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Pixel8r

Dollar may be done here - Be careful

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Of course. ALL THOSE CARRY TRADES are Bullish for the Dollar at some point,

when the carry trades get reversed

Do you see that happening soon then?

 

I don't, I see rates staying very low for an extended period of time, which means the dollar should weaken even more over the foreseeable future. As I have talked about previously from what I know about carry trades they take a long time to build and a long time to unwind, months not weeks. Dollar bulls looking for a bounce are not looking so clever now, are they?

 

Got Gold?

 

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Of course. ALL THOSE CARRY TRADES are Bullish for the Dollar at some point,

when IF the carry trades get reversed

 

Bubb - quick observation:

 

You say 'when' the carry trade reverses. What IF it never happens? What if the 'real' carry trade is from USD to physical GOLD? From financial assets to physical assets?

 

What evidence do you have that ALL carry trades reverse? I'd agree with you if we limited the definition of a carry trade only to Fiat currencies, but I still believe we are in uncharted waters.

 

 

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Do you see that happening soon then?

 

I don't, I see rates staying very low for an extended period of time, which means the dollar should weaken even more over the foreseeable future. As I have talked about previously from what I know about carry trades they take a long time to build and a long time to unwind, months not weeks. Dollar bulls looking for a bounce are not looking so clever now, are they?

 

Got Gold?

 

From:

 

HI Pixel8r, interest rates rising is not a prerequisite condition for the unwind of a carry trade. Look at how the JPY performed against GBP and all other pairs during the unwinding of the carry trade. the BOJ actually cut rates to 0.15 from 0.50 in this time.

 

1257700204_38_UploadImage.png

 

 

I see rates staying very low for an extended period of time, which means the dollar should weaken even more over the foreseeable future.

 

Its not dependent only on US rates, it will depend on asset bubbles or credit risks forming outside the US, or in the US for that matter...the housing market in Australia is going to go pop in the not too distant future, which will collapse the AUD against the USD IMHO. Stock markets and commodities could reverse, and interest rates in the US would still be at zero, but the USD in this situation will strengthn greatly.

 

what I know about carry trades they take a long time to build and a long time to unwind, months not weeks.

 

Again check that GBPJPY chart...18 months to uwind nearly 20 years. They unwind very quickly. But can take time to deleverage completely. One might say that the unwinding of the CHF, JPY and USD carry trade still has not unwound, but began to unwind in 2007/2008.

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HI Pixel8r, interest rates rising is not a prerequisite condition for the unwind of a carry trade. Look at how the JPY performed against GBP and all other pairs during the unwinding of the carry trade. the BOJ actually cut rates to 0.15 from 0.50 in this time.

 

Its not dependent only on US rates, it will depend on asset bubbles or credit risks forming outside the US, or in the US for that matter...the housing market in Australia is going to go pop in the not too distant future, which will collapse the AUD against the USD IMHO. Stock markets and commodities could reverse, and interest rates in the US would still be at zero, but the USD in this situation will strengthn greatly.

 

Again check that GBPJPY chart...18 months to uwind nearly 20 years. They unwind very quickly. But can take time to deleverage completely. One might say that the unwinding of the CHF, JPY and USD carry trade still has not unwound, but began to unwind in 2007/2008.

I am not claiming to understand carry trades that well, I have just noticed that once created they tend to last for a while. The dollar carry trade is quiet a recent thing and if the 20 years of Japan is anything to go by, it looks like it will carry on a while longer.

 

18 months to unwind is plenty of time to adjust your positions when you see it changing, meaning there is no point trying to second guess when it is going to happen.

 

Currency trades is not really my thing, I am more interested in precious metals. This thread was started due to Jim Sinclair saying the dollar would be starting it's decent this weekend. Think it will be interesting to monitor the action in the dollar this coming week, although it doesn't really affect me other than gold moving inverse to it.

 

 

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I am not claiming to understand carry trades that well, I have just noticed that once created they tend to last for a while. The dollar carry trade is quiet a recent thing and if the 20 years of Japan is anything to go by, it looks like it will carry on a while longer.

 

18 months to unwind is plenty of time to adjust your positions when you see it changing, meaning there is no point trying to second guess when it is going to happen.

