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- As Silver Prices Rise, Silver Volatility will Grow
- Gold hits record high in flight to safety from Libyan unrest
- Morning Notes: Dollar Breaking Down
- When Bonds Lose Their Bid
- 5 Charts That Prove Inflation Is Here
- Bang Bang Maxwell Silver Hammer
- The Dollar's Impact on Stocks So Far in 2011
- Canadian Dollar: Higher or Head-Fake?
- Middle East Meltdown Could Mean Oil at $300 a Barrel, Pump Prices of $9.57 a Gallon
- Protection in Play After Euro Rally
- The Bear and the U.S. Dollar
- US Mint Must Pay More For Silver
- Bang Bang, Maxwell Silver Hammer
- Is the U.S. Dollar About to Crash?
- Peter Schiff: Silver Outweighs Gold
- yahoo msg board poster nails gold/silver moves, comex, jpm
- Gold Reaches New Record High - News Barely Reported by Mainstream Media
- Silver Outweighs Gold
- Top in Stocks and Silver?
- The next 10 days could determine the fate of the U.S. dollar
- Five charts that show inflation is soaring
- Did the Ben Bernank just tell us, indirectly, that Gold and Silver are set for infinity? Guest Post
- Canadian Dollar: Higher or Headfake?
| As Silver Prices Rise, Silver Volatility will Grow Posted: 02 Mar 2011 06:17 AM PST It does not seem uncommon to log online or turn on a TV and see silver head higher. Save for a few weeks in January, the trend toward higher prices has been in effect since August, when most people were still thinking silver at $20 was overvalued. At $33, it's still a bargain. | ||
| Gold hits record high in flight to safety from Libyan unrest Posted: 02 Mar 2011 06:11 AM PST Gold hit a record high above $1,436 an ounce on Wednesday as violence in the Middle East and North Africa pushed US oil prices above $100 a barrel triggered a flight to safety. Violence in the region has cooled appetite for assets seen as higher risk, like shares, and boosted so-called safe havens like German government bonds, the Swiss franc and gold... Read | ||
| Morning Notes: Dollar Breaking Down Posted: 02 Mar 2011 06:10 AM PST What's wrong with the dollar? That was the question the Fast Money traders were asking Wednesday morning as the dollar continued to fall against a basket of currencies including the Euro, Canadian dollar, Japanese yen, British pound, and Swiss franc. "The dollar is really trading lousy," said Joe Terranova, Virtus Investment Partners' Chief Market Strategist. "It really looks like it wants to make a substantive breakdown here."... Read | ||
| Posted: 02 Mar 2011 04:48 AM PST Felix Salmon submits: A couple of big names are out with cautious bond market views this week. For the big picture, turn to Bill Gross, who's worried about what's going to asset prices — both bonds and stocks — when QE2 comes to its scheduled end on June 30. He has two main points:
Complete Story » | ||
| 5 Charts That Prove Inflation Is Here Posted: 02 Mar 2011 04:43 AM PST Michael T. Snyder submits: Despite what Federal Reserve Chairman Ben Bernanke says, rampant inflation is officially here. The federal government is constantly monkeying with the numbers to keep the "official" rate of inflation below 2 percent, but it is becoming very difficult to deny that the cost of almost everything is really going up these days. The American people are not stupid. They notice the difference when they go to the grocery store or stop at the gas station. The dollar is losing value rapidly now. The price of gold set another new all-time record today and is currently hovering just above $1,430 an ounce. The price of West Texas crude has moved above $100 several times recently and the price of Brent crude is currently above $116. These higher oil prices are really starting to be felt in the United States Complete Story » | ||
| Bang Bang Maxwell Silver Hammer Posted: 02 Mar 2011 04:31 AM PST Everybody leaves the Beatles, whose strange songs are stuck in the memory of millions of people. "Bang, bang, Maxwell's silver hammer, came down upon her head. Bang, bang, Maxwell's silver hammer, made sure that she was dead." Little did the legendary Beatles realize they were providing the theme song for the linchpin of the USDollar in its lethal slide into the dustbin of fiat currency history. The song might have referred to Blythe Masters herself, the arrogant megalomaniac in wait, the JPMorgan queen of ruin. Silver rules! Gold is the victor, but Silver takes the spoils! The little sister shines! Central banks own no silver, nor do governments anymore. Industry requires and consumes silver, but not gold. Mint coin sales have exploded to record levels, and now struggle to continue amidst grotesque shortages. So on a supply basis and on a demand basis, silver is