Ouch!

The dollar keeps pulling a Rasputin ("I'm not dead yet!") and raises its head off the mat to bolt higher. Crude and gold take it on the chin, as Bloomberg tells us ...

Gold Falls Most in a Week After Dollar Halts Slide, Oil Drops

Feb. 20 (Bloomberg) -- Gold fell the most in a week in London on speculation investor demand may slow after the dollar halted its slide against other currencies and oil declined, reducing inflation prospects.

Investment demand for gold in exchange-traded funds watched by the World Gold Council has climbed 3.5 percent this year. Purchases accelerated this month as the dollar declined and crude oil rebounded. The dollar rose against the euro and the yen today.

"In the last week or so, the U.S. dollar moves have been more influential'' on the gold market, said David Thurtell, a London-based analyst at BNP Paribas SA, France's biggest bank. ``The inflation picture is sort of benign."

As with any adventure story, an Oriental villain makes it all the better ...

Investors in Japan sold 8.8 metric tons of bullion more than they bought in the last three months of 2006, compared with net purchases of 6 tons in the same period a year earlier, according to World Gold Council figures last week. Japanese investors "were one of the major drivers'' who sent gold to a 26-year high in May."

XX Ah, so that's it -- let's blame the crafty Japanese for this tumble. Does anyone take this narrative seriously? Let me tell you my view: Gold has been on a rocket ride recently. It is taking a rest, as happens in every bull run. The bigger uptrend is still intact. Therefore, history tells us a smart speculator might buy this dip.

Likewise, the US dollar looks to be in trouble, despite today's bounce. Now, I may have this story wrong. Maybe the greenback is finding a new bottom and gold is finding a new top. But that's not what the trends are telling us now.

Check out my new gold and energy blog at MoneyAndMarkets.com