My OperaPeak Dollar Is Coming Soon
Thursday, August 7, 2008 4:37:32 AM
Introduction
We have passed through Peak Currencies.
And we have passed through Peak Bond Wealth.
Soon we will reach Peak Dollar.
Then gold will arise as the global currency and the means of preserving wealth.
The big news of the day is that the US Dollar rose strongly, and the Yen and the other commodity currencies went through the floor
The yen carry traders went long the dollar and short the yen and other commodity currencies as oil traded off some today; this blasted USD/JPY higher.
The US Dollar, $USD, rose 0.5% to close at $74.25 at 200 day moving average.
The ongoing Google Finance chart of the Yen, FXY, the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, shows the currencies went kaboom down.
And Stockcharts.com relates that the Yen died today, FXY -1.4%. And the others were butchered: FXA -.7%, FXE -.3%, and FXC -.5%.
This action caused a dramatic rise in the USD/JPY: it zoomed to 109.47.
We passed through Peak Currencies on the unwinding of the Yen Carry Trade on July 22, 2008
The world has passed through Peak Currencies on July 22, 2008, as can be seen in the lollipop hanging man candlestick serving as dark cloud cover in the daily Stockcharts.com chart EUR/JPY, FXE:FXY, and the daily MSN.com chart of the Euro, FXE, relative to the Yen, FXY.
Yes, in an investment sea change, on July 22, 2008, the yen carry trade unwound as the US Dollar traded up and oil down following hawkish comments as reported by ActionForex and CEP News.
The unwinding of the yen carry trade continued as ActionForex and Adam Button of CEP News reported that U.S. Dollar Bulls Trample Commodity Prices.
Then on July 28th, 2008, the EUR/JPY, FXE:FXY, fell sharply lower, as all commodity currencies sold off with the Australian Dollar, FXA, taking the biggest plunge, as seen in this daily MSN.com chart of the Australian Dollar, the Euro and the Yen.
This on dual news: First of Australian inflation as reported by Matthew Bradbard in Seeking Alpha: "Australia's Bureau of Statistics said that consumer prices were up 4.5% in the second quarter from a year ago, the biggest gain since 2001. The September Australian dollar was down just under 150 ticks on the week".
And secondly in response to the decision of the Australian National Bank, NAB, to write off 90% of its US conduit loans.
Today, the EUR/JPY, FXE:FXY, rose back to resistance today at 1.699, as the US Dollar rose to 74.251; in other words the currency traders activated liquidity, that is they activated their loans, to take the dollar higher on lower oil prices as reported by William L. Watts and Lisa Twaronite of MarketWatch in article Dollar Gains On Rival Currencies Lifted By Weak Crude; this took US stocks higher.
The tide has turned, the commodity currencies of the world have turned over, one can no longer garner wealth by trading in world currencies as risk aversion is rising to inflation and also to bank debt.
Borrowing from the Bank of Japan at 0.5% interest to go long currencies is over; borrowing for interest rate differential investing in the world currencies is done.
Now with oil falling, the US Dollar, $USD, is the destination of interest rate differential investing using Bank of Japan funding.
The weekly chart of EUR/JPY, FXE:FXY, shows the liquidity window of the Bank of Japan closing. Yes, one of the two spigots of fiat wealth is being turned off by rising aversion to inflation and bank debt. The well of lending at the Bank of Japan is starting to run dry. The EUR/JPY shows an Elliott Wave One Down On August 5, 2008 To 1.680. And today, August 6, 2008, the EUR/JPY has risen to an Elliott Wave Two Up to 1.6999. And soon, an Elliott Wave 3 Down will commence, which will cause a great unwinding of wealth not only from currencies, but also from stocks and most likely debt, that is bonds of all types, as well.
The falling volume in the weekly chart of FXE:FXY suggest that one invest immediately, short EUR/JPY in a Forex account.
The EUR/JPY is now at the top of an Elliott Wave 2 Crest; and is thus soon going to fall lower.
This will be the 'mother of all Elliott Wave 3 Downs', there will be a terrific fall of the US Dollar, of US Stocks, and of stocks globally.