the dominant metal. In the last several months, Silver has shown its power and exerted its strong dominance. It has led the precious metals move, an explosive one. Gold has confirmed. Excuse the outline format, but the message is clear, offered without the burden of details. In this case, at this time, the important message is the firestorm of positive factors leading to a silver price explosion. The Jackass is on a brief vacation in Central America where the sun never stops shining. Apologies in last weekly article where mention was made of a negative real rate of inflation. The error was blatant in a slip of fingers. Given the price inflation of 8% in the USEconomy and near 0% rate of short-term interest, the inflation adjusted real rate of interest is negative. It is in the minus 7% to minus 9% range. That is a primary jet fuel accelerant for the gold bull market, a factor overlooked by the clueless cast of economist hacks!! SILVER ON THE VERGE OF EXPLOSIVE MOVE - prepare for an explosive upward price move toward $40 this spring/summer - a bullish silver hammer was shown last week, with open & close at the weekly high - year end price target is $50 per oz should be easy to achieve - a flag pennant pause pattern has been completed at the 28-31 range - usually it signals a half-way mark, so get ready for a move to 40 in next runup - gains in silver have tripled the gains of gold, as Jackass forecasted late last summer - do not be surprised if in 2 to 3 years, the silver price exceeds $100 per oz - latest noontime reading was 34.90 per oz for silver, in breakout GOLD FINALLY CONFIRMS BREAKOUT - it was bound to happen, and finally it did, confirming the silver breakout - a rectangular pattern was evident throughout the consolidation period - gold has shown a very different price pattern behavior consistently - the entire global monetary system is in ultra slow motion breakdown mode - latest noontime reading was 1440 per oz for gold, in breakout GLOBAL SILVER SHORTAGES - strong industrial silver demand (not true of gold) - absent depleted USGovt stockpile from 1905 created by Teddy Roosevelt - fully 6 billion ounces of silver in stockpile has been exhausted for five years - numerous government mints around the world have announced no silver supply - evident in the futures contracts, in backwardation of varying degree - expect arbitrage in full force to continue to make backward price extreme HUGE QE2 EFFECT ON COMMODITIES - monetary metals, industrial metals, energy, foodstuffs all rising fast in price - silver being accepted as monetary reserve, even as asset reserve - Chinese Govt announced plans to diversify reserves into silver - India is the first nation to begin a silver monetization plan - early stage of hyper price inflation in the global economic price structure - inflation adjusted real rate of interest is minus 7%, a primary gold market fuel - denials by USFed Chairman Bernanke is its confirmation !!! - Ben has a nearly perfect track record of wrong analysis and conclusions DEPLETION OF COMEX VAULTS - demands for delivery have been heavy since September - secret supply bailouts come from BIS and even the Holy See - some sort of March delivery climax event might be in progress - China has targeted the COMEX for delivery raids - demand staved off by COMEX cash delivery with 25% bribe (contract fraud) - metals markets have no silver !! CHINESE PLOT TO CORNER SILVER MARKET - China is angry at a broken secret treaty over Favored Nation Status grant - the USGovt sold the leased metal and cannot return it to China - China honored its side of the agreement by purchasing USTreasury Bonds - China is angry over the unilateral QE programs on US$ devaluation - the devaluation of the USDollar was done unilaterally without agreement - China is angry over charges of currency manipulation by the USGovt - the grand currency manipulator in gross violation is the USGovt & USFed - China senses an exposed jugular vein, and is using Sun Tzu war tactics GIGANTIC USMINT SILVER DEMAND - January coin sales were more than 2x the demand in previous months - mint coin sales are setting records not seen in 20 years - the USMint is purchasing silver from the open market SPROTT FUND CHALLENGE TO SOURCE SILVER - the fund required over three months to secure the entire supply of bullion - its manager reports of extremely tight silver market, no loose supply - James Turk echoes the shortage claim, from his GoldMoney vantage point MINING FIRMS BYPASS COMEX - the mining firms are not given a fair price by the metals exchanges - they are selling to the more honest investment funds, as metal source - the funds might strangle the official