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Dollar may be done here - Be careful

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I agree in many ways with the carry trade. However, we know how it usually ends for the carry trade currency...It can become very strong and can reverse quickly.

 

I don't at all ignore fundamental analysis, but I think it is more useful for a longer term time horizon...Whereas technical analysis is much better for timing and shortterm swings. So while I agree we will have a weaker USD over the coming decade, or years, I m technically bullish for a while. I also own gold, silver and wont sell as it is fundamentally analysed for the longer term. However, short term its good to hedge...

 

The way I look at it is this. We can make a longterm investment in say gold as an example,,,which we might plan to hold for 10 years or longer or shorter, of course we can look at other ways that are non time based to spot tops so its not good to try and forecast an exact holding period...

 

So when gold goes up I m not selling, when silver goes up I m not selling. Now through out this longterm holding period, there will be cyclical times lasting months or even a year or so, when buying gold or the already paper gains in gold might be at risk. So I think the best strategy is to hedge longer term investments with short term holdings of other assets...I m not planning to hold or go long on USD for 10 years like gold or silver. However, with a shorter term period say a few months I will maybe be bullish on USD's to hedge and offset any down turn in gold...The difference being at the end that few month period I will not be selling gold, but will possibly be selling USD...

 

In a nutshell...Longterm analysis and investment based on fundamentals, secular and cyclical analysis. (10-20 years)

 

Shortterm hedges within this larger 10-20 year holding period using technicals, sentiment, market breadth indicators, price trend indicators and short

terms fundamental changes.

Good post. I have pretty much the same strategy, but you've managed to explain it more concisely [and patiently] than me.

 

My hedges are Yen and dollars [soon to buy].

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I agree in many ways with the carry trade. However, we know how it usually ends for the carry trade currency...It can become very strong and can reverse quickly.

 

I don't at all ignore fundamental analysis, but I think it is more useful for a longer term time horizon...Whereas technical analysis is much better for timing and shortterm swings. So while I agree we will have a weaker USD over the coming decade, or years, I m technically bullish for a while. I also own gold, silver and wont sell as it is fundamentally analysed for the longer term. However, short term its good to hedge...

 

The way I look at it is this. We can make a longterm investment in say gold as an example,,,which we might plan to hold for 10 years or longer or shorter, of course we can look at other ways that are non time based to spot tops so its not good to try and forecast an exact holding period...

 

So when gold goes up I m not selling, when silver goes up I m not selling. Now through out this longterm holding period, there will be cyclical times lasting months or even a year or so, when buying gold or the already paper gains in gold might be at risk. So I think the best strategy is to hedge longer term investments with short term holdings of other assets...I m not planning to hold or go long on USD for 10 years like gold or silver. However, with a shorter term period say a few months I will maybe be bullish on USD's to hedge and offset any down turn in gold...The difference being at the end that few month period I will not be selling gold, but will possibly be selling USD...

 

In a nutshell...Longterm analysis and investment based on fundamentals, secular and cyclical analysis. (10-20 years)

 

Shortterm hedges within this larger 10-20 year holding period using technicals, sentiment, market breadth indicators, price trend indicators and short

terms fundamental changes.

Isn't that really just cancelling out some of the gain you making in gold and silver? Also at any point a black swan event could happen, which completely changes the outlook. Carry trades do change quickly when they finally change, but they take a long time to change and I think it gets to the point that you know it is going to happen soon. I think ZIRP will be around for a very long period and even when it starts to change it will do so very slowly.

 

The plan I have been using is to hold both gold and silver, but to swap a portion between metals if we are on a deflation swing or an inflation one. So at the moment I am heavier on silver, as I see things look to moving back to deleveraging and deflation I will swap silver back to gold.

 

I suppose my problem is that I can not bring myself to trust any fiat currency, especially with the amount of printing that is happening. Something which can't happen with metals.

 

I guess I am too busy really to be trying to time markets with my work and just try to take the longer term outlook. Really I am trying to increase my buying power while the housing market crashes, which has been going very well so far ;)

 

 

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Isn't that really just cancelling out some of the gain you making in gold and silver? Also at any point a black swan event could happen, which completely changes the outlook. Carry trades do change quickly when they finally change, but they take a long time to change and I think it gets to the point that you know it is going to happen soon. I think ZIRP will be around for a very long period and even when it starts to change it will do so very slowly.