One should start to dollar cost average gradually, that is daily, into the anti-thesis of the US Dollar, that being gold, as gold trades inversely of the US Dollar, even though gold could be falling lower with oil. Gold, $GOLD, has been in a bull market run up since May 1, 2008 when the institutional investors traded out of financial stocks to go long the commodities with the yen carry traders. And gold broke out again on June 23, 2008, as carry traders sold out of stocks such as the BRICS, to go long gold.
Now today, gold, $GOLD, fell to the June 23, 2008 level and could fall all the way lower to the May 1, 2008 level or $850, or 82 for the GLD ETF, before going higher again as 'the last refuge of wealth'. Buying gold now fits into my investment maxim: in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength. Gold is in and has been in a bull market since May 1, 2008, so it makes sense to buy on its current dip.
Alf Field, writing in 321Gold.com article Elliott Wave Gold Update XXI, like myself, relates the potential of gold falling to $850 before moving higher. And the Privateer shows a 2x3 support level for gold at $850.
The other spigot of fiat wealth is liquidity provided by the Federal Reserve. The Great Purveyor of Credit Liquidity, Alan Greenspan, excelled at blowing asset bubbles world wide. Now his successor Ben Bernanke has been continuing in his place by lowering of the central bank interest rate to 2%, and by provisions of TAF, TSLF and PDCF, which become more liberal and generous all the time as LCOs are likely being traded out for US Treasuries.
And Bernankeism has expanded to rescue the mortgage GSEs as well. And yesterday he extended hope of a further interest rate cut or cuts with the FOMC quote "The FOMC believes that inflation will moderate later this year and in 2009".
Yes, the Fed Chief, I am sure would like to take rates to zero, or pay interest on reserves, or take new initiatives to further extend and expand liquidity to banks, which are for all practical purposes insolvent, being laden with level two assets and level three assets, as well as debt kept off balance sheet in SIVs and SPEs.
Economic nature may cut Mr. Bernanke's actions short by unleashing multiple systemic risk events.
And there is the principle of diminishing returns, his liquidity actions simply become less simulative over time. Soon the efforts will be totally down the drain as soon, as they are put into effect.
We passed through Peak Bond Wealth on March 18, 2008
We passed through Peak Credit on March 18, 2008 when the bond market place called the interest rate on the 30 Year US Treasury Bond, $TYX, higher on the Fed's announced assistance to JP Morgan buyout of Bear Stearns and provision of TAF, TSLF and PDCF.
We passed through Peak US Treasury Bond Wealth on July 16, 2008, as the bond market place again called $TYX higher as concerns grew over the Federal Reserve's interest to rescue the mortgage GSEs, Freddie Mac and Fannie Mae, via lending liquefaction and capitalization.
And now today, the interest rate on the 30 Year US Treasury Bond, $TYX, rose again on news that Freddie Mac Swings To 2nd Quarter Loss, and on the Jennifer Ablan of Reuters report that Pimco's Gross Says US Will Rescue Fannie, Freddie.
Weekly trading charts
Commodities are down
GLD -3.3%
USO -3.6%
Stocks are up
DIA 3.0%
IWM 1.3%
QQQQ 3.9%
SPY 2.2%
US Treasury Bonds are down
TLT -1.4%
Interest rate on the 30 Year US Treasury is up
$TYX 2.7%
The US Dollar rose today to close at $74.2517 .... Peak Dollar is coming "soon"
NY BOT DX Daily shows a close at 74.251.
US Dollar, $USD shows a 1.10% weekly gain to close at 74.25.
The fall of the Yen, FXY, today, coupled with a fall in oil, USO, propelled the dollar up -- these goosed the dollar up.
Given the rise in the US Dollar, and its support by the yen carry traders, we could see a continued rise in the Dollar, and in US stocks as oil may be falling lower.
The ongoing Google Finance report shows today's activity:
IYF: -0.6 down on Fannie and Freddie Falling lower.
QQQQ: 1.5
DIA: 0.4
SPY: 0.4
IWM: 0.5
Here is the catch, that is the terrific risk to the bullish dollar: the other currencies have died; yes died, and cannot be resurrected.
This means one day, very soon, the dollar will run out of gas so as to speak and when it does, the US Dollar is going into a death spiral lower with all the other currencies together.