corrupted COMEX on supply cutoff SLV SUPPLYING COMEX TO MEET DEMAND - SLV stock shares used to offset naked shorts of futures contracts - back door to fraud written in their fund prospectus, in careful language - 129 million oz originally came from Warren Buffett, the great deception - prepare for a gigantic lawsuit from defrauded investors in late 2011 or 2012 - penalty in negative 2% SLV price premium, which is heading to minus 25% - in time, the SLV fund will own zero metal THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS. From subscribers and readers: At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue. (DevM from Virginia) "Days like these, I congratulate myself I had the good sense to follow your advice. I am much indebted to you!! For the last three years of my Hat Trick Letter membership, I have been able quickly to separate the grain from the chaff and save my assets from doom, having made sound investments in precious metals. Your thorough knowledge of macro-economics and financial cogwheels paired with your courageous visionary writing have been a much needed eye opening university." (PatrickB from France) "I think that your newsletter is brilliant. It will also be an excellent chronicle of these times for future researchers." (PeterC in England) Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com by Jim Willie CB March 2, 2011 home: Golden Jackass website
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| The Dollar's Impact on Stocks So Far in 2011 Posted: 02 Mar 2011 04:28 AM PST  Hickey and Walters (Bespoke) submit: After starting out the year on a positive note by rising five days in a row, the U.S. dollar index has reversed course and is now down 2.93% year to date. We wanted to see what impact, if any, the move lower in the dollar this year has had on stocks. When the dollar is rising, U.S. companies that do most or all of their business within our borders stand to benefit, while U.S. companies with large amounts of revenues outside of the country lose out. The opposite occurs when the dollar is declining -- companies with large amounts of international revenues benefit at the expense of the domestics. With the dollar down so far this year, we used our International Revenues Database that tracks the percentage of international revenues for U.S. companies to see if the names with large amounts of international exposure have been outperforming. To do this, Complete Story » | ||
| Canadian Dollar: Higher or Head-Fake? Posted: 02 Mar 2011 04:24 AM PST Mercenary Trader submits: The Canadian dollar made new highs Friday and Monday – seemingly due to the recent oil price spike. The Canadian dollar also has a well-known and long-standing link with the price of oil, so it pays for currency traders to be aware of the action in oil markets – and as you know, that action has been spectacular as of late. We cannot help but wonder though: Where would oil be without massive riots engulfing the Middle East? As recently as last week, WTI crude (West Texas Intermediate) couldn't maintain a rally even with the threat of a revolutionary contagion spreading across the entire Middle East. It took actual widespread revolution in the Middle East just to push oil above $100. WTI closed well under $100 on Friday – blowing off a full weekend of revolution risk. As far as I know, revolutions don't take weekends off! In other words: Complete Story » | ||
| Middle East Meltdown Could Mean Oil at $300 a Barrel, Pump Prices of $9.57 a Gallon Posted: 02 Mar 2011 04:20 AM PST Martin Hutchinson submits: The unrest in the Middle East oil patch is roiling the global oil markets on an almost daily basis. The events in Egypt, Libya, Saudi Arabia, Oman and other countries are also forcing us to ask that long-dreaded question: What happens if the countries throughout the Middle East region fall to radical governments? The answer is both stunning and surprising. In an absolute worst-case scenario - if the entire Middle East falls under radical control - we could be looking at $300-a-barrel oil and pump prices of $9.57 a gallon. Definitely a stunner. Here's the surprise: Even such a worst-case outcome would not result in the end of Western civilization as we know it. In fact, you can hedge against such a meltdown - just follow the recommendations that we detail below. A "Model" of Chaos The Middle Eastern and North African (MENA) countries produced 22.7 million barrels per day Complete Story » | ||
