Let's talkabout it !
May 1, 2007
- 35 years of dollar weakness is ending in 2007. Since August 15, 1971 we have been plagued by a long cyclical and emotional free for all thanks to Richard M. Nixon. It has now ended officially on April 30, 2007. Beginning in May of 2007, a new long term cyclical US Dollar bull market is beginning. Historical? Yes. Opportunity or Lunacy? You decide.
- When you look at a long term chart of the EURUSD, what do you see? Let me ask it differently. What do most see? An uptrend of course. A paralyzed US Dollar that is "doomed". Books have been written, articles, hedge funds formed. Jump on board. It is easy to get wealthy. Just short the dollar. Even Bill Gates and Warren Buffet are doing it. When I look at a long term chart this is what I see. In 2004, a new trend was established. The real trend. In 2005, all the late comers to the party jumped on board to get their share of the wealth. They have enjoyed a nice run back to the levels of the original new multi-year trend. They are all trapped. Soon they will begin to panic. Fear will set in and some big money will realize their mistake. The real trend will now resume from the original ground swell where it began in earnest. It will continue for at least 30 years.
- If the dollar is "toast", then it is priced in the market NOW?
- The USDJPY always leads the way. Draw a simple trend line from 1971 to present across the downtrend.
- Do you really think the biggest economy in the world is just going to wither away. Give me a break? This is what the media wants you to believe. It sells books, causes Forex accounts to be opened and makes people look like experts for a short time. Do you realize how capital flows in the US compare to the so called emerging markets? One click of the mouse can dwarf some of them. Do your research. Don't be lazy.
- Is a British Pound really worth 2 times a US Dollar. If you believe this, why?
- Will the countries who have purchased long maturity US bonds want the dollar to weaken?
- What happened to the twin deficit media push? I'll tell you what happened, they were wrong. Why aren't they admitting it? What will happen to the current predictions now that we are off that kick?
- Is the European Union really set to soar economically. They certainly have wonderful employment numbers now don't they. Wages and Labor costs are not an issue now are they? Who is leading who? Germany? No comment.
- Just a 10% correction in the US dollar will yield 1300 points to the downside. EURUSD at 1.2150 by the end of 2007. Maybe more. Even if all the experts are right, does a healthy market need to correct or can it just go parabolic forever. Is 10% a good correction? 15%? 20%? Has any market in history not corrected?
- A North American Dollar? Mexico, Canada and the United States.
- Who has the largest Oil reserves in the World? Do you know this answer? Why does it matter?
- What is the purpose of Gold? Is it traded like a natural resource? Why is this important? Why would anyone want to pay $2000 an ounce for a worthless metal? Greed sells doesn't it. Why wouldn't we just find something else of value instead of Gold. No. Wait I'm wrong. Let me carry my gold around with me everyday. On the planes. So convenient. What a wonderful store of value. No...let me keep it in my vault at my house and I will just tell people that I have a lot of it or bring them to the bank to show them. No, No....I will just show them on paper or the internet. Now what is this? Ah yes! It is something just like the dollar paper. Fiat statements of my gold. Give me a break. What a bunch of malarky this gold thing is.
- Why don't all the economists and analysts talk about all their wrong predictions?
- Is China really ready to carry the torch? Look closely below their publicized middle class growth. What do you find? Are you counting on all these lower class people to push them out the top of the volcano? Good luck, they can barely feed themselves. But they will buy up cell phones and create business right? Just like the homeless in America are doing right? If you take away the lower class in China, what is left from a numbers comparison perspective? Do this and compare the numbers to the US.
- How about Japan? That's like saying the US is going to win the World Cup soon.Well not really, the US actually has a chance.
- Is World peace coming? Why have things been so quiet for so long? CNN is struggling to find anything that is exciting.
- The US Housing Market is collapsing right? From what level? All markets correct naturally. Real Estate is a bad investment in the US right? Why would anyone want to own property in the Untied States? Again, define collapse for me. Media, Media, Media. Yep, we are just collapsing here in the US. Going down the drains. It is a struggle for me. Freedom, High Income, Public Services, Shops, Restaurants, Lifestyle all within a few miles of my home. Fire Department will come automatically if I need them. My kids are in public or private schools.I have a lot of choices on this one too. All my kids have cell phones and their own cars. My kids have jobs and they are still in school. Yes, we are collapsing here in the US. I better leave now if I want to survive. Where should I go? China. They have roads there right? For all my cars.
- If there is a thing such as "smart money", why doesn't smart money just work for themselves in an office in the islands somewhere? It is smart to be an emplyee of a bank right? To work for smart money employers. Smart Money is an Oxymoron.
Here are a few of my relevant predictions for the next serveral years
US Dollar Index goes to 150
AUDUSD to .40
EURUSD to .85
USDCHF to 3.50
USDCAD to 1.75
Gold to 280 or much lower
Oil to $25
US 30 Year Bonds to 30