Furthermore, when the dollar runs out of gas, the contraction will not be gentle it will be sharp.
But the real danger is the EUR/JPY, and its Elliot 2 Wave Crest, it could break lower any day, and the stock loss of value from that is going to be severe beyond belief; that is just one reason why I encourage an investment in gold today.
The financial risk of a systemic risk event, as well as the risk of deployment of civil security police by the EU US government suggests the wisdom of investing in gold
I have written a lot about multiple systemic risk potential events such as in the article Tax Exempt Mutual Fund Investors Could Suffer More Than Other Investors When The Coming Financial Breakdown Starts.
Another systemic risk event potentiality is the Pay Option ARMS Implosion -- the POA Implosion covered by Jesse and Mr. Mortgage. And MockTheMarkets writes that Option Arms Chart Signals Looming Disaster
I am growing more greatly attuned to the reality of the EU US Western World Government, and its plans for civil security through an international police body to oversee global governance rule of the Euro Asia nations as well as the entire North American Continent in response to any number of emergencies, which would result in the provisions of the Security and Prosperity Partnership, the SPP, being enforced.
Both of the above factors, that is rising systemic risk, and the risk of civil security measures being deployed in an emergency, suggests the wisdom of investing immediately in gold.
Specific suggestions for a diversified wealth preservation investment strategy
Wealth preservation comees primarily from gold and is based upon diversification of investment locations; it's much like having a three legged stool:
1) gold at BullionVault.com and
2) gold at GoldMoney.com and
3) ETFs and mutual funds GLD, SKF, RYWJX, and TBT, in a trust account and not a brokerage account.
It would have been good to buy TBT lower, rather that now when it is in breakout.
There is coming a time to go short the financial sector with SKF. And there is coming a time to go short the dollar with RYWJX.
Yes, the wealthy should take note of the scientific investment research: The author in Calendar Yen Trading Patterns provides historical record that EUR/JPY and USD/JPY is frequently down in the month of August
Today's action in the USD/JPY definitely is contrary to the seasonal norm as it boomed to 109.40, and could continue to do so; it is difficult to go short at this time; but going short EUR/JPY seems reasonable.
We have passed through Peak Currencies.
And we have passed through Peak Bond Wealth.
Soon we will reach Peak Dollar.
Then gold will arise as the global currency and the means of preserving wealth.
The big news of the day is that the US Dollar rose strongly, and the Yen and the other commodity currencies went through the floor
The yen carry traders went long the dollar and short the yen and other commodity currencies as oil traded off some today; this blasted USD/JPY higher.
The US Dollar, $USD, rose 0.5% to close at $74.25 at 200 day moving average.
The ongoing Google Finance chart of the Yen, FXY, the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, shows the currencies went kaboom down.
And Stockcharts.com relates that the Yen died today, FXY -1.4%. And the others were butchered: FXA -.7%, FXE -.3%, and FXC -.5%.
This action caused a dramatic rise in the USD/JPY: it zoomed to 109.47.
We passed through Peak Currencies on the unwinding of the Yen Carry Trade on July 22, 2008
The world has passed through Peak Currencies on July 22, 2008, as can be seen in the lollipop hanging man candlestick serving as dark cloud cover in the daily Stockcharts.com chart EUR/JPY, FXE:FXY, and the daily MSN.com chart of the Euro, FXE, relative to the Yen, FXY.
Yes, in an investment sea change, on July 22, 2008, the yen carry trade unwound as the US Dollar traded up and oil down following hawkish comments as reported by ActionForex and CEP News.
The unwinding of the yen carry trade continued as ActionForex and Adam Button of CEP News reported that U.S. Dollar Bulls Trample Commodity Prices.
Then on July 28th, 2008, the EUR/JPY, FXE:FXY, fell sharply lower, as all commodity currencies sold off with the Australian Dollar, FXA, taking the biggest plunge, as seen in this daily MSN.com chart of the Australian Dollar, the Euro and the Yen.
This on dual news: First of Australian inflation as reported by Matthew Bradbard in Seeking Alpha: "Australia's Bureau of Statistics said that consumer prices were up 4.5% in the second quarter from a year ago, the biggest gain since 2001. The September Australian dollar was down just under 150 ticks on the week".
