Saturday, January 23, 2010

Interesting Weeks Ahead

The potential for the dollar to mount a very strong rally increases with the passage of each, especially in light of the recent negative developments in Greece. A breakdown in Greece could trigger a domino effect by first affecting other weak countries such as Italy, Ireland, Spain and Portugal. A strong rally in the dollar by default is going to lead a strong pull back in the Euro and this could in turn lead to a much stronger than expected pull back in Gold.

However, the bright spot is that a strong pull back in Gold should be viewed as a tremendous buying opportunity if it comes to pass. The long term trend of the dollar is still down and is not likely to change but it could produce a lot of acid for those betting against in the short to intermediate time frames. The long term in the Gold is up and the pattern is projecting much higher prices in the future, though in the short term the volatility is going to give short term traders a headache. The Euro on the other hand is the one where potentially things could fall apart. Several European members are in trouble and thus one has to be open to the potential that the Euro could fall apart. The key word to focus on is potential.

The dollar is very close to hitting a critical point; it needs to close above 78.50 on a weekly basis. A weekly close above 78.50 will be the first sign that the dollar is getting ready to potentially mount a much stronger rally. If Gold trades below 1080 for 2-3 days in a row, it could lead to a test of $1030 an ounce and the 980-990 ranges. Last week proved to be very profitable for those who shorted Oil and Gold miners, those who bought and held DTO around 60 OR shorted PBR made a killing. Stay sharp and nimble.

27 comments:

  1. DTO was a kick ass trade thnx

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  2. Some light reading material if you want to know how real power works behind the scenes. Most "crises" are contrived events, wars included. I'll remain anonymous for this post.

    http://www.redicecreations.com/specialreports/2005/08aug/redshield.html

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  3. BTW protesting the current political or financial system of America only helps them establish one world government and currency, and the very ones disgusted with the current system are really the ones who grease the wheels to have it happen. And if you do not protest enough they will create enough crises to attain that goal anyway.

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  4. Not sure if you will remember me. But, I think you now understand what I was arguing with you a while back.

    The dollar was bound for a rebound, we are in deflation, and gold will drop on the face of the dollar rally. Gold will eventually go higher, but not at this time.

    Dny

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  5. Dny

    We are in deflation for evrything EXCEPT overall cost of living. True deflation which is the drastic drop in price of essential goods/services is not here and won't be here, asset deflation is here to stay and that includes loss of jobs, foreclosures. As far as Dollar is concerned, it should rebound, Gold will retrace for a while ( bottom can very well be 980/990) and then just like late 2008 and the first 3 months of 2009, both Gold and Dollar will move up. The best time to make real money from Gold miners is when both Gold and Dollar are in upward move since that reduces the cost of production and increases margins. Do not assume that each time dollar goes up, Gold goes down, that inverse relationship is only true in the initial stages of dollar strengh.

    palmer

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  6. When I said True deflation won't be here, I am refering till 2012.

    palmer

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  7. DNY,

    By the way TAXES on evrything are part of overall cost of living, in the TRUE deflation overall cost of living including taxes need to come down drastically, good luck with that one.

    palmer

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  8. Well losing your job is one way to lower your taxes :)

    I'll keep playing both sides for now, when the next big move comes I'll react to that. Gold + Bear Fund + Wait = Strategy?

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  9. Morla,

    Income tax is only one form of taxing, that's why I said TAXES on everything which includes goods/services.

    palmer

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  10. No "true overall deflation" until the money printing monetization and QE are destroyed. This will NOT occur until the hand of the fed is forced. And that will not be until the essential costs of goods and services strangle all hope of the consumer to survive in a consumer driven economy....and yes there is no hope of that formula to reinflate. But you could see a stagflation procede for another couple of years fitting into the Kress call of overall deflation finally cleaning the system out in 2012 -2014.....a slaughter. Interest rates will be the trigger very likely.

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  11. Once the PIIGS (Portugal, Italy, Ireland, Greece and Spain) start to fall wont that cause a rush to gold? the dollar? or both?

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  12. Sales tax revenues are down from last year also, but if you mean the percentages will increase yes that is a possibility.

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  13. Temo,

    Initially Dollar will move faster and gold will get retracement and after that both Gold and dollar will go up. Gold is a safety net against deflation and a hedge against inflation. Gold Miners do much better during deflation than inflation since during severe deflation both gold and dollar will go up and that means lower cost of production and higher margins for the miners with solid reserves and good balance sheet.

    palmer

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  14. Morla,

    Do not also forget about health insurance cost, that's part of overall cost of living especially for those who have lost their jobs and are going to lose their job, in a TRUE DEFLATIONARY environment that cost needs to come down drastically as well, good luck with that one as well, heheeeeee!

    palmer

    palmer

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  15. Kli wondering if you think this is P3 as Daneric, Kenny and Prechter have been calling for. Do you think the high is in at 1150?

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  16. Doubt that this market will give you any clear signal whether we are at a high until retrospect. I do believe about the max they can push it is 1240 that is the 61.8 fib retrace...now ...whether they hit it or not...doesn't really change much of my strategy...I have a good core of miners now after this week and will trade some gaps and hope that they bring miners doon more.....but not worried at all. was worried a couple of weeks ago when my core had dwindled.....this year will be very different than last ...you can bet on that...