 

Currency trades is not really my thing, I am more interested in precious metals. This thread was started due to Jim Sinclair saying the dollar would be starting it's decent this weekend. Think it will be interesting to monitor the action in the dollar this coming week, although it doesn't really affect me other than gold moving inverse to it.

 

Absolutely...but as we are all here to expand our knowledge I think it is a very useful thing to know about currency relationships...after all it will have a big influence on the gold price...

 

Interesting week ahead is right...I m still of the opinion that the trend is still bullish for gold and bearish USD, but still waiting for reversal...

 

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Absolutely...but as we are all here to expand our knowledge I think it is a very useful thing to know about currency relationships...after all it will have a big influence on the gold price...

 

Interesting week ahead is right...I m still of the opinion that the trend is still bullish for gold and bearish USD, but still waiting for reversal...

 

I dont have a position other than holding euros but i am expecting that rather than a decline of US power any time soon that some kind of rip your face off short squeeze will result from what people like Faber say is the large oversold state of the USD. There are already signs the US situation is stabilising. If that continues then there has to be at least a temporary recovery.

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Also what about the commercial real estate bubble which is just starting to burst.

 

 

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I dont have a position other than holding euros but i am expecting that rather than a decline of US power any time soon that some kind of rip your face off short squeeze will result from what people like Faber say is the large oversold state of the USD. There are already signs the US situation is stabilising. If that continues then there has to be at least a temporary recovery.

 

No he could be right if these hit the stores for xmas the stabilisation would be complete.!!

 

 

k0969190.jpgAndrex today released 2 new toilet paper holders they will be in all major stores for xmas. :lol::lol:

u12398176.jpg

 

 

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or the widening trade gap.

 

The us is a major manufacturer and commodity exporter.

 

A weaker dollar is useful for them

 

Meanwhile they remain the most powerful country on earth with no serious rivals

 

I dont think there is much point discussing this because only results will show who is correct. Us residential housing will have a bottom of sorts by mid 2010. other aspects of the crisis will grind on and bottom and then we get to find out how the land lies

 

I dont think i know the future but i believe some things are unknowable

 

And yet some things can be assumed via reason and knowledge. Many aspects of this crisis have played out as i thought they would do one year ago. The next part is more unknown to me.

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The us is a major manufacturer and commodity exporter.

 

A weaker dollar is useful for them

 

sorry, but that's nothing but a statist myth.

 

manufacturers sell at the market price.

 

bizarre that you should think that theft on a massive scale (which is what inflation is) benefits manufacturing.

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sorry, but that's nothing but a statist myth.

 

manufacturers sell at the market price.

 

bizarre that you should think that theft on a massive scale (which is what inflation is) benefits manufacturing.

 

For the record the rich with assets tend to do well out of inflation because they bought the assets with debt and they tend to maintain an inflation linked income. Inflation is more a tax on the poor

 

But you already know this i am sure

 

Manufacturers sell at the international market price but pay costs in local terms including wages. If their local currency falls then their goods are more competive on the world market and they get increased orders and market share versus stronger currencies

 

I would guess you know that too

 

For richer americans high unemployment means that unions have less bargaining power and are more docile and easier to manage. If there is 20% unemployment then 80% of americans are still working and if you rich and not working it is not a big deal.....more like a welcome holiday maybe.

 

unfairness has nothing to do with the final outcome.

 

If you want to successful trade precious metals and currencies i think you need to put your desire for a different world to one side and simply trade each day as the world exists today or whatever trends you see developing for tomorrow

 

Perhaps the rich will get richer and the poor poorer. That is a more usual historical world norm i think?

 

Similarly the young disenfranchised eventually age and become more like their parents who cant understand why the young are so uncooperative and want everything to be 'so easy'

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sorry, but that's nothing but a statist myth.

 

manufacturers sell at the market price.

 

bizarre that you should think that theft on a massive scale (which is what inflation is) benefits manufacturing.

 

 

Not to mention that manufacturing jobs only holds about 20% of the total labour market...That percentage needs to grow. Basically a weak USD is not good for anyone.

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how's Zimbabwe's manufacturing doing? :) they must have the best manufacturing in the world...

 

If you take the land from farmers who manufacture food and give it to people with no interest in farming and pay government officials with invented money then you may as well employ sheep to run the economy and get better results

 

i am sure you know that too

 

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applies to America also.