And secondly in response to the decision of the Australian National Bank, NAB, to write off 90% of its US conduit loans.
Today, the EUR/JPY, FXE:FXY, rose back to resistance today at 1.699, as the US Dollar rose to 74.251; in other words the currency traders activated liquidity, that is they activated their loans, to take the dollar higher on lower oil prices as reported by William L. Watts and Lisa Twaronite of MarketWatch in article Dollar Gains On Rival Currencies Lifted By Weak Crude; this took US stocks higher.
The tide has turned, the commodity currencies of the world have turned over, one can no longer garner wealth by trading in world currencies as risk aversion is rising to inflation and also to bank debt.
Borrowing from the Bank of Japan at 0.5% interest to go long currencies is over; borrowing for interest rate differential investing in the world currencies is done.
Now with oil falling, the US Dollar, $USD, is the destination of interest rate differential investing using Bank of Japan funding.
The weekly chart of EUR/JPY, FXE:FXY, shows the liquidity window of the Bank of Japan closing. Yes, one of the two spigots of fiat wealth is being turned off by rising aversion to inflation and bank debt. The well of lending at the Bank of Japan is starting to run dry. The EUR/JPY shows an Elliott Wave One Down On August 5, 2008 To 1.680. And today, August 6, 2008, the EUR/JPY has risen to an Elliott Wave Two Up to 1.6999. And soon, an Elliott Wave 3 Down will commence, which will cause a great unwinding of wealth not only from currencies, but also from stocks and most likely debt, that is bonds of all types, as well.
The falling volume in the weekly chart of FXE:FXY suggest that one invest immediately, short EUR/JPY in a Forex account.
The EUR/JPY is now at the top of an Elliott Wave 2 Crest; and is thus soon going to fall lower.
This will be the 'mother of all Elliott Wave 3 Downs', there will be a terrific fall of the US Dollar, of US Stocks, and of stocks globally.
One should start to dollar cost average gradually, that is daily, into the anti-thesis of the US Dollar, that being gold, as gold trades inversely of the US Dollar, even though gold could be falling lower with oil. Gold, $GOLD, has been in a bull market run up since May 1, 2008 when the institutional investors traded out of financial stocks to go long the commodities with the yen carry traders. And gold broke out again on June 23, 2008, as carry traders sold out of stocks such as the BRICS, to go long gold.
Now today, gold, $GOLD, fell to the June 23, 2008 level and could fall all the way lower to the May 1, 2008 level or $850, or 82 for the GLD ETF, before going higher again as 'the last refuge of wealth'. Buying gold now fits into my investment maxim: in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength. Gold is in and has been in a bull market since May 1, 2008, so it makes sense to buy on its current dip.
Alf Field, writing in 321Gold.com article Elliott Wave Gold Update XXI, like myself, relates the potential of gold falling to $850 before moving higher. And the Privateer shows a 2x3 support level for gold at $850.
The other spigot of fiat wealth is liquidity provided by the Federal Reserve. The Great Purveyor of Credit Liquidity, Alan Greenspan, excelled at blowing asset bubbles world wide. Now his successor Ben Bernanke has been continuing in his place by lowering of the central bank interest rate to 2%, and by provisions of TAF, TSLF and PDCF, which become more liberal and generous all the time as LCOs are likely being traded out for US Treasuries.
And Bernankeism has expanded to rescue the mortgage GSEs as well. And yesterday he extended hope of a further interest rate cut or cuts with the FOMC quote "The FOMC believes that inflation will moderate later this year and in 2009".
Yes, the Fed Chief, I am sure would like to take rates to zero, or pay interest on reserves, or take new initiatives to further extend and expand liquidity to banks, which are for all practical purposes insolvent, being laden with level two assets and level three assets, as well as debt kept off balance sheet in SIVs and SPEs.
Economic nature may cut Mr. Bernanke's actions short by unleashing multiple systemic risk events.
And there is the principle of diminishing returns, his liquidity actions simply become less simulative over time. Soon the efforts will be totally down the drain as soon, as they are put into effect.