 

The plan I have been using is to hold both gold and silver, but to swap a portion between metals if we are on a deflation swing or an inflation one. So at the moment I am heavier on silver, as I see things look to moving back to deleveraging and deflation I will swap silver back to gold.

 

I suppose my problem is that I can not bring myself to trust any fiat currency, especially with the amount of printing that is happening. Something which can't happen with metals.

 

I guess I am too busy really to be trying to time markets with my work and just try to take the longer term outlook. Really I am trying to increase my buying power while the housing market crashes, which has been going very well so far ;)

 

There is a thousand ways to skin a cat, however, going past whatever method is "best"(everyone has a different method) whatever method you are using I wish you success with it as it looks like you have done your homework. I m in agreement long term fundamentally...

 

Does it cancel out? No because, I m only holding one short term and the other long term. Example, gold ( holding longterm), lets say shortterm,ie, months, it goes to 750-850 USD, I ll not sell of course if it gets to 750 USD as I think it will move higher longer term...

 

In the same time gold to 750 USD, and I m also long USD against say sterling, CAD, Euro, lets say we go to sterling 1.50, euro 1.30, CAD 1.1500, and I cover my longs in USD...I will have made money, and might consider putting some of that money into gold or silver...in next 12 months after that gold goes to 1200+...If i was not hedged I would be down a paper loss, a drawdown on my gold holdings...However, I used the short term swings to make money from the long USD positions held short term...thus offsetting any paper loss in gold, and hence hopefull a profit overall.

 

Thats the theory anyways :) Of course confirmation is needed.

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I am looking/ hoping for this and will be keen to jump from silver to gold should it occur. If there is one final push up, the ratio may near 50.

Would also look at buying dollars with strengthened Korean won.

 

Unfortunately for some, that thrust up (& low in the Dollar) may be done already.

 

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How anyone can look at the graph above and say it shows a turn is about happen amazes me!

Symptom of True Believer Syndrome? :unsure:

:lol:

 

Elliott Waves are one of the few systems that can signal turns BEFORE they happen.

 

...the DX is still in a downturn...however, the USD has had plenty of big rally's in the last 30 years...Just to say again, I m not longterm USD bullish, I m very negative...But I this USD short is very overcrowded now...and it is at times when people are amazed at how something could happen that they usually do in markets. Thats why its best to not use the fundamentals as a leading indicator, but price first...

 

I agree completely with that

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Unfortunately for some, that thrust up (& low in the Dollar) may be done already.

75.37. Could slide further... who knows when it will turn. I am not too concerned if I miss it as have some solid funds in Yen. I think the Yen is safe from unravelling.... for the time being.

 

I've suspected for some time now one final wave up in the inflation trade.... things do seem a bit knife-edgy here.

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Unfortunately for some, that thrust up (& low in the Dollar) may be done already.

May being the important word in that statement!

 

One day pigs may fly.

 

 

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Bob Chapman -

The USD will test 71 by the end of this year.

 

By the end of October? possible.

 

Gold/Silver are the only place to be..people just don't get it.

People don't get it? Why don't you take the time to read carefully the strategies some here are pursuing. Oh, you might have to bracket certain dogmas first.

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People don't get it? Why don't you take the time to read carefully the strategies some here are pursuing. Oh, you might have to bracket certain dogmas first.

 

Keep your Toga on Roman...he said it, not me! I/he wasn't referring to you or probably around 90% of the people on this forum.

 

FWIW I'm happy to just preserve what i've got over the next few yrs.

 

If/when a Gold/Silver derivatives dealer goes down...that will be payday!

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Keep your Toga on Roman...he said it, not me! I/he wasn't referring to you or probably around 90% of the people on this forum.

 

FWIW I'm happy to just preserve what i've got over the next few yrs.

 

If/when a Gold/Silver derivatives dealer goes down...that will be payday!

Oh right... humblest apologies. :D

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Dollar Decline Draws International Protest

 

LONDON -- This could end up being viewed as the week when dollar weakness became too much for the rest of the world to bear, setting the scene for tense encounters at the upcoming meeting of finance ministers from the world's 20 largest economies.

 

Brazil has now imposed a tax on some foreign-exchange inflows. The Bank of Canada has cranked up its negative tone on the strength of the Canadian dollar. And a whole slew of European officials have practically begged the U.S. to step in and boost the buck.

 

This chorus of pain marks a rise in international pressure ...

 

 

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The dollar index won't go anywhere without the euro strengthening.