| Protection in Play After Euro Rally Posted: 02 Mar 2011 04:12 AM PST optionMONSTER submits: By David Russell The euro has enjoyed a nice run, but one investor still wants protection. Our Depth Charge tracking system detected a three-way put trade on the CurrencyShares Euro Trust (FXE) exchange-traded fund, which tracks the common currency against the U.S. dollar. A block of 2,500 March 137 puts was sold for $0.80, while equal amounts of April 137 puts were bought for $1.70 and April 134 puts were sold for $0.78. The net cost of the transaction was $0.12. Volume was below open interest in the March contracts, but not April. That suggests the investor rolled a position from the simple puts to a new bearish put spread the following month. He Complete Story » | ||
| Posted: 02 Mar 2011 04:11 AM PST John M. Mason submits: I continue to be a long-term bear on the U.S. dollar. The credit inflation that is looming on the horizon in the United States over the next decade is daunting. Financial leverage is going to increase once again and financial innovation, spurred on by advances in information technology, is going to be this future. This is what people do in a period of strong credit inflation. Chairman Bernanke says he doesn't see any signs of a buildup of inflationary expectations. This analysis comes from a man who has been late for every economic event during his 10 years of leadership in Washington, D.C. Inflationary expectations may not be showing up significantly in bond yields, but inflationary expectations continue to dominate the markets for the U. S. dollar. Inflationary expectations are not showing up to any extent in the government bond market because of the pressure kept on this market by Complete Story » | ||
| US Mint Must Pay More For Silver Posted: 02 Mar 2011 04:04 AM PST US Mint Must Pay More For Silver Bix Weir 
March 2, 2011 Open letter to: Edmond C. Moy Director of The US Mint 801 9th Street NW Room 8S23-3 Washington, D.C. 20220 Re: US Mint Must Pay More For Silver Dear Mr Moy: By stopping the production of US Silver Eagle Coins you are in violation of Public Law 99-61 which requires you to produce these coins "in quantities sufficient to meet public demand . . . " The Laws of the United States of America are put on the books to facilitate the proper functioning of our society. It is not within the powers of the US Mint to decide which laws are obeyed and which are discarded. The reason given for stopping production of the US Silver Eagle is the lack of availability of silver blanks. "The United States Mint will resume production of American Eagle Silver Uncirculated Coins once sufficient inventories of silver bullion blanks can be acquired to meet market demand for all three American Eagle Silver Coin products." http://catalog.usmint.gov/webapp/wcs...category=10191 This is not a new problem as I have written you many times in the past about this issue. Here is a letter from over 2 1/2 years ago that addressed the exact same problem: US Mint Illegally Rationing Silver Eagles http://www.roadtoroota.com/public/140.cfm Mr. Moy, the problem with silver availability is NOT that the silver blanks are not available but that... THE PRICE THAT THE US MINT IS WILLING TO PAY IS FAR TOO LOW! The reason for this is that the ongoing manipulation and price suppression of silver keeps the price of silver well below its "Fair Market Value". Of course there is an obvious solution to the problem... PAY MORE THAN THE ARTIFICIALLY SUPPRESSED PRICE FOR SILVER BLANKS! If the US Mint were to offer $50/ounce for silver blanks then suppliers would be lined up around the block to provide you with all the silver you need to be within Public Law 99-61. If you believe that $50/ounce is too high then you must determine at what price would the US Mint be able to source silver blanks to adhere to the requirements under the law. This is not rocket science. This is how the FREE MARKET IS SUPPOSED TO WORK! I request that you IMMEDIATELY remedy this violation and offer sufficient premiums to the suppliers of silver blanks in order to deliver US Silver Eagles "in quantities sufficient to meet public demand". The injustices in America these days are many...don't add to them by not upholding the laws of our land. Sincerely, Bix Weir www.RoadtoRoota.com cc: Gary Gensler, CFTC Chairman, Bart Chilton, CFTC Commissioner, Ron Paul, Chairman of the Domestic Monetary Policy Subcommittee | ||
| Bang Bang, Maxwell Silver Hammer Posted: 02 Mar 2011 04:03 AM PST Everybody leaves the Beatles, whose strange songs are stuck in the memory of millions of people. "Bang, bang, Maxwell's silver hammer, came down upon her head. Bang, bang, Maxwell's silver hammer, made sure that she was dead." Little did the legendary Beatles realize they were providing the theme song for the linchpin of the USDollar in its lethal slide into the dustbin of fiat currency history. The song might have referred to Blythe Masters herself, the arrogant megalomaniac in wait, the JPMorgan queen of ruin. | ||