We passed through Peak Bond Wealth on March 18, 2008
We passed through Peak Credit on March 18, 2008 when the bond market place called the interest rate on the 30 Year US Treasury Bond, $TYX, higher on the Fed's announced assistance to JP Morgan buyout of Bear Stearns and provision of TAF, TSLF and PDCF.
We passed through Peak US Treasury Bond Wealth on July 16, 2008, as the bond market place again called $TYX higher as concerns grew over the Federal Reserve's interest to rescue the mortgage GSEs, Freddie Mac and Fannie Mae, via lending liquefaction and capitalization.
And now today, the interest rate on the 30 Year US Treasury Bond, $TYX, rose again on news that Freddie Mac Swings To 2nd Quarter Loss, and on the Jennifer Ablan of Reuters report that Pimco's Gross Says US Will Rescue Fannie, Freddie.
Weekly trading charts
Commodities are down
GLD -3.3%
USO -3.6%
Stocks are up
DIA 3.0%
IWM 1.3%
QQQQ 3.9%
SPY 2.2%
US Treasury Bonds are down
TLT -1.4%
Interest rate on the 30 Year US Treasury is up
$TYX 2.7%
The US Dollar rose today to close at $74.2517 .... Peak Dollar is coming "soon"
NY BOT DX Daily shows a close at 74.251.
US Dollar, $USD shows a 1.10% weekly gain to close at 74.25.
The fall of the Yen, FXY, today, coupled with a fall in oil, USO, propelled the dollar up -- these goosed the dollar up.
Given the rise in the US Dollar, and its support by the yen carry traders, we could see a continued rise in the Dollar, and in US stocks as oil may be falling lower.
The ongoing Google Finance report shows today's activity:
IYF: -0.6 down on Fannie and Freddie Falling lower.
QQQQ: 1.5
DIA: 0.4
SPY: 0.4
IWM: 0.5
Here is the catch, that is the terrific risk to the bullish dollar: the other currencies have died; yes died, and cannot be resurrected.
This means one day, very soon, the dollar will run out of gas so as to speak and when it does, the US Dollar is going into a death spiral lower with all the other currencies together.
Furthermore, when the dollar runs out of gas, the contraction will not be gentle it will be sharp.
But the real danger is the EUR/JPY, and its Elliot 2 Wave Crest, it could break lower any day, and the stock loss of value from that is going to be severe beyond belief; that is just one reason why I encourage an investment in gold today.
The financial risk of a systemic risk event, as well as the risk of deployment of civil security police by the EU US government suggests the wisdom of investing in gold
I have written a lot about multiple systemic risk potential events such as in the article Tax Exempt Mutual Fund Investors Could Suffer More Than Other Investors When The Coming Financial Breakdown Starts.
Another systemic risk event potentiality is the Pay Option ARMS Implosion -- the POA Implosion covered by Jesse and Mr. Mortgage. And MockTheMarkets writes that Option Arms Chart Signals Looming Disaster
I am growing more greatly attuned to the reality of the EU US Western World Government, and its plans for civil security through an international police body to oversee global governance rule of the Euro Asia nations as well as the entire North American Continent in response to any number of emergencies, which would result in the provisions of the Security and Prosperity Partnership, the SPP, being enforced.
Both of the above factors, that is rising systemic risk, and the risk of civil security measures being deployed in an emergency, suggests the wisdom of investing immediately in gold.
Specific suggestions for a diversified wealth preservation investment strategy
Wealth preservation comees primarily from gold and is based upon diversification of investment locations; it's much like having a three legged stool:
1) gold at BullionVault.com and
2) gold at GoldMoney.com and
3) ETFs and mutual funds GLD, SKF, RYWJX, and TBT, in a trust account and not a brokerage account.
It would have been good to buy TBT lower, rather that now when it is in breakout.
There is coming a time to go short the financial sector with SKF. And there is coming a time to go short the dollar with RYWJX.
Yes, the wealthy should take note of the scientific investment research: The author in Calendar Yen Trading Patterns provides historical record that EUR/JPY and USD/JPY is frequently down in the month of August
Today's action in the USD/JPY definitely is contrary to the seasonal norm as it boomed to 109.40, and could continue to do so; it is difficult to go short at this time; but going short EUR/JPY seems reasonable.
