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The definitive U.S. Dollar Rally Thread

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  • Thu, May 13, 2010 - 01:44pm

    #31
    Peak Prosperity Admin

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    Re: The definitive U.S. Dollar Rally Thread

JAG,

IMO your thinking is right on.  Trouble is, in the words of Yoggie Berra, predictions are so hard – especially when they are about the future. 

Kidding aside, the dollar is obviously due for a retracement.  Question is, will it retrace before a rise to new highs, or retrace for good?  I think it will make a partial retrace towards its lows, and then rally past whatever the current peak ends up being.  That’s just based on commonly accepted wave theory.  I will not utter the P word here (Prechter), because Elliot Wave chartists besides him agree.

I am thinking of liquidating some of my UUP shares, maybe half, today.  Maybe I’ll sell all of them.  It’s a tough call. I can always re-enter after it corrects, and try to ride the next wave up.  Trouble is, with Europe running out of gold and silver, the dollar may have much more to benefit from this current psychological cycle.  What I mean is, if you cannot get your hands on PMs, and your European, you most likely next option is to buy Uncle Buck.     

  • Thu, May 13, 2010 - 01:55pm

    #32
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    Re: The definitive U.S. Dollar Rally Thread

In all honesty: With respect to the paper – I think we are going to see a lot of parity. EUR to USD, GBP to EUR.

But I really think most folks are “just not getting it”. The entire casino is on fire, everything will burn to the ground – what good will ANY paper be? Especially when they will be pulling the old paper soon and issuing new paper?

  • Thu, May 13, 2010 - 02:20pm

    #34
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    Re: The definitive U.S. Dollar Rally Thread

[quote=Davos]

In all honesty: With respect to the paper – I think we are going to see a lot of parity. EUR to USD, GBP to EUR.

But I really think most folks are “just not getting it”. The entire casino is on fire, everything will burn to the ground – what good will ANY paper be? Especially when they will be pulling the old paper soon and issuing new paper?

[/quote]

Oh Yeah, and the Davos “TSHTF” Indicator has gone exponential!

No offense Dave, but because of your intimate connection with the blogosphere, your point of view can be very helpful to the contrarian investor, lol.

Maybe its time to go long paper and short the physical…..just joking my friend.

  • Thu, May 13, 2010 - 02:27pm

    #33
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    Re: The definitive U.S. Dollar Rally Thread

Thanks for the replies guys.

While everybody is focused on Europe, I can’t help but think there is some significant smart money repositioning going on somewhere else. Maybe its the dollar, or maybe its the Yen, or both. Maybe the play is to short paper gold, (I’m not selling PMs!), I honestly have no clue.

Right now, I see the following perceptions in play:

  • Gold is untouchable.
  • The Euro is trash.
  • The Equity markets will not be allowed to decline.
  • Oil is short term weak, and long-term strong (PO).
  • Goldman Sachs cannot lose money
  • China is overextended and is pulling back.
  • The safety trade into USD and Treasuries is strong.

What do you see? Thanks.

(PS: FB, good point about gold and silver becoming less of an option for the Europeans. Your really on a roll, thanks)

Edit: This idiot can’t spell

  • Thu, May 13, 2010 - 02:28pm

    #35
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    Re: The definitive U.S. Dollar Rally Thread

[quote=JAG]

What do you see?

[/quote]

This really needs to be articulated: We are talking about global financial Armageddon.

The fuse was lit Monday, it cannot and will not be extinguished.

It is a worldwide situation in which every currency is now in collapse, worse, for the first time ever there is a 1.6+++ quadrillion dollar shadow banking system that is simultaneously melting down, so while this has NOTHING to do with the equity markets, I sincerely doubt that anything will be capable of propping them up.

The way I see it is there are only two things you can do, three if you are religious: Have PM insurance, be self sufficient because it is going to take the morons at large a while to re-issue the currencies and the new ones don’t always take flight the first time down the runway.

You may make a few bucks in the casino but I’ll let you tell me how you are going to get out when your inside and the fire erupts.

 

  • Thu, May 13, 2010 - 02:28pm

    #36
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    Re: The definitive U.S. Dollar Rally Thread

While I think the US dollar has serious long term issues – I think we are a few years to major meltdown.  Given the topic of this thread, thats a long long time.  The US can do another round or two of QE – which is just another way to slowly devalue the currency.  Since its the world reserve currency as well as an independent soverign government, the US doesnt need to have a one moment shock like Argentina or Greece.