| Is the U.S. Dollar About to Crash? Posted: 02 Mar 2011 03:59 AM PST By Leigh Drogen
Gregor Macdonald was in the office yesterday and I am always in awe of the way he processes information. As a trader I like to focus on the trend and block just about everything else out. But as a person who generally loves information and learning about the world, it's hard not to love my conversations with Gregor. We had the chance to discuss things ranging from what is currently taking place in the Middle East, to resources depletion, to the origins of the name for the band Steely Dan. I also asked him about the US Dollar, specifically, is it about to crash. (Click to enlarge) First, as a technician it's hard to deny that the US Dollar has been in a longer term bearish consolidation pattern for the past 3 years or so. We see a symmetrical triangle after a long term downtrend starting in Complete Story » | ||
| Peter Schiff: Silver Outweighs Gold Posted: 02 Mar 2011 02:05 AM PST Silver Outweighs Gold by Peter Schiff In the world of precious metals, silver spends a lot of time in the shadow of its big brother gold. Gold, with its high price-to-weight and distinctive yellow tint, has always occupied a special place in the human psyche. To many people across many ages, gold is simply the ultimate form of money - and, as a long-term, stable store of value for one's personal wealth, I agree it's hard to beat. However, rare circumstances are aligning today that I believe will make silver the true champion of this bull run. WHAT'S DRIVING PRECIOUS METALS? Gold and silver are both benefitting from a perfect storm in the sector. Dollar devaluation means that much of the 'gains' we see are really just losses by people holding dollars. In other words, if your dollars lose 50% of their value, it's going to take twice as many of them to buy the same ounce of gold. But the rally is based on more than simple inflation. Precious metals are regaining their role as the ultimate reserve asset. That means many, many more people are buying and holding these metals than at any time in the last thirty years. Another factor is the rise of emerging markets and decline of developed markets. As billions of poor Asians, Africans, and South Americans lift themselves out of poverty by embracing the free market, the US is plunging itself into poverty by rejecting it. This means there are a mind-boggling number of new customers for jewelry, savings, and industrial products that require precious metals - and that we are becoming less and less able to outbid them for these resources with our dollars. SILVER'S DRIVING FASTER If the world were going to hell in a hand-basket, then I would expect gold to outperform silver. However, it is only the developed economies that are on the rocks - and only the US that faces true catastrophe. Thus, we have seen silver outperform gold for the last eight years. The market is telling us that while uncertainty reigns supreme, the global economy will prosper in the years ahead. While gold most effectively insures the investor against economic devastation, silver offers both a shield against monetary turmoil and exposure to market growth. THE KEY: INDUSTRIAL DEMAND This is because silver is both a precious metal and an industrial metal. Gold is mostly precious, copper is mostly industrial, but silver strikes a fine balance between the two. And it seems as if this moment in history is perfectly suited to this balance. We are facing not only the prospect of the collapse of the international monetary order, but also the largest industrialization process the world has ever seen. While in a past era, wood, steel, or oil would have been the most critical commodity, today silver is used in everything we hold dear: iPhones, flat-screen TVs, batteries, solar panels, etc. Asia - the new heart of the global economy - is accumulating gold, but they're consuming silver. That makes both metals good bets, but likely gives silver the edge. It's safe to say the future depends on a steady supply of silver. This burgeoning demand is reflected in the latest figures: global demand for silver is about 890 million ounces a year, while global mine production is about 720 million ounces a year. We're actually consuming scrap to make up the difference. And unlike gold, which tends to remain in a recoverable state as coins or jewelry, a large quantity of silver is ending up in trash dumps - where it is essentially lost forever. As long as the emerging markets continue to trend toward freer markets, and