Wednesday, October 20, 2010

One for General C – courtesy of Joe Granville

U.S. Dollar Gains Big: A Trend Change, Or a Temporary Event?

http://www.housepricecrash.co.uk/newsblog/2010/10/blog-a-bank-with-sense-what-about-gold-30781.php 'nuff said? Love Private Techie

Posted by techieman @ 08:14 AM (1771 views)
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34 thoughts on “One for General C – courtesy of Joe Granville

  • (yawn)

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  • and the answer hpw is……..?

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  • ZZZZzzzzzzzzzzzzzz

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  • Comment about Rooney on the other thread.

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  • Another comment from the same article:-

    Well King ought to know, as it was the BOE that orignally handed out all of the booze (loose/funny)money) that the system originally got drunk on.

    This is the equivalent of a drug dealer telling those that he has got hooked on his merchandise, that he is no longer willing to supply them with the goods that they so desperately need.

    Let’s not be fooled by this. The Central Bankers of this world were the actual creators of the mess we are now in the middle of.

    There are only two reasons why the Central Bankers have unanimously agreed upon our current monetary system:

    (1) As it provides them with a mechanism to artificially manipulate the prices of all assets up and down at will;

    and (2) It provides them with a mechanism (inflation) to silently rob people of their wealth in perpetuity.

    I think you are in the minority on this techie.

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  • i see so the movement of the most watched forex pair in the world and the implications that has for the global economy – of which i believe we are still a part is not worthy of comment by the north london massive? I see.

    Best you go back to bed mat eh – a bit early to be snoozing.

    I will attempt a bit of simplification. The question, is whether this is a temporary move up in the dollar or a change of trend – for a longer period. Sensible responses would be appreciated.

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  • i think you have put 5 on the wrong thread !! Chr1st you really are asleep.

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  • i think you have put 5 on the wrong thread !! Chr1st you really are asleep.

    I wonder if we can merge threads…

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  • I’m going back to bed for another 20 minutes.

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  • No surprise about how Schiff sees this:

    If China can do this to gold, it will be interesting to see how gold responds when we start raising rates. You make a good point about the dollar, Techieman, but I suspect the trend is still with General Congreve – especially in view of Geithner’s recent utterings about the dollar (at least nobody in the audience laughed this time.)

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  • quiet man did you report this article for sarcasm in title?

    huh huh huh

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  • I read a comment yesterday on this site that boldly proclaimed that the Dollar would eventually go to zero. This is far from the first time I have read comments like this, on this site. I am always taken aback by the naivety that must lie at the root of this comment. I usually avoid currency topics (too much of a busman’s’ holiday) but I think it might be worth risking a generalised comment on this one.

    If you’ve lived in America for any length of time or worked with Americans you will know that they are very patriotic. American businessmen and businesses are proud to be American and they will remain loyal to their country. The following is a list of giant, hugely influential American corporations that have their tentacles growing in, through and around every part of the developed and developing world. The head quarters and culture of these giant corporations are all firmly anchored in America. It is therefore fair to say that a bet against the Dollar is a bet against these absolutely dominant global corporations (for example, there is not a Dollar of growth in China and India that doesn’t get a healthy number of cents shaved off it by Intel, Microsoft and the rest of them). Don’t get me wrong, these corporations have some competition and the Dollar can rise and fall but “go to zero”? That’s a ridiculous notion. Look at the list below and think what you are betting against when you say that the Dollar is, or will be, worthless.
    This list is far from exhaustive: Microsoft, Intel, Apple, AMD, 3M, Google, Yahoo, Boeing, IBM, Proctor and Gambol, Johnson and Johnson, Wal-Mart, Exxon Mobil, Chevron, General Electric, ConnocoPhillips, General Motors, Ford, JPMorgan Chase, Hewlett Packard, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, American Express

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  • flashman i agree

    when the dollar was $2 to £1 the americans were almost rioting.. it cant happen unless china starts a real war on usa

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  • Schiff @ 10 concentrates far too much on a carry trade/arbitrage perspective and doesn’t seem to recognise that carry trades are like a see-saw (there is a critical mass point that causes a reverse in the flows). Any appreciation of the RMB will ultimately be limited by the beneficial effects for American trade (a higher RMB will benefit American industry at the expense of Chinese industry, which will in turn put a floor under the falling Dollar). Imagine how much the corporations listed above will benefit from weaker Dollar (foreign earnings). I forgot to mention MacDonald’s and Coca Cola. Even the French and Chinese are shovelling down le big Mac and coke.

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  • Techieman

    Perhaps a very good example of news fitting the movement as we’ve discussed before. I think previously you or someone else predicted the turning point to be £1.61/2 GBP/USD so pretty close.

    With regard to Gold, the talk on here is generally relating to it’s movement against currency, the dollar of course as that’s how it’s priced.

    The important ratio for everyone here (trying to protect their savings or to get a small return) is of course Gold priced in Sterling.

    There has been talk of late about Gold making a retracement (in dollar terms). Now if the dollar is about to strengthen against other currencies (Sterling of most interest here), even if the price of Gold stood still a while, surely this would strengthen the arguement to perhaps hop back into cash for a short while.

    Just a thought, particularly as you and Flashman are both on this thread.

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  • Hi Quiet Guy @ 10

    The point I was making was that its dangerous to rely on the fundamentals to tell you whats going to happen. This was a probable buy on the rumour sell on the fact type thing. In other words this was discounted. Sometimes it is , sometimes it isnt – and sometimes what people think will move the market one way does or has not effect or moves it the other.

