Friday, March 14, 2008

Major financial turning point coming up

Dollar plunge sets off global alarm bells

USD touched a record $1.5620 against the euro. In the US, crude oil reached a record $111 a barrel despite rising inventories

Posted by sold 2 rent 1 @ 08:51 AM (1725 views)
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19 thoughts on “Major financial turning point coming up

  • sold 2 rent 1 says:

    My charts for many things are flashing extreme levels

    I cannot see the USD going much below 70. It will rebound sharply
    As for the euro a peak of 160-162 is what I expect.
    Oil will peak between 115-120
    Oil stocks will then fall very hard indeed.

    The timing of all these turning points could well be when we see stocks crash (put in a final low) around Easter.

    As for gold, I still have a target for 1300-1500.
    What the government surpressions of the gold price actually do is make the final spike even higher, as it gives the 200 dma time to catch up.

    Silver is more unpredictble but we should see a peak of 25-30. Quite a big range I know but that is silver’s unpredictability.

    What I am extremely mega bullish on is gold stocks, with juniors being the cream of the bunch.
    Gold stocks always do very well in the final stages in any gold upleg. This time however, oil will be correcting hard into May, and will drive stocks higher as oil is seen the biggest input costs for the mining industry.

    Note: Gold stocks may take a big hit when general stocks tumble around Easter

    The gold-oil ratio will go from 9 to 15-20 in the space of 2 months.

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  • We have had:
    Location, Location, Location

    Now it’s:
    Recession, Recession, Recession

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  • Happy R – sorry didnt get to your question yesterday. I agree with s2r1 re the sharp reversal – when it comes – in the $, although not prepared yet to stick my neck out re the US$ low. Would be surprised however if £ makes a new high v. the US before the US rallies against it. Happy R – i was only commenting on the USD Ex Rate v other currencies. Someone i have alot of respect for has just shorted Oil (although if it goes higher he will average) as he thinks there is a major turning point on the cards (i’m more conservative and normally wait for some downside off a top and then a retracement before initialising shorts). Re the stockmarket – am sidelined as my feeling is it goes higher short term even though on the weeklies we look like we may have a new low. Certainly the moves in the Dow yesterday looked like a retracement from the 400+ upmove and the fact that the market reversed to postive territory is a good sign for the bulls.

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  • happyrenterz says:

    Personally I can’t see a reversal in the $ soon. Bernanke is working to a script which will slash interest rates to zero as long as there is deflation going on. And there is a lot of deflation left to go.

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  • happyrenterz says:

    Thanks for your reply techieman. I think shorting oil is not that risky because a slowdown will reduce demand.

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  • happyrenterz says:

    Also with US interest rates at zero the $ carry trade will kick in driving it down further.

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  • sold 2 rent 1 says:

    techieman,

    This is the dollar index breakdown.

    Euro 57.6 %
    Japan/yen 13.6 %
    UK/pound 11.9 %
    Canada/dollar 9.1 %
    Sweden/krona 4.2 %
    Switzerland/franc 3.6 %

    With the euro reaching a peak, any sharp reversal has to stop the dollar decline by itself
    Add in a sterling fall, and the yen’s recent 20pc rise ending, we have a big bounce for the USD.

    A rising dollar doesn’t mean the US is OK. Far from it.
    It actually means that all western fiat currencies are disliked. That is why gold will super spike.

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  • Matt_the_hat says:

    I thought there was a positive correlation between gold and oil, i.e. gold is a good hedge against inflation (however I’m no city wiz kid)

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  • rocket robbie says:

    S2r

    From my limited knowledge i have noticed that in the past few months the juniors have made steady progress but the major players like Rangold (the one im in) has soared from December £17.00 a share up to £26.00 a share today. Is it not a big risk to put your money in the small players while the big players keep on climbing.

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  • sold 2 rent 1 says:

    rocket robbie,

    The gold junior stocks are always the last to rocket.

    It is a bit like the Nasdaq bubble in 2000 when the interest switched from Oracle, Microsoft, and Yahoo to pets.com and lastminute.com.
    Until Nasdaq 2000 this gold top will be intermediate and not the final top.

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  • We have:
    * Rotten bonds with an AAA rating.

    * A worsening liquidity problem.

    * More defaults on Sub-prime to come.

    * Rumours of another Carlyle…etc., ..etc

    When you see a cockroach in a kitchen you know there are a dozen hidden behind the cooker. It’s like that with the dollar, untill you get a month with no bad surprises, people will continue to suspect the worst.

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  • s2r1 – yep, same page thanks for Dollar index b/down. Not so sure about end of the Fiats for a while yet….but yes am holding off selling my remaining gold but to be honest I’m just pushing stop loss to +20% of overall holding (which is around 400-500) and will run the rest, assuming that the market will indicate any potential “confiscaition”. Hold until we have a major spike if thats the case.

    HR – (i keep stopping myself from following with ..puff n stuff …well until now! Showing my age there). Yes fundamentally you may be right, I would expert to see some concerted G -$ buys soon though and the rate cuts next week are already discounted. Infact that is the point how much of this stuff IS already discounted by the market. As im sure you dont need telling the central banks are not the market – by that i mean whatever drivel they come out with the market will decide whats right and wrong – as i think S2r1 said price is the final arbiter.

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  • Alan you may be right but markets are always most bearish at bottoms and most bullish at tops. So all this blood on the streets stuff is a good indicator (i think and yes money where mouth is) that we are near a $ bottom. A good example as i said is the Dows performance yesterday – down on the Carlyle news but bounced back to the upside.

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  • happyrenterz says:

    rumours of confiscation will mean gold plummets. If the US goes ahead with confiscation would this mean a long term drop in the world price of gold?

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  • harold- good link – yes im sure we could all find something that supports the case – now whether or not the dollar is making an intermediate low or an all time low well thats a fair comment.`But im not too fussed about that, just think there`needs to be a quite large correction but soon (not right now) . As you say we will see, and price action will dictate my stance. Of course its possible for us both to be right dollar index goes one way (lower v Euro) and £/$ goes the other, thats not my view though.

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  • The picture is so typical – when it’s all going to 5h1t where is the paper open?

    Yes, you got it, on the page with the headline…

    “Woman dethroned after 2 years on can”!

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  • techieman, actually I don’t know if it’s a good article or not, hence my comment “maybe”. Ultimately, however, we’re just talking about one fiat vs. another – which is a bit like arguing over which dung heap stinks more than the other. They’re all doomed – a bit like us really.

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  • @techieman,
    Respectfully, I’d say ….lets see the market bounce back after Bear Stearns.

    …and the rest….

    cockroach theory (11 above) vs chartism.

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