consumers the world over continue to demand computers, electronics, and green tech, silver should only become more scarce - and thus more valuable. I think these assumptions are pretty safe to make. CAN THE WORLD THRIVE EX-US? Of course, if everyone agreed with me, silver would already be worth hundreds of dollars an ounce and there wouldn't be any profit to be made on the trade. Fortunately, there are a couple of bogeymen in the financial media scaring the majority of investors away from silver so far. First, some analysts still believe - bless their hearts - that the US is really going to pull through this time into a sustainable recovery. After being duped by dot-coms and then housing, they are all aboard the Treasury Express back to Bubbletown. Unfortunately, as in the previous two cases, the current low interest rate environment is merely masking an underlying economy that is vastly more rotten than it was even a decade ago. The unemployment rate is a key signal that this time, Bernanke's magic medicine won't work. A second cohort sees that the US is doomed, but still thinks we will drag the rest of the world down with us. This is the school that holds that despite our persistent current account deficits and monumental external debt, the world economy "needs" the US consumer to drive growth. As I alluded to in my book, How An Economy Grows And Why It Crashes, this is like a plantation master claiming his slaves need him around to consume the fruits of their labor, or else they wouldn't have anything to do. Well, the results are in: after an initial panic rush into dollar-based assets, emerging markets are back at full sprint while the US is still limping along. SILVER IN A DOLLAR COLLAPSE Just like a Hollywood celebrity, we in the US spent our time at the top of the world - and soon let our status get to our heads. And like a celebrity, our adoring fans the world over will be quick to forget us as we fall from the limelight and deal with our powerful addiction to partying and cheap money. To survive the next decade in America, you are going to want an asset that is in demand globally, but is also free from counterparty risk here at home. I recently did an interview with a group that is making a film about living in America in the year 2019. The premise is that inflation is rampant, the economy is in shambles, and groups are springing up that do all their trading in silver rounds. While I think their timeline is quite generous, this is a fairly accurate picture of what lies ahead. Not only does silver appreciate while sitting in your safe due to overseas demand, but it also comes in units that are ideal for use as a common trade unit. Two or three ounces of silver can buy you groceries for a week. By contrast, just try to eat an ounce of gold's worth of vegetables before they spoil. There are fractional gold coins and bars, but they carry very high markups. None of us have had to think about these things in our lifetimes, but it is not abnormal in history. Soon, understanding precious metals will be as much a survival skill as knowing how to change a car tire. THE GOLDEN RATIO I always say that every investor should have at least 5-10% of his portfolio in physical precious metals. Of that, the proportion allocated to gold vs. silver depends mainly on risk tolerance. Silver tends to be more volatile than gold, so silver investors must have the discipline not to liquidate their stash at the first sign of a correction. I generally advise a ratio of 2:1 gold-to-silver in the average portfolio. More aggressive investors can push it to 1.5:1 or beyond. Year-to-date, silver is up 5 percentage points more than gold, and I expect that trend to continue. It's important to understand that in this fast-changing world, silver is no longer runner-up. | ||
| yahoo msg board poster nails gold/silver moves, comex, jpm Posted: 02 Mar 2011 02:03 AM PST this is a good read yahoo poster says hedge funds working over jpm in comex. also laid out the trades with andrew-maguire-type accuracy http://www.silverbearcafe.com/private/03.11/crimex.html | ||
| Gold Reaches New Record High - News Barely Reported by Mainstream Media Posted: 02 Mar 2011 01:31 AM PST | ||
| Posted: 02 Mar 2011 01:30 AM PST In the world of precious metals, silver spends a lot of time in the shadow of its big brother gold. Gold, with its high price-to-weight and distinctive yellow tint, has always occupied a special place in the human psyche. To many people across many ages, gold is simply the ultimate form of money - and, as a long-term, stable store of value for one's personal wealth, I agree it's hard to beat. However, rare circumstances are aligning today that I believe will make silver the true champion of this bull run. | ||