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  17. The SPX top-out target is 1207. - Analyze.

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  18. SPX follows the same technical pattern in form as X, although X under institutional bias based on China materials demand front run it since the metals industry specifically had to ramp here to prop the ponzi. The morons on Fast Money gave a false target of 72 on X so that people would hold while they unloaded overblown call positions. That is standard fare for them, always has been. The SPX target I gave is the real one, but is not necessarily the next target unless they hit the other downside target for max-out I gave last night, otherwise a consolidation phase ensues. - Analyze.

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  19. BTW vfrtxn is a standard well_armed ID that you are posting to on the SKF board, ditto with the rmike14 and sgrm IDs. Same gay shit we had to put up with last year. Fuck-ups eating KD in trailer courts belong on Iggy, don't waste your time.

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  20. Other topic. Do you want to hear what a great Baritone forcing up to singinging in tenor range with topping out at A5 sounds like, listen to this one from 1:30 through 2:00. Up to that point is just baritone standard range. The range on the first part goes to G5, 1:50 to 2:00 with the raspy push to A5 top range is pretty much as good as it gets. The scary thing about it is he was almost dead when he sang this too.

    http://www.youtube.com/watch?v=WLDsd6lUiR8

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  21. palmer, Guys,

    I agree with you on your points. But I disagree with your definition of inflation/deflation. The definition is NOT about prices. Prices are a mere symptoms of inflation/deflation. Here is a simple explanation.

    Everyone on this blog knows what happened in the Weiner Republic, Germany in the 1920s. To pay for the war, they printed money, and their money supply exploded. I don't think any of you would argue that this is a typical case of an inflationary environment. What you fail to understand is that while this happened, the cost to rents plummeted. Are you confused now?

    The bottom line is that if you start measuring the price of oranges, rice, etc, you will probably die before you finish. And to me, this is an impossible way to measure whether we have an inflationary, or deflationary environment. Bad weather causing rice prices to rise is NOT inflation. If you cannot understand this, than I don't know what to tell you.

    If you focus on the money supply + credit (a much simpler way of looking at it) we are clearly in deflation. And please don't point out how the money supply has increased 3 fold in the last 2 years, without first including the housing "wealth" and the amount of credit which has evaporated during the same period. The problem today is not and will not be inflation anytime soon. The government has inflated (inflation) this bubble for the past 20 years. This bubble has reached the end of the road, and the opposite of inflation is LOGICAL to happen. The credit that was pumped into the markets has peaked and is on reverse.

    I agree with you on gold. There will be a point where gold will move higher with the dollar. But 4 weeks ago when I was arguing this with you guys, you guys slapped me around. When fear comes into full swing, the USD and gold will move higher in synch.

    Dny

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  22. Kliguy,

    If your definition of deflation is when ALL prices drop, than I am not going to fight with you on that argument. In my view, there will NEVER be a point in which everything drops, so technically, there will never be deflation.

    The funny thing about your definition is that in the last 30 years of inflation, certain things fell in price (PCs, Laptops, TVs, even food in certain cases), yet your definition clearly states that we went through an inflationary period. Please clarify for me how you can have certain prices fall in your definition of inflation, but ALL must fall during deflation.

    Again, and as I stated on my previous post, you should NOT be looking at prices as they will confuse you. I hope this is clear enough for you inflationists out there.

    Dny

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  23. DNY,

    There is a huge difference between ESSENTIAL cost of goods/servics vs everything else. If ASSET deflation does not cause the price of essential goods/services including health care, taxes, food,,etc come down then you are not in TRUE deflation. I am well aware of what you HAVE BEEN TOLD or READ as far as deflation, that's the LINE my bosses ( REAL power) have been feeding you for yrs. The reality which is what the REAL person faces NOT the crap we have been selling you in the form of books dictates that if a HUMAN being is losing his job, his investments, his house,,etc which is ASSET DEFLATION but his over all COST of LIVING is not coming down to adjust with asset deflation which is the result of credit contraction then you will get spanked by that person if you tell them we are in real deflation. There is ABSOLUTELY nothing and I mean nothing you are describing that I am not aware of , because we have been feeding you the line you are repeating. I'll let you guess what my real profession is.

    palmer

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  24. DNY.....its ESSENTIALS ESSENTIALS...itsa game ...and now its getting to the rubber meeting the road for the ponzi

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  25. Are you saying there is no escaping the NWO? They've done a great job destroying Europe and Japan and are in the throes of containing the U.S. However, unsure how that is going to work for the emerging markets, especially China with all those men.

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  26. Palmer,

    Here are the definitions from Wiki:

    Inflation:
    In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money.

    Deflation:
    n economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money – allowing one to buy more goods with the same amount of money.

    Now, does that look more like your definition or mines?

    So it seems that I am not the one following text book definitions of inflation and deflation here. The only word missing from the Wiki definition is "Essentials". The rest is the same.

    Dny

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  27. I just want to say that It was very good post, it helped me in finding a good affiliate,

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