    Now EWI provide the “explanation” as to why this move was good for the dollar, whereas GC in the thread yesterday pointed out why it would be bad for the dollar. [not that what he said had no credibility] – i.e.:

    “However, surely higher interest rates in China will attract investment in the yuan, pushing it up versus the dollar (exactly what the Chinese don’t want). It’ll also drive the dollar down, weakening the US economy……

    Ergo, an accelerated trend of defaults on mortgages and loans, pushing the US banks to the wall even quicker, requiring even more bailouts and QE, weakening the dollar further… vicious circle.”

    That all sounds credible but then we have ” Ultimately the dollar will lose all it’s value. It’s going to happen anyway, but looks like the Chinese are giving a shove in the right direction. The death of the dollar means only one way for gold to move. It’s not bearish BTW.”

    I agree with Flash – which was why i said the obituary for the dollar was premature (at best).

    EWI shows that pinning the explanation to the news is a bit futile. Sometimes it works sometimes it doesn’t. As I said Granville’s – if its obvious, its obviously wrong – sprung to mind.

    Just to be clear I actually wasn’t having a go at GC at all.

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  • Techie

    just a thought maybe the chinese want to weaken the USA so they can continue their buying spree, I know they have been buying whole apartment blocks and funding building in Las Vegas

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  • Hi str2007

    Yes I said 1.60 – 1.61 but it wasn’t exactly a fantastic call as an upside target because I think we were around 1.58 at the time. However I did say by then people will say the dollar is in the toilet and will probably reverse, at least in the short term.

    By the way we are now back up about 80 pips from last night, so it may not be the c-o-t. Personally I think it is but I have a MBG – so aside from automatically getting out of some of the position for various tech reasons last night – I am willing to OCO a long term hold with the MBG, and probably add to it if we get some more sustained Euro selling. As I said im not too interested in cable really, I find it more difficult to suss out.

    As for gold – I think Christian’s assessment is pretty good – in broad terms it was and has been overbought for some time – top of BBs etc, but could easily spike at some point. You might want to take a look at last night’s vid.

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  • mark…. maybe. Personally im gonna set my soul on fire….

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  • lol do you need any matches or petrol?

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  • The death of the dollar seems to be told from 2 perspectives.

    The first is a chapter in the larger story about the end of fiat currency. The argument goes that fiat currencies always eventually fails and hey this time is no different. In this version of events the fact that the fiat system then re- arises (because it is obviously useful) is conveniently overlooked.

    The second is the demise of the US, a story perpetuated mostly by Americans who feel o/s and alienated by their system and use their freedoms of speech and such like to have their say. This story is forever seeing some other country gain dominion (I suppose understandable paranoia for any top dog). In the 1980’s it was Japan (look at them now), and now it is China. This analysis generally fails on the basis that the arguments are selective weighing only the weakness of the US against the strengths of the competitor – in this analysis the competitor has no weaknesses and indeed would itself be magically unaffected by the demise of the worlds largest economy.

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  • am sure hpw would be happy to supply those!

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  • There is another reason why the dollar is not so fashionable

    If you use the dollar as payment system for online gambling, adult sites etc the feds can come after you, cant remember the exact law, but using the dollar opens you up to it

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  • techieman

    I can’t go to sleep unless I’ve heard Christians dulcet tones now. How sads that.

    Should have had a disclaimer in my youth.

    THE DISCLAIMER BABY, READ IT AND WEAP.

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  • bellwether

    Wise words.

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  • There was a facinating email this morning from MoneyWeek about Silver and why (due to various ratios) now may be a good time to step aside for a while.

    Here’s the link for anyone who’s interested.

    http://www.moneyweek.com/investments/precious-metals-and-gems/money-morning-silver-price-take-profits-04209.aspx

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  • @Techieman
    “The point I was making was that its dangerous to rely on the fundamentals to tell you whats going to happen.”

    Even in the long run? Gold’s malleting yesterday was a good illustration of the dangers for traders but what of the next few years or so? Is Schiff wrong on that one as well? I’m interested because I expect that raising interest rates in the West will kill gold at some point.

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  • QG – hang on werent you a gold bull a couple of days back? I dont really make too many comments on gold – except its a good idea to have some. I bought a fair lump years ago, but liquidated most of it in 2008 around 1030. Although i have a fair bit left, (about 20% of the original) as far as i am concerned i have made the money i am gonna make and only have the rest for insurance purposes.

    If i am honest i would probably have got out of the rest but for the fact that S2R1 convinced me of some end of world scenario and that you should hold gold. Short term gold gets the same technical treatment as anything else but long term…. well really who knows. And frankly if it all went to nothing next week i have relatively small exposure – although i would of course be a bitt p1ssed off. .

    As i said to str2007 – to see where technicians are coming from on gold see perfectstockalert.com. [then pick the you tube link]. The only other thing i would say is if we do have a spike, when thats all over it will likely collapse a la bubble. Good luck with it.

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  • but for the fact that S2R1 convinced me of some end of world scenario and that you should hold gold

    and I’ll bet you are glad you did….maybe not though.

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  • 2008 around 1030

    I don’t think gold went above $1,000 an ounce in 2008.

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  • hpw @ 30 not too fussed to be honest – as i said made what i am going to out of it – the rest isnt material in terms of a strategy.

    @ 31 – think again! You might want to check this blog then.

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  • Actually if you are going to call someone a liar, here is a tip always get your facts straight before doing so.

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  • @Techieman

    Thanks for responding. I am still bullish for Au over the next few years but like to explore other views on the subject. I will have a play with your perfectstockalert.com suggestion.

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