| Posted: 02 Mar 2011 01:00 AM PST
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| The next 10 days could determine the fate of the U.S. dollar Posted: 02 Mar 2011 12:20 AM PST From Gonzalo Lira: I've never been much of a fan of technical analysis. It's always struck me as something akin to reading tea leaves –and just as batty. But on the other hand, I've seen enough technical analysis deliver accurate predictions that I can't really dismiss it completely. Right now, the world is going through a pre-crisis mode – you can practically feel it in the air. The limitless deficit spending by the U.S. Federal government, which has instituted systemic +10% of GDP deficits year after year; the insane Federal Reserve policy of Quantitative Easing 2, which is nothing more than debt monetization as I wrote here, enabling the Federal government's addiction to deficit spending; the popular uprisings sweeping through the Middle East and North Africa, affecting – wouldn't you just know it – oil producing countries one after the other; the steadily rising food inflation, which in fact triggered those uprisings in Tunisia, Egypt and Libya, and which are beginning to affect the entire globe; the inevitability of a collapse of the euro – the other major world currency – because of the systemic tensions affecting the European continent, between the strong economies of the north, and the weak economies of the peripheries. All these issues are bringing renewed pressure on the dollar – though which direction the dollar will react to that pressure is the issue up for debate right now. The next 10 days will be key: Will the dollar spike up? Become the safe haven of everyone fleeing from the world's troubles? Or will the dollar nosedive, the first big step down in its death spiral? This is where we're at – and this turning point is happening now: Right now. Read full article... More on the U.S. dollar: A dollar collapse could be imminent You must diversify now before it's too late The unbelievable new way Americans can escape the dollar | ||
| Five charts that show inflation is soaring Posted: 02 Mar 2011 12:12 AM PST From The Economic Collapse: Despite what Federal Reserve Chairman Ben Bernanke says, rampant inflation is officially here. The federal government is constantly monkeying with the numbers to keep the "official" rate of inflation below two percent, but it is becoming very difficult to deny that the cost of almost everything is really going up these days. ... When it comes to inflation, the key is not to look at the official U.S. government numbers (they are highly manipulated), or how the U.S. dollar is performing against other major currencies (because they are all being devalued, as well). Instead, you can get a truer sense of what is really happening to inflation by looking at... Read full article (with charts)... More on inflation: Why the U.S. debt crisis isn't anywhere near over Marc Faber answers the most important question in the world The Federal Reserve is creating HUGE instability in commodities | ||
| Did the Ben Bernank just tell us, indirectly, that Gold and Silver are set for infinity? Guest Post Posted: 01 Mar 2011 11:53 PM PST Submitted By Jack C. By Michael R. Crittenden Dow Jones Newswires via The Wall Street Journal Tuesday, March 1, 2011 http://online.wsj.com/article/BT-CO-20110301-714533.html WASHINGTON -- Federal Reserve Chairman Ben Bernanke defended the central bank's effect on the dollar Tuesday, pushing back at the idea that policy makers should consider alternative proposals like the gold standard. | ||
| Canadian Dollar: Higher or Headfake? Posted: 01 Mar 2011 11:08 PM PST
The Canadian dollar made new highs Friday and Monday – seemingly due to the recent oil price spike. The Canadian dollar also has a well known and long standing link with the price of oil. So it pays for currency traders to be aware of the action in oil markets – and as you know, that action has been spectacular as of late. We cannot help but wonder though – where would oil be without massive riots engulfing the Middle East? As recently as last week, WTI crude (West Texas Intermediate) couldn't maintain a rally even with the threat of a revolutionary contagion spreading across the entire Middle East. It took actual widespread revolution in the Middle East just to push oil above $100. WTI closed well under $100 on Friday – blowing off a full weekend of revolution risk! As far as I know, revolutions don't take weekends off! In otherwords: Despite the pyrotechnics, these moves seem more like passing jitters than a genuine mood shift in oil.