 

Q: How many dollars to a euro this week?

A: 1.495 +- 0.005

 

Round number stickiness or manipulation?

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May being the important word in that statement!

 

One day pigs may fly.

I don't particulary think the dollar is that great (and perhaps it should have been flushed down the toilet years ago). However it not beyond the realms of possibility that the dollar could significantly rally from here. I known - based on hot air, fantasy, deleveraging-redux, you name it - the possibility still exists. You must be prepared mentally for any possible scenario because these next few months could get a little crazy. Sure we are both solid gold bugs (I think!) but how would you feel if some backroom deal between US and China meant that the China-put dissapeared and the gold price went along with it. How would $600 feel to you? I stil feel there is an EPIC shakeout yet to occur in this game. TPTB are not going to let the goldbugs win so easily. Be prepared, comrade ;)

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Sure we are both solid gold bugs (I think!) but how would you feel if some backroom deal between US and China meant that the China-put dissapeared and the gold price went along with it. How would $600 feel to you?

Obama is not even thinking about gold yet. He has no clue. Hence there will be no deal. What would be in such a deal for China anyway?

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I don't particulary think the dollar is that great (and perhaps it should have been flushed down the toilet years ago). However it not beyond the realms of possibility that the dollar could significantly rally from here. I known - based on hot air, fantasy, deleveraging-redux, you name it - the possibility still exists. You must be prepared mentally for any possible scenario because these next few months could get a little crazy. Sure we are both solid gold bugs (I think!) but how would you feel if some backroom deal between US and China meant that the China-put dissapeared and the gold price went along with it. How would $600 feel to you? I stil feel there is an EPIC shakeout yet to occur in this game. TPTB are not going to let the goldbugs win so easily. Be prepared, comrade ;)

Don't worry I am prepared if that did happen, I went from $1000 down to $700 and was fine ;) I think TPTB are the ones putting out so much doubt in the minds of goldbugs just before they let the price surge to the next level.

 

Do you really think the Chinese and the yanks are on such close talking terms, I don't. I think the chinese are displaying more contempt for the US policies daily.

 

I actually don't think what you are talking about is going to happen, that is why I said the important word in that statement is "may". There is a lot of talk at the moment that draws the conclusions that things are definitely going to happen which I think can be dangerous especially to the casual browsers.

 

People should not delay and protect themselves.

 

 

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Don't worry I am prepared if that did happen, I went from $1000 down to $700 and was fine ;) I think TPTB are the ones putting out so much doubt in the minds of goldbugs just before they let the price surge to the next level.

 

Do you really think the Chinese and the yanks are on such close talking terms, I don't. I think the chinese are displaying more contempt for the US policies daily.

 

I actually don't think what you are talking about is going to happen, that is why I said the important word in that statement is "may". There is a lot of talk at the moment that draws the conclusions that things are definitely going to happen which I think can be dangerous especially to the casual browsers.

 

People should not delay and protect themselves.

 

 

From my observations Pixel, you seem to be on the train with a one way ticket. You say we are on the verge of hyperinflation, and the USD has only one way to go...I m not that dogmatic. As explained yesterday, I m positioned to take a USD long when I get the signal, even though now I m short USD, in the form of a proxy owning gold and silver.

 

At what point do you plan to go between silver to gold? I m just trying to understand your strategy. When silver gets to 15USD, 14 USD, when the S+P is at 1000 again?

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From my observations Pixel, you seem to be on the train with a one way ticket. You say we are on the verge of hyperinflation, and the USD has only one way to go...I m not that dogmatic. As explained yesterday, I m positioned to take a USD long when I get the signal, even though now I m short USD, in the form of a proxy owning gold and silver.

At what point do you plan to go between silver to gold? I m just trying to understand your strategy. When silver gets to 15USD, 14 USD, when the S+P is at 1000 again?

 

Hi vedantaTrader,

 

When you decide to go long USD....how will you do it? Spread-bet, dollar ETF or some form of proxy? Thanks.

 

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Hi vedantaTrader,

 

When you decide to go long USD....how will you do it? Spread-bet, dollar ETF or some form of proxy? Thanks.

 

I just use Oanda, they are pretty good, I m not at the size unfortunately to have an institutional type forex broker yet, at least to do it with managed risk...So I ll just use the spot forex broker.

