrel. Silver maintained small gains, opening up a dime at $9.82 but platinum slipped $13 to $885 per ounce, dented by news that 700 US auto dealers may follow the fate of the French bistros mentioned above. Palladium gained $2 at $181 per ounce. Focus for today will be on the reception the second stimulus package receives in the US and on stock market performance - or lack thereof. Gold still appears pointed towards the mid-$700's if not lower, at this time. Sporadic injections continued in various places like France ($14bn for ailing banks) and the Netherlands ($13.4bn for ING Groep NV) and european money-market rates finally declined to the lowest level since Lehman's failure on the nascent confidence that the multi-pronged governmental initiatives are beginning to engender in the Old World and elsewhere. The Nikkei gained 300 points last night, on the heels of the 413 point advance in the Dow. But, not all is well on the continent, as you can see below. Behold the Americanization of the French palate. More than 3,000 independent French restaurants have filed for bankruptcy over the past half a year. Sacrebleu! That's like...well let's not go there.... Arc(s) de 'Triomphe'... These emerging trends (no, not the gastronomic ones) have proven damaging to gold in several ways. First, emerging confidence after a total battering is decreasing the amounts of safe-haven umbrellas to be deployed. Next, the rising stock markets -shaky as they may still be - are drawing an increasing amount of spec money away from commodities. Finally, the liquidation patterns among funds have not abated and continue to add to the downward pressure in the metals complex. It may turn out that either global investors are sensing the tail end of the credit storm to be the most destructive yet, or that they once again proved to be behind the curve in a manner reminiscent of 1980. We do not have the crystal ball that figures that one out. While governments are busy shoring up the remnants of capitalism as we knew it, certain countries' denizens are equally busy making sure they get rid of the system as fast as you can say " Sjáumst! " It appears that Iceland has had just about enough of whatever it was that brought it down from fifth-rank in the world's wealthy nations, to its current situation. Bloomberg sheds light on the issues facing the country - and they are nothing short of 'revolutionary.' Not the "Reagan Revolution" mind you: "More than any of its Nordic neighbors, Iceland under Prime Minister Geir Haarde imbibed the economic policies of Margaret Thatcher and Ronald Reagan -- state-asset sales, light regulation and corporate growth abroad through debt. Now that the hangover has arrived, many of Haarde's countrymen want his Independence Party-led coalition to pay the price for turning one of the world's wealthiest countries per capita into a beggar state staving off depression. "Many find that the government has mishandled the situation,'' said Thorvaldur Gylfason, a professor of economics at the University of Iceland and a former International Monetary Fund economist. ``A major political realignment will take place at the next election,'' which must be held by May 2011. That's not soon enough for many of Iceland's 320,000 citizens, as may become clear when the first opinion poll since the country's three biggest banks collapsed into receivership this month is released on Nov. 1. "We can never ever have a fresh beginning with the same people,'' said G. Birnir Asgeirsson, owner of car retailer Bill.is. ``This was such a big bust, they can't get around it. They can't just move on.'' Ingibjorg Elsa Bjornsdottir, a 42-year-old geologist from Selfoss near Reykjavik, said she will vote for the Left Greens, the biggest opposition party. "There's so much anger in the society now because of what has happened,'' she said. ``We're witnessing the death of Reaganism-Thatcherism. We have to go back to our older values. The free market is not doing what it's supposed to be doing.'' That may be an understatement. Iceland was ranked fifth- wealthiest in the world per capita in the UN 2007/2008 Human Development Index. Now, it's facing shortages of imports including food and clothing. Controls on foreign currency payments have been enforced to favor imports of fuel, medicine and food. The value of Iceland's currency has evaporated and an economy that outgrew the U.S. and euro region every year since 2004 at the least faces a prolonged recession, if not a depression. The economy may shrink more than 10 percent with inflation reaching 75 percent in months, says Danske Bank A/S Chief Analyst Lars Christensen. The country's main stock index has lost 90 percent of its value, most of it in the past week or so, more than double the decline in neighboring Nordic countries like Norway and Sweden. In response, Haarde, 57, and central bank Governor David Oddsson, 60, have held out the begging bowl, seeking to borrow from Russia and the IMF, which hasn't had an aid request from a Western country since 1976, when the U.K. sought a bailout. Steingrimur Sigfusson, leader of the Left Greens, says islanders shouldn't have to wait for an election. The ruling coalition has 43 seats in the 63-seat parliament and Haarde's term is scheduled to end in 2011. ``First, we have to take the rescue measures,'' he said in a telephone interview. ``Then we have to stabilize things. And then there definitely should be an election.'' Sigfusson predicts a shift back to more government oversight and regulatory control. ``The main enemy here is the neo-liberal privatization policies,'' he said. ``The big mistake was to make greed a virtue. The most important thing now is that we can shift the basic politics in more sensible and more socially just directions so that we can build a prosperous welfare society.'' Looks like you can define freedom in many different ways. Imagine a referendum where the US citizenry gets to vote a leader out or in, based on the direction of the economy and the current of national affairs. Wait, they already have that. In fourteen days. Looks like another good day for some bargains ahead of Diwali.

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