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goldminingXpert (29.54)

Strong Dollar is Back

Recs

14

December 18, 2008 – Comments (30) | RELATED TICKERS: GLD , SLV , GG

That whole weak dollar thing was real cute; for a day or two, it looked as if the goldbugs' constant threats of "toilet paper dollar" were again within the realm of plausability. Today, however, reality has returned to the forex market as the euro has lost an entire 5 cents of value against the dollar. King Bucky is again on the rise as the DX is moving sharply higher. While gold and silver are down nicely today, they should be down much more. For all of you who caught the big runs in stuff like SLW, it's time to take profits, gold is heading straight back down to the low 7's and silver is returning to a single digit. Don't argue with King Bucky, when the rest of the world gets scared, they buy dollars.

30 Comments – Post Your Own

#1) On December 18, 2008 at 12:41 PM, FleaBagger (28.78) wrote:

So enormous changes in supply don't affect prices? I think a few trillion here and a few trillion there, and you might just change the supply/demand balance.

Also, in a recession, you have fewer goods and services competing for dollars.

You're fast enough you might not miss the boat, but you'll probably change your tune within a few months.

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#2) On December 18, 2008 at 1:07 PM, HansHauge (32.34) wrote:

You're a bull on the dollar?

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#3) On December 18, 2008 at 1:08 PM, oldBart (< 20) wrote:

 IT is a race to the bottom..Dead trees and ink are in strong demand all over the central bank world..Is there any moral leadership anywhere??No, there is not..All will suffer the coming deluge of dollars, euros, yen, etc.. Gravity cannot be changed by decree..Nor can wealth be created and held by craven mavens of finance and deception..Gold is not subject to the laws of supply and stupidity..In times of real "change" (ie. collapse) it is the last and final anchor point  in widespread financial ruin. Dow down 50%, interest rates at 0%, real estate in a death dance..Wake up Chowderheads!!! The big burrito has hit the fan..Gold $2000 is on the horizon and beyond that is too scary to think about now...You are warned.

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#4) On December 18, 2008 at 1:25 PM, goldminingXpert (29.54) wrote:

Hans, that is correct--until the depression ends, THEN I become a bigtime dollar bear. In the meantime, I'll continue to short Goldcorp.

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#5) On December 18, 2008 at 1:40 PM, Ph1sh55 (28.50) wrote:

I'm thinking we're going to get one more pull back in gold before it's meteoric rise. 

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#6) On December 18, 2008 at 3:52 PM, dangerfairy (< 20) wrote:

You got TLT? I sure do.

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#7) On December 18, 2008 at 4:52 PM, goldminingXpert (29.54) wrote:

I'm short TLT via puts. TBT is the 2x inverse of TLT you want to be buying.

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#8) On December 18, 2008 at 8:17 PM, nuf2bdangrus (< 20) wrote:

I'm waiting to see the dollar make a double top, like oil did.  I'm guessing that will be January.  Then I will buy UDN and gold.

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#9) On December 18, 2008 at 9:00 PM, Harold71 (22.03) wrote:

Okay GMX, you're a dollar bull, and yet you are shorting long-term treasuries via puts. 

So, you are expecting the price of long-term treasuries to decline, possibly dramatically.  Why would that happen?  Because the supply of these treasuries exceeds demand. 

Now why would this supply exceeding demand, coincide with your strong dollar?  Jim Rogers was in TBT and he HATES the dollar.  Says it is possibly doomed.

Can you explain this logic of loving the dollar, expecting deflation, etc, but hating dollar-denominated bonds?

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#10) On December 18, 2008 at 10:57 PM, goldminingXpert (29.54) wrote:

yes, I can. It's called 2% yields on the 10-year. Those won't last; the 10-year yield should be significantly higher, even though the dollar is the bulwark of the international system, that doesn't justify a near-ZIRP situation. At some point within 10 years, we'll snap out of depression and have inflation of greater than 2%... owners of those bonds will get crushed.