 

I also have an account with Hargreaves Lansdowne, and a spreadbetting account and CFD account...which is I think if you are not day trading. Also I m just opening a Barx account. I like the range of products they have, and also you can use the options through them listed with Societe Generale.

 

Barx

 

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From my observations Pixel, you seem to be on the train with a one way ticket. You say we are on the verge of hyperinflation, and the USD has only one way to go...I m not that dogmatic. As explained yesterday, I m positioned to take a USD long when I get the signal, even though now I m short USD, in the form of a proxy owning gold and silver.

 

At what point do you plan to go between silver to gold? I m just trying to understand your strategy. When silver gets to 15USD, 14 USD, when the S+P is at 1000 again?

I use the gold to silver ratio as my guide and also the fundamentals of what is going on. As a quick guide I would swap gold to silver at 1:70 or better, not sure I would swap at the moment but I am currently 65% silver to 35% gold. I do not go all in on my thinking.

 

If I can see things starting to top out in inflation and it looks like we are going to move into a deflationary period I will swap some back, probably around 30%. I am expecting this happen around April/May time where I expect the gold/silver ratio to be around 1:40.

 

Through my analysis I see that we will be on a surge in gold to around $1300-$1400 over the next 5 months, due to us breaking out of the inverse head and shoulders and the $1000 barrier. I expect silver to gain more during this time than gold, think silver will get to somewhere around $30-$35. I then expect us to go into another deflationary surge through the summer, which will see gold drop back to around $1100 and silver to drop more in percentage terms.

 

That is my current thinking, but I am permanently revising my thinking and am prepared to change my mind at any point.

 

I don't believe my thinking is dogmatic, hope that has helped you to evaluate my strategy :)

 

 

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Great article by Sprott asset management;

 

Safe Harbour No More [PDF]

 

The US dollar (USD) is the world’s “reserve currency”. This status is arguably the greatest privilege enjoyed by the US as an economic entity. Most people don’t appreciate its significance. As the world’s reserve currency, the USD is used by other countries across the globe to back up their own respective paper currencies. In some cases, it’s as basic as a country stockpiling US dollars in their central bank vaults. When asked what supports their Pesos, Rubles, or Yen, the powers that be simply point to their pile of US dollars as proof of value. Upon reflection, it’s quite obvious how tenuous it is to back up one’s currency with a pile of paper issued by another country, but this is exactly how the world of international currency has worked for decades. And it has worked quite well...until now.

 

Despite falling 36% since 2001 (as measured by the US Dollar Index (DXY)), it is only recently that the US dollar’s ‘world reserve currency’ status has been seriously questioned. The media pundits haven’t spent much time discussing this of course, but during the week of September 8th to 11th, the DXY actually fell to new 2009 lows every single day that week. Over the last six months there has also been a substantial increase in anti-US dollar rhetoric from China, Japan, Russia, France, Brazil, and even the United Nations. Reading between the lines, it appears the US dollar hegemony has finally broken, and what happens next will have major consequences for the global economy.

 

 

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Obama is not even thinking about gold yet. He has no clue. Hence there will be no deal. What would be in such a deal for China anyway?

Bush had even less of a clue last year, but that didn't stop a huge dollar rally. IIRC it was a relatively small dollar/euro swap by Paulson which triggered it. Conditions are not the same but the euro could be high at the moment considering its own fundamentals.

 

Never underestimate your opponent.

 

 

Why would China want the deal? Maybe because its dollar reserves would buy more gold and commodities.

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Why would China want the deal? Maybe because its dollar reserves would buy more gold and commodities.

Why would the US want to give China precious gold for cheap? Remember, the US stopped handing out gold for cheap in 1971. Yes, they might be interested in dumping and buying back every now and then to scare small investors. But they can not 'afford' to give away larger amounts for cheap. If you have a lot of paper debt floating, but you have most of the gold, then the worst thing that can happen is that you have to scrap the paper, but you still have all your gold. If you loose your gold, however, then the jig is really up.

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Why would the US want to give China precious gold for cheap? Remember, the US stopped handing out gold for cheap in 1971. Yes, they might be interested in dumping and buying back every now and then to scare small investors. But they can not 'afford' to give away larger amounts for cheap. If you have a lot of paper debt floating, but you have most of the gold, then the worst thing that can happen is that you have to scrap the paper, but you still have all your gold. If you loose your gold, however, then the jig is really up.

You should change the above to;

 

If you have a lot of paper debt, but if you have most of the gold.

 

 

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