 

 

but America will print more $$$ & everything will be ok. we are already seeing green shoot everywhere ;)

 

 

I think next few days are to watch.

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Do you see that happening soon then?

 

I don't, I see rates staying very low for an extended period of time, which means the dollar should weaken even more over the foreseeable future. As I have talked about previously from what I know about carry trades they take a long time to build and a long time to unwind, months not weeks. Dollar bulls looking for a bounce are not looking so clever now, are they?

It does not need a rate hike for the carry trade to reverse. The hedge funds have bought into the logic that zirp provides a fee lunch. The markets are fragile and a reversal could be sparked by any number of events. The Yen carry trade was conducted when the world economy was in a period of growth... though in hindsight lit could be said to have helped create in reality a lengthy super bubble economy.

 

This new dollar carry trade is operating in a period of contraction, and is blowing a bubble in asset prices at an even more furious rate. The timespan of this bubble may be a very compressed..... and pop very quickly.

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Just seven days to go now...... Is Jim Sinclair going to be right this time?

Do not mean to put the boot in here, but given that he is wrong again with his somewhat "alarmist" prononcement, would you consider taking his next deadline less seriously?

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http://www.citywire.co.uk/personal/-/news/...5358&Page=1

 

Buy shares as G20 pledges to keep providing support (No thanks I think I'll stick to gold and silver!)

 

The leaders of the G20 group of countries once again said it is too early to withdraw support from the global economy, providing more reasons to buy shares.

 

US Treasury Secretary Tim Geithner's speech was typical of the tone at the meeting.

 

'With growth now underway and the financial fires winding down, the policy challenge is changing. The next stage is about catalyzing private demand and business investment. This will require continued policy support, ' he said.

 

He said the recovery programs put in place in the United States and around the world were designed to provide support for growth over a two year period, and said 'governments around the world are committed to continue to reinforce the recovery now underway, before we shift to restraint.'

 

A trader at a leading European investment bank said the news was supporting shares as: 'The G20 over the weekend pledged to keep stimulus measures in place until the economic recovery was assured. G20 financial leaders agreed it was too early to pull the plug on economic support for a fragile economic recovery.'

 

And Alain Bokobza, strategist at Societe Generale, said investors should still be buying equities given the policy backdrop.

 

'History tells us there is a lag of at least 14 months between the start of job creation and the start of a tightening process,' he said, adding policy makers have learned their lesson and will not tighten aggressively on the first signs of economic recovery.

 

'Policymakers are still doing whatever possible to reflate as inflation is far away. Fiscal policies should remain supportive in 2010,' he added.

 

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It does not need a rate hike for the carry trade to reverse. The hedge funds have bought into the logic that zirp provides a fee lunch. The markets are fragile and a reversal could be sparked by any number of events. The Yen carry trade was conducted when the world economy was in a period of growth... though in hindsight lit could be said to have helped create in reality a lengthy super bubble economy.

 

This new dollar carry trade is operating in a period of contraction, and is blowing a bubble in asset prices at an even more furious rate. The timespan of this bubble may be a very compressed..... and pop very quickly.

The FED have been well known for blowing bubbles in asset prices have they not, that has been there policy for years one bubble after another.

 

Best be in the right bubble at the beginning and get out just before it pops. The amount of money being pumped into the system means this bubble is going to be even larger than the last to me.

 

 

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Do not mean to put the boot in here, but given that he is wrong again with his somewhat "alarmist" prononcement, would you consider taking his next deadline less seriously?

The dollar has gone down rapidly since the date he has said, so I think you are being a bit quick to say his call is wrong again. Lets see what happens for the rest of the week before being so quick to put the boot in.

 

 

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The FED have been well known for blowing bubbles in asset prices have they not, that has been there policy for years one bubble after another.

 

Best be in the right bubble at the beginning and get out just before it pops. The amount of money being pumped into the system means this bubble is going to be even larger than the last to me.

And what is the right bubble? Surely not gold.

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And what is the right bubble? Surely not gold.

I believe the bubble will be in commodities in general, with gold being the king. I am not saying that I think gold is in a bubble yet, or that the price will come down far when it peaks though. I actually think gold will soar from here and then become money again at some point.

 

 

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