Carrying The Dollar
Lots of stuff going on but not a lot of time today so I have to keep this relatively brief.
As you look at the charts below, I want you to consider something. Much has been made of the idea that you do not want your currency to be the funding vehicle of the "carry trade". The idea is that a world looking for growth will short the crap out of your currency and use the proceeds to fund "risk" trades. Recently, we've all witnessed what seems to be a direct correlation between dollar strength/risk off and dollar weakness/risk on. Is this not some evidence that the dollar is now the carry trade funding vehicle? I'm not saying that it is...certainly folks a lot smarter than I would be talking about it if it were...but, it's certainly worth considering.
So what about that reversal in The Pig overnight? Apparently, it has to do with this:
Look, this downgrade of France and perhaps some others has been whispered about all week. It's likely to happen. I wouldn't be surprised if S&P announces it late this afternoon, similar to the way they released the downgrade of the U.S. back in August, What kills me is the trading rationale today.
- France et al will be downgraded to AA+ or even AA
- Relatively speaking, this makes the dollar look better
- Buy the dollar
- Sell gold, silver, crude, stocks....
Is that not just incredibly freaking stupid? No matter that the U.S. has a debt:GDP of over 100%. No matter that O'bottom is requesting another $1.2T of debt because we burned through the last extension at the rate of $200B/month. No matter that the real news is that all major nations could/should have their debt ratings downgraded. NO!!! All that matters is that euro weakness makes the dollar look better. It's nothing but brainless, mindless, nonsensical bullshit.
I posted back on Wednesday that "the next 24-48 hours would tell the tale". That certainly seems to be true. It looked like we had ourselves a breakout yesterday at this time but TPTB thought otherwise. Gold has been consistently beaten back, showing us that The Cartel is not quite ready to let it restart its ascent. Check out this chart I posted in the comments of the last thread:
So, anyway, whaddayagonnado? Well, I know what I'm going to do. I'm going to keep watching this crap and telling you what I think. I guess it's up to you to decide if you want to keep reading it.
Here are your updated charts. As mentioned yesterday, today is an important day. I had hoped that gold would close above 1650 and silver would close above 30.20, at a minimum. Of course, there's still time for that to happen but, for now, let's just hope they stay above the lines I've drawn on these charts. If we can hang in there, there will still be hope for a breakout next week. If not, next week probably won't be any fun at all.
Lastly, crude has sold off some on the hope that Una Paloma Blanca was soaring over the Persian Gulf.
Well, as Lee Corso would say, not so fast, my friend:
That's all for now. Before I sign off, I'd like to pass along a special thank you to all the folks who sent along encouragement during my struggles yesterday. We will continue to run this site in a manner deemed positive for most. Can't please everyone, that's for sure. To that end, I'd like to thank again all of the mods who do an absolutely tremendous job of keeping this place civil. Without them, this site would die a nasty death.
Have a great Friday! TF
p.s. Santa visited with Eric King yesterday. You should probably give it a listen.