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#11) On December 18, 2008 at 11:12 PM, shamtrader49 (< 20) wrote:

The USD will hold in for the first year or so of the Obama admin. But when the pig tries to go through the python the USD will suffer like no other time in recent history. The good news for USD bulls is that all currencies with fall under the pressure of hyper-inflation. Gold which is a lousy proxy will move towards 2500.00 per oz. More later..

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#12) On December 18, 2008 at 11:46 PM, mickeyc21 (29.55) wrote:

This qualifies as the most bizarre comment by a high ranked player I've ever seen. 

The move on the Euro is the biggest in history. 

This dollar move may or may not be the mythical dollar collapse (I think it's too early) but to crow about a five cent retracement after a 2400 pip move is surreal. 

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#13) On December 19, 2008 at 12:07 AM, Harold71 (22.03) wrote:

At some point within 10 years, we'll snap out of depression and have inflation of greater than 2%... owners of those bonds will get crushed.

Ok...I Agree....however, you own the TLT puts now?  So you are expecting the inflationary pressures/bond destruction within a near time frame?

Still very confused about you GMX.  Your logic here is questionable in my view.  I have a feeling that you are simply being facetious.

 

This dollar move may or may not be the mythical dollar collapse (I think it's too early) but to crow about a five cent retracement after a 2400 pip move is surreal. 

My sentiments exactly.  I do NOT understand GMX's fascination with the strong dollar.  IMHO, the USD is going to free fall against gold.  Look at the policies your gov't is implementing!  They are doing their best to kill the dollar.  Their future pension liabilities (SS and medicare) alone will require massive inflation, there is no way to pay these people off otherwise.  Who knows exactly when, but when people actively try to destroy a currency, they will succeed.  And that could be the biggest factor of all in turning this recession into a depression.

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#14) On December 19, 2008 at 12:36 AM, goldminingXpert (29.54) wrote:

The 2400 pip came right off the back of a 3500 pip move the other way. Never heard of a technical retracement before, eh?

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#15) On December 19, 2008 at 1:24 AM, mickeyc21 (29.55) wrote:

I was in both moves.

God help you if you ever trade currency - your arrogance will kill you. I nominate you for the Bernie Madoff "know it all" award. 

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#16) On December 19, 2008 at 1:52 AM, falang1 (96.81) wrote:

GMX,

Do you like TBT or PST? (or both)

Just from a chart standpoint the 20 year has exploded more so it's in for the bigger correction, giving the edge to TBT.

I got some S&P shorts, let's hope Friday goes down.

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#17) On December 19, 2008 at 8:00 AM, goldminingXpert (29.54) wrote:

I love TBT yes. I don't trade currencies much mickeyc, I like the defined risk of options best.

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#18) On December 19, 2008 at 10:04 AM, Harold71 (22.03) wrote:

At some point within 10 years, we'll snap out of depression and have inflation of greater than 2%... owners of those bonds will get crushed.

Ok...I Agree....however, you own the TLT puts now? 

So you are expecting the inflationary pressures/bond destruction within a near time frame?

-----------------

Ignored.  Do you have puts with a ten year expiration?

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#19) On December 19, 2008 at 12:37 PM, FleaBagger (28.78) wrote:

Yeah, GMX and I own the Jan 2018 TLT puts. The ticker is TLTHA.HA

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#20) On December 19, 2008 at 12:49 PM, FleaBagger (28.78) wrote:

Also, Goldcorp hedged gold prices, so the only way they make money is if the dollar stays strong. Long GG is a dollar bull play (or short mining costs), and short GG is short the dollar.

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#21) On December 19, 2008 at 12:57 PM, FleaBagger (28.78) wrote:

Sorry I forgot to put all this in the first comment. I'm not trying to take up your whole comment section.

But seriously. SLW has such a low cost of production, so many oz of silver, they don't even need $10 silver to justify $6 per share. SLW is also well managed, so even they were in a position where it was difficult to do well (and they're not), they would probably be able to figure something out. If silver goes to $5/oz it will hit the other Ag miners' earnings much harder, and it will be time to buy SLW.

By the way, I did sell most of my SLW for 6.7 to 6.9. I'm buying it back in the low 5's.

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#22) On December 19, 2008 at 1:20 PM, goldminingXpert (29.54) wrote:

I own January TLT puts Harold. I doubt interest rates will fall much farther. If I lose, so what, I'll just buy February puts next month.