Each time the US uses QE, its like a small devaluation.  Given the wealth of the US and its citizens, and given much of the debt we all have payable far into the future and owed to ourselves, moderate devaluations kick the can down the road quite a ways.

Now, I still think the economy is going to tank from here, as well as the equity markets.  I also think that at some point sooner than later QE will result in immediate selloffs in equities and bonds….however – this process also fixes cash flow issues in the short term.

In short – I just dont see the US dollar crashing any time soon.  Equities, bonds….sure…but not the dollar.

  • Thu, May 13, 2010 - 02:48pm

    #37
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    Re: The definitive U.S. Dollar Rally Thread

I am not selling my PM….& I am doing ok with the Gold miners at the moment. They should do ok with oil moving down & gold moving up. Also I went into some of the Canadian Oil trusts. I own some PWE & they are up sharply today. China seems to want to become more involved there. At least I have recieved a nice monthly dividend.

Penn West Energy Trust and China Investment Corporation Announce Strategic Partnershiphttp://finance.yahoo.com/news/Penn-West-Energy-Trust-and-iw-778195177.html?x=0&.v=1

What’s in Store Next for Canadian Energy Trusts? http://finance.yahoo.com/news/Whats-in-Store-Next-for-indie-237377530.html?x=0&.v=1

High yields and monthly distributions have combined to make Canadian energy trusts a particularly attractive option for income-oriented investors.

However, it’s a sector that has been on a rollercoaster ride in recent years. The trusts were riding high until what has come to be known as the “Halloween Surprise” of October 31st, 2006. That’s when the Canadian government announced that it would begin to tax the trusts starting in 2011.

After oscillating back and forth in a fairly tight range throughout 2007, many of the trusts staged nice rallies in 2008 as energy prices climbed to record levels. The wheels then fell off the bus and all the trusts nosedived as energy prices plunged in the fourth quarter on 2008.

In publishing its Nine High-Yield Stocks for 2009 special report in November 2008, BullMarket.com saw an opportunity in the sector, adding two trusts to its picks: Baytex Energy Trust (NYSE: BTENews) and Penn West Energy Trust (NYSE: PWENews). They would return 114% and 53%, respectively, over the next year.

PS I like the Davos “TSHTF” Indicator as it keeps my bullishness in check LOL.

  • Thu, May 13, 2010 - 03:06pm

    #39
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    Re: The definitive U.S. Dollar Rally Thread

[quote=idoctor]

PS I like the Davos “TSHTF” Indicator as it keeps my bullishness in check LOL.

[/quote]The needle moved from the edge of the yellow into the red on Monday. I’m not overly cautious – just very opposed to any risk, was the same way flying.

  • Thu, May 13, 2010 - 03:22pm

    #38
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    Re: The definitive U.S. Dollar Rally Thread

[quote=rickets]

 

In short – I just dont see the US dollar crashing any time soon.  Equities, bonds….sure…but not the dollar.

[/quote]Bonds ARE dollars. They go, the dollar goes. They have already slipped on the ice, the skates are over the skaters head. Look at the auction take downs, direct bidders taking down 50%, primary dealers monetizing the rest.

With a 1.6 quadrillion dollar meltdown and a full blown currency crisis I think we all might be surprised at just how fast the pencil snaps. Hope you are right and I am wrong, but I see 2010 and 2011 as the 2 worst years in the history of economics.

  • Thu, May 13, 2010 - 04:26pm

    #40
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    Re: The definitive U.S. Dollar Rally Thread

Davos said  “Bonds ARE dollars.”

There is a subtle, but huge difference.  Bonds are an agreement to pay back dollars over time – they are not due right now.  When evaulating debt and bonds, you must also include the time and amount of all future cash flows and outflows as well as assets backing the cashflows that could be used in the event of distress.  Further, you must look at the probability of cash flows being altered as well as the potential size of those variables.

Discussing numbers like 1.6 quadrillion when talking about cash flows over 50 years is sensational like MSM.  If you toss numbers out like that, I would ask you to also provide what their present values are and also what the net present value of all income in over that time.  Further, please let us know what other assets back that debt, as well as discuss what options there are to reduce debt in the event of distress or cash flow shortage.

Once the other side of this equation is plugged in the real picture becomes more clear.  This is similar to a discussion of whether a retired person with no income can afford a 500/mo payment on a car.  Under your analysis Davos, you would assume this person is insolvent.  However, you should ask what assets does the person have?  What future income is possible if needed?  What debts can be dissolved, altered, or delayed?

 

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