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.

paper_1-13ams_0.jpgpaper_1-13am.jpg

So what about that reversal in The Pig overnight? Apparently, it has to do with this:

http://www.zerohedge.com/news/here-it-comes-eurozone-sources-say-several-countries-may-face-imminent-downgrade-sp

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:

paper_1-12pmg_0.jpg

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.

paper_1-13amgold.jpgpaper_1-13amsilv.jpg

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:

http://www.gata.org/node/10878

http://www.debka.com/article/21648/

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.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2012/1/13_Jim_Sinclair.html

94 Comments

NZ SilverSurfer's picture

First!

!!

SRSrocco's picture

WHAT THE?

1st?

H - original's picture

1st?

?

BASEBALL 13's picture

First? Second? Turd?

Enjoy the weekend!

BB13

Turd Ferguson's picture

French Downgrade Imminent?

MODERATOR

The action in gold reminds me of early morning, Sept 6, when gold was crushed by direct central bank intervention in the minutes before the SNB devalued the franc by 10%.

Don't be sore, buy more.

Perfidious Albion's picture

Food for thought

But how does one maintain integrity in this twisted world. 

Integrity is a concept of consistency of actions, values, methods, measures, principles, expectations, and outcomes. In ethics, integrity is regarded as the honesty and truthfulness oraccuracy of one's actions. Integrity can be regarded as the opposite of hypocrisy,[1] in that it regards internal consistency as a virtue, and suggests that parties holding apparently conflicting values should account for the discrepancy or alter their beliefs

.http://en.wikipedia.org/wiki/Integrity

Value judgements strike again 

value system is a set of consistent ethic values (more specifically the personal and cultural values) and measures[clarification needed] used for the purpose of ethical or ideologicalintegrity. A well defined value system is a moral code.

http://en.wikipedia.org/wiki/Value_system

Oh oh moral codes its getting deep and meaningful 

A moral code is a system of morality (for example, according to a particular philosophyreligionculture, etc.)

http://en.wikipedia.org/wiki/Moral_code

Its tricky very tricky and I dont have the answers but Viva the mods, Viva Turdicus Viva Turdites 

Gramp's picture

Thanks for the write up

Thanks for the write up TF!

Feels like we are post "half time" w/ the Euro debt drama... pace seems faster. but WTFDIK!

balz's picture

Thanks Turd for another great

Thanks Turd for another great post.

BASEBALL 13's picture

The Picture of Integrity

Turd Ferguson's picture

Trader Dan update

MODERATOR
murphy's picture

TF

Glad we can "ease your pain" as they say in Iowa. Remember you are not a teflon Turd, impervious to constant flushings.

survivalwstyle's picture

29.50

Ag hold here baby...if not we could be heading back to the coin shop. caNNot say how much this

friday the 13th stuFF has got me aLL worked up. put it on sale. dare you suckers.

¤'s picture

Thanks for the update

My gut feeling is that this downgrade/warning happens today or after the US market closes today.

The U.S./EU markets tank a bit next week or a bit longer then they go up near the end of the month or early Feb. due to a combination of late Jan. FOMC innuendo and some EU asset purchases by the ECB facilitated through the EFSF in February.

My gut says to jump in when it looks bleakest at this point. They zig, we zag.

This all bears watching as it's very fluid and I have no firm date in mind. Within a month? Maybe.

The Iranian situation (if any) is the wild card overall.

ClinkinKY's picture

How To Cut Entitlements

http://legalinsurrection.com/wp-content/uploads/2012/01/Bumper-Sticker-Seattle-WA-Make-Welfare-As-Hart-To-Get1.jpg

Be Prepared's picture

If and When France loses an "A"

The Euro goes down even further.... rumors are S&P will take their shot at France and cut them.  It could breach into the 1.25 range if the HFT algos start rebalancing before the weekend.