Haven't studied SLW enough, just saying it's wise to take profits into 150% moves when your product, silver, is heading back down.

King bucky is rising farther today. DX is back to 83--retracing over a 3rd of the so-called horrible decline. I've never said the dollar will be good forever, but for the next year, you don't want to be short it--at least not for long (scalping is always fun.)

GG short is a play on being overvalued. There is no excuse for their P/E and lack of future earnings growth regardless of how hedged they are. 

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#23) On December 20, 2008 at 12:59 AM, mollykat (59.79) wrote:

This dialogue on the dollar, Euro, puts calls is out of my league. I am just looking for input on my FCX position since divd was suspended. I don't understand why the stock didnt go to $15 or lower. FCX only produces about 20% of their rev in gold. The balance is copper and moly which temp'y are in the tank. I like a gold stock (FCX OK) in my portfolio for diversification over a 1 to 5 yr window.  

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#24) On December 21, 2008 at 9:05 PM, mgiv (99.08) wrote:

I'm not so sure about gold crashing.  30% of gold's use is reserve currency.  That said, and with the printing presses running out of control, threat of currency crisis, the zirp ( zero interest rate), the US is now the carry currency.  I say you simply can't lose with gold in a fiat currency regime.  If everybody is running into debt and the world is zero sum, then who the hell do we owe the trillions to?  Europe, Japan, Australia, who do they owe?

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#25) On December 22, 2008 at 9:41 AM, FleaBagger (28.78) wrote:

Sorry, I was wrong about GG hedges. Sinchy (who knows way more about this stuff than I do) and Schiff's April 2008 Bull Moves in Bear Markets both say GG is not hedged, ergo a good short for a rising dollar situation.

My bad.

Mollykat - I own FCX. Picked it up around 25 or so very recently. I'm starting to wish I'd gone with a combination of PCU and some foreign-owned precious metals miner, because Schiff is starting to scare me off American-owned companies, and I'm studying FDR's wholesale theft of the country's gold in the 1930's. And when it comes to windfall profit taxes and other stupid, petty, envy-motivated ideas, the U.S. is no slouch.

Copper will stay down only as long as worldwide manufacturing stays down, which is not going to be nearly as long as the U.S. recession. I also like silver and gold.

Oo! Look at silver today!

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#26) On December 22, 2008 at 9:42 AM, FleaBagger (28.78) wrote:

Clarification: I don't agree with GMX's rising dollar scenario, I just wanted to cop to my mistake about GG's hedging (which they don't do).

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#27) On December 22, 2008 at 2:25 PM, dexion10 (27.72) wrote:

Goldmining xpert this is a good article on the issues facing refineries:

 http://online.wsj.com/article/SB122947423155012413.html?mod=yahoo_hs&ru=yahoo

The excess, high cost capacity will be shuttered and the golden egg called deisel fuel exports will disappear when India and Saudi Arabia open new facilities (India's opens next year).

Where will the margins come from ??? 

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#28) On December 22, 2008 at 5:31 PM, goldminingXpert (29.54) wrote:

"Copper will stay down only as long as worldwide manufacturing stays down"

People make stuff to sell it to us. We aren't buying--and won't be for years to come. I, however, am a buyer of FCX--in the single digits. 

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#29) On December 26, 2008 at 3:26 PM, SBeren (23.93) wrote:

Recent Dollar strength is illusory and occurred as a consequence of redemptions, people saving more, spending less (demand for dollar has gone up). As with any product for which there's a growth in demand, its price appreciates. To combat this deflationary effect, which the Fed has concluded (incorrectly) is a bad thing, the Fed is borrowing and printing trillions of dollars. When this monetary policy works its way through the system, your Dollar will be worth a Quarter at best. BTW, justifying your 'predictions' based on several days of dollar movements is both laughable and pointless.

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#30) On December 29, 2008 at 4:46 PM, terrificdeals2k8 (89.57) wrote:

hopefully you don't lose too much on this gold/silver short.  cheers!  i'm overweight on the sector for 1-3 months

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