Other evidence: Oil prices for delivery 1 year out haven't budged, even though spot prices soared 15% or more. The WTI contango (prices for distant future delivery more expensive than near delivery) that has defined the oil market for the last several months has evaporated. While moving out of contango would "normally" be interpreted as a bullish sign, multiple revolutions across the Middle East doesn't qualify for "normal" at all. Shifts to new price regimes require the entire oil price curve to shift – which has not happened. With huge, huge riots everywhere – and what appears to be a defacto overthrow of the Libyan government this weekend – we have WTI crude still wrestling with $100. So there are at least two interpretations of the price action in oil:
To me, the price action says "Flow of oil likely to continue no matter who is in power" – so let's look at the impact of oil on the Canadian Dollar. Oil moving $13 is still $13, so you'd expect this to have an impact on the Canadian Dollar. Oil and the Canadian Dollar are widely considered to be strongly linked markets. When I do a bit of math, it seems like the move in the Canadian was "too small" relative to the huge increase in oil prices. What do I mean by "too small"? We have years of a historical relationship between oil and the Canadian dollar. We have a strong indication of what "should" happen to the Canadian Dollar with oil moving $1/barrel.  As it turns out, regression analysis says that for every $1/barrel move in oil, the price of the Canadian should move about 62 pips. This relationship is not absolute and no market moves in complete lockstep. But it does give clues to what should be happening with the price of the CAD. Let's use the oil lows from late January as a reference point.
Based on the above, the Canadian Dollar should have had a move of 10.33 * .0062 = 640 pips. We got a move of 250-300 pips. This doesn't take into account the huge move well above $100 a barrel that happened late last week and sold off – at one point the Canadian should have been up nearly 1200 pips! We've seen nothing in the CAD even close to this magnitude. This discrepancy between oil and the Canadian Dollar has been in place for the last 6 months. Oil and Canadian both made significant lows on August 26. But while the price of oil has rallied at least $27/barrel (from $70!), the Canadian Dollar has only rallied about half of what would have been expected. I am using futures in the chart below – the CAD futures are inverted compared to the USDCAD. Mentally invert this chart if you're used to looking at USDCAD.
We had similar price action during the 2008 oil price spike to $140. Oil went to $140, but the Canadian Dollar hit 1.10 months before the spike, and actually started to fall once oil got above $90. By the time oil hit $140, the USDCAD was trading around 1.0000. Clearly, something keeps a lid on the Canadian Dollar when the price of oil gets too high. The most obvious answer is that the market gets very concerned about U.S. economic growth when oil prices get too high. Since some large portion of Canadian economic activity depends on U.S. activity, oil prices above $90 are negative for the future of the Canadian economy too. What is the upside here for the Canadian Dollar? Further oil price increases are unlikely to give the CAD a boost in the short term. Additionally, the Canadian Dollar has had a compressed range when compared with corresponding moves in the price of oil. This is something to consider when looking at oil prices as a driver of the Canadian Dollar – the CAD doesn't seem to like oil above $90/barrel. This doesn't negate the higher movement of the CAD, but is rather something to watch as trading develops… |
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