JimmyTheHand's picture

Whaddayagonnado

I am going to keep reading your site, patiently stack physical and try to go on fewer boat outings this year :)

I have to agree, its all pretty freaking stupid on their part.  I think it just goes to show the market is all HFT quants trying to chase a quick nanosecond profit with abosolutely no clue what the fundamentals are.  I wrote a comment on one of your posts the other day, I met one of those guys not long ago.  He didn't know JACK SH!T about a single market fundamental in any category, all he knew was x=this and y=that so I tell the computer to sell=widgets. 

The market is coming unhinged and makes no sense because the very trades that they carry out defy the market fundamentals.  Eventually their will be a giant burp and it will all come down, IMO.

survivalwstyle's picture

p4 your thoughts

put into pictures make me aLL buFF>> love it bro. thanks again and kEEp it up!!

uote=Pining 4 the Fjords]

One of SWS freestyle rhymes hit me with a visual, so I thought I'd make it real-  this one's for you SWS:

[/quote]

Colonel Angus's picture

Everything is happening faster and faster...

...and that is always the time when the system is about to get really chaotic. Think about it...you're carrying a large stack of cups, larger than you really should. You start to lose your balance, and the cups teeter, so you overcorrect. Then you have to overcorrect in the opposite direction...and eventually you're on the screen with Moe and Larry. 

ZH now saying we should expect FrAAAnce to be downgraded any minute now. Others will go down with France. We're about to see "credit events", no matter what ISDA has to say about it. MFGlobal may have been a trial balloon to see if the CDS writers could also shirk on their contracts. And paper gold and silver are going down. Glad I loaded up on the last dip, but I'll be even more glad to dump the last bit of fiat when it looks like the bottom is in here. Because none of this ends up with more CONfidence in any fiats. Sure, the dollar will catch a bid for a while, and then people will look at France and the US and say "Pot? Kettle? Now which one was which again?"

I dumped the last of my euros at about 1.35. I guess that is better than zero....present Eurozone, RIP. What comes next? Anyone want to hazard a guess?

SRV - ES339's picture

No Worries Turd!

I (and many more I'm sure) are just as frustrated as you are!

Sold all my PM related holdings in early December but have been doing a few day trades in SLV (six figures in and out on bounces to try to make a few bucks) while I wait this out. 

QE3 is coming (whatever they call it) and PMs must be whacked to direct investment to USD, Stocks, and bonds (and away from PMs). Finally... MLK Day and a few Euro downgrades could be the perfect storm... not a good weekend to be holding IMHO!

Thanks for the updates!

Bay of Pigs's picture

Una Paloma Blanca?

The white dove flying over the Persian Gulf?

LOL, nice one Turd.

ReachWest's picture

Crappy Crapola

Thanks Mr. F - Your charts and commentary reaffirm what I'm feeling. (This site is a sanctuary in rough seas.)

This AM does have a deja-vu feel to it. Last time this happened I didn't sell some of my oil/miners portfolio thinking they wouldn't be hit too awfully badly - of course I regretted that decision a few trading sessions later. 

This time - I still don't want to sell - my inner core belief continues to be that something big is going to break at some point soon and when it does I don't want to be out of two types of positions 1) Oil and 2) Gold miners. Heading to the exits could put me out of positions that I may not be able to re-acquire if something nasty goes down fast. While it looks like my portfolio might get smacked back again - I will probably continue to hold. Crappy crapola! (The stack continues to do what it does and grow - so that is of no consequence).

Be Prepared's picture

The Euro will survive as an Incarnate of Socialism

It will survive, albeit not in its current form, but it wll survive none the less..... because too much has been intertwined for the power brokers to want to unwind it.  The control and power they get from the EU is worth the pain of the masses since TPTB are insulated from it all.  I just wish they would get on with the purge of the second-tier members..... that's going to happen for sure.  Greece will be shown the door.

Green Lantern's picture

Interesting little paradigm

Interesting little paradigm we've got going here.  Euro fears=rising dollar and pull back in commodities.   Yes?  Maybe a little A,B,C pullback in gold as well.   Well, lets look at this little illusion the world has now that the dollar and the yen are safe havens.  

Flashback The banking crisis of the 1930's.  It began, not in the US, but in Europe.    Then by 1934 almost 10,000 US banks had failed.  It took with them your grandma and grandpa's money.  

The first large domino to fall was an Austrian bank based in Vienna, considered one of the strongest in the world, Creditanstalt.   Creditanstalt once was a very charitable bank and lend out millions on a binge.  By '31, it's borrowers were defaulting, withdrawing their money.   Sound familiar??

When Creditanstalt could not pay back it's debts, it spread to Dutch banks, German, Poland, Latvia, Turkey and Egypt and the United States.  

It seems to me that these little temporary hits of adrenaline for the US dollar will soon end as people realize they will need to shift their money into something a little more STABLE.  GOLD!!  Coming Soon to a National Theater Near You  

maravich44's picture

Style.

..do not need you full ScReaN.   tOO mUch, E-z bRo. Gee gOly wis AnD Gosh dArn. mY noT Cussing sAnction.

TechTrade's picture

Short Term Technicals

Some pain ahead perhaps.  With the daily STO peaking out and turning down, not sure why you'd be buying calls.  The obvious impending move down in the stock market (from last night) would be most likely to drag the currencies down, as well as gold, silver, copper and crude, as the dollar heads towards 82 and bonds go crazy to 145.  April Gold went right to the 100 day EMA and got rejected to the tune of almost $40, so far.  If it doesn't hold 1625-1630 (and the daily downturn has just started, though MACD has not confirmed), then 1600-1608 is the next support, followed by 1585-1595.  Likely that G&S will be weak for this next down cycle, which could take 1 to 2 weeks. The latter part of January has often been a seasonally weak time, so this could be a correction point before a sustainable rally past 1650 and 30 starts.  But as long as the weekly STO remains turned up, should not see any new lows made.

That being said, as long as silver can hold 29.4-29.5, we could just consolidate here and work off some overboughtness.  But with the Asian markets closing, and the US markets closed Monday, conditions are ripe for a larger beatdown, which could further the technical indicator downmove, and take that 1-2 weeks to move through the cycle.  Until the daily STO turns back up (which is certainly possible, as long as the daily MACD doesn't cross over down, and silver doesn't break 29.4) be cautious about picking bottoms.  Probably better to sell rallies (short term).  Since we peaked at 30.675, we've been making lower highs and lower lows, consistent with a downturn in the daily stochastics, and with falling below short term moving averages, which then act as resistance to rallies.

But I'll be buying gold at 1610 and silver at 28.8 to 29, good support points there.  Or perhaps platinum, as when the rally resumes, platinum will probably get on top of gold again, so it's at about a $150 discount to gold.

sevin's picture

France Credit Downgraded by S & P from CNBS

http://www.cnbc.com/id/45986372

"Standard & Poor's has downgraded France's credit rating, French TV reported Friday, while several euro zone countries face the same fate later in the day, according to reports.

Germany and the Netherlands aren't among those facing a downgrade, a senior euro zone government source told Reuters. Another source confirmed "several" countries would be hit."

DaddyO's picture

Hey Turd, the cartel..

heard you bought a silver call and now they're going to rub your nose in it. JK! The metals seem to be "being discouraged" this morning...

DaddyO

edit:reposted from end of last thread

Dr G's picture

If we see gold at 1610 or

If we see gold at 1610 or silver at 28.8 I will be shocked.

EDIT: sevin nailed the news, France downgrade has come, S&P announcement soon. Austria should be downgraded any moment now. Germany maybe also?

Green Lantern's picture

Looks like the French might

Looks like the French might be eating a little less of some of their favorite delicacies

a

And a little more of this

TheObsoleteMan's picture

WAVE GOOD BYE

To any hope of breakouts in the metals. Get ready for the plunge I felt was coming yesterday when support was just too weak, it couldn't decisively break north of resistance. Here is a little nugget of truth for you: If the US debt rating isn't AAA, who in Europe is? Maybe Norway, but that is about it. The can kicking will continue, it is all about managing perceptions. 

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