Commodity buy time
Things seem to have clarified. The violent moves of a week ago have reached their extent, stabilised, begun to move back. I think that medium term bottoms are in for gold and silver, time to bet on them going up, this may be the last good chance.
Oil and gas are less certain. I expect natural gas to be a more positive trade over the next 6 months but there will be more money to be made on oil if you get the ups and downs right. Oil is about $70 now and really resists temporarily falling more than a $couple below that. I think there is almost no chance of oil (WTIC next month) dropping below $65 before hurricane season end, I expect moments of $85 and if anything untoward happens $95 or more are very likely. Buy oil at $70, chicken out at $65 if nervous, sell on fast peaks to $85 cos TPTB will be against you (there was sign of this at the Katrina peak).
US$ is failing its bounceback around the 86% USDX level. This is ominous. Several people I respect are saying there will be a significant uptrend in $ about now with 90% and 92% in view, it doesn't feel so to me. I think a lot has to go right for $ to hold at or above 85%; breaks to 82%, 80%, 78% beckon IMO. What happens on this is probably most critical in determining the general shape of what happens. TICS data was $ bad this week, will lurk as a nasty smell for a while, if next month TICS is as bad expect a significant $ downturn.
Stocks looked over a precipice, turned round and ran to the nearest Fed beer pub. I can still imagine brief new highs but they would be artificial. If you are going to gamble I would say be prepared for highs of about 11,800 on DJIA and 1325 on S&P500 but bet for the downside and sell HARD if they make those artificial highs ;)
Gold and silver look good up bets now. I think some of the softs do too, I would go for coffee and wheat. Buying oil below $70 (WTIC) looks a good move.
These forecasts are invalidated by a US$ move to 92% of its USDX index, gold to below $525, silver below $8. This is not investment advice, if you listen to me it's your choice / problem / fault. I can't help it if I am wrong, or right ;)
Oil and gas are less certain. I expect natural gas to be a more positive trade over the next 6 months but there will be more money to be made on oil if you get the ups and downs right. Oil is about $70 now and really resists temporarily falling more than a $couple below that. I think there is almost no chance of oil (WTIC next month) dropping below $65 before hurricane season end, I expect moments of $85 and if anything untoward happens $95 or more are very likely. Buy oil at $70, chicken out at $65 if nervous, sell on fast peaks to $85 cos TPTB will be against you (there was sign of this at the Katrina peak).
US$ is failing its bounceback around the 86% USDX level. This is ominous. Several people I respect are saying there will be a significant uptrend in $ about now with 90% and 92% in view, it doesn't feel so to me. I think a lot has to go right for $ to hold at or above 85%; breaks to 82%, 80%, 78% beckon IMO. What happens on this is probably most critical in determining the general shape of what happens. TICS data was $ bad this week, will lurk as a nasty smell for a while, if next month TICS is as bad expect a significant $ downturn.
Stocks looked over a precipice, turned round and ran to the nearest Fed beer pub. I can still imagine brief new highs but they would be artificial. If you are going to gamble I would say be prepared for highs of about 11,800 on DJIA and 1325 on S&P500 but bet for the downside and sell HARD if they make those artificial highs ;)
Gold and silver look good up bets now. I think some of the softs do too, I would go for coffee and wheat. Buying oil below $70 (WTIC) looks a good move.
These forecasts are invalidated by a US$ move to 92% of its USDX index, gold to below $525, silver below $8. This is not investment advice, if you listen to me it's your choice / problem / fault. I can't help it if I am wrong, or right ;)
posted by Agric | 23:24
3 Comments:
What is your take on Mish's take (http://globaleconomicanalysis.blogspot.com/) on the dollar?
You both seem to be pretty close. It seems your a bit more of a dollar bear.
I really like Mish and respect his analysis, been reading him much longer than this blog's been going, I would mostly trust him more than me. He and I differ on some things...
First is the inflation / deflation argument. I think Jim Puplava is right medium term: we are in for a serious inflation to postpone economic collapse and monetize debt. I happen to think that Mish's deflation ultimately happens in spades as a side effect of the total collapse of the monetary system.
I do think the US$ is ultimately toast but don't think that is imminent. I'll try to get my thoughts together on this over the next few weeks and do a US$ post to explain what I think. My short term thoughts are almost totally separate from what I perceive as the longer term fundamentals.
Most of Mish's (short term) $ arguments are fairly sound, though I would disagree with some:
- UK pension problems are miniscule compared with US
- I don't recall anyone saying the Euro would implode
- US M3 money expansion was over 8% last time reported, lol, in March 2006. Both UK and EU were higher - in the 8% to 12% range, as was China at near 20%
- EU countries do have a demographic problem*, but this could be solved by doing the US trick of allowing legal and illegal cheap labour in, lol.
* I expect this problem to be solved by die-off processes.
We are in a global liquidity (end)game, it cannot continue forever (or for too long), just as our consumption of fossil and natural resources cannot continue to accelerate forever (or much longer). Whilst Mish's arguments are mostly sound he fails to factor in those limits, IMO.
As a counter to Mish's perspective I would offer this analysis by Jim Willie from a couple of years back:
http://www.financialsense.com/Market/willie/2004/0621.html
Me a dollar bear? Before 2010 I expect the US$ to decline to about 50% of current value vs Euro, Yen, Yuan; and to about 20% of current value vs gold and silver. The US economy is largely a derivative based on illusion.
Scrolling back through Mish's recent posts I would draw attention to and totally endorse stuff from June 6th:
"Mish's Movie Review" esp. the bits about job numbers and job births / deaths. (the BLS birth / death model is based on their PERCEPTION of what state the economy is in, currently it is expanding from recession, lol, so they invent jobs based on that). Here's the BLS page, they hide it well:
http://www.bls.gov/web/cesbd.htm
"Nightmare Carry Trade Scenario" all of it, since it will probably happen.
Best plan to buy that $ toaster in the next year or so, Mish.
We really have no idea what will happen if the carry trades unwind, we have never been there on any scale within 1% of now before.
In some not so distant past there was a decoupling between financial systems and survival. Now their interdependence is all-pervasive. When the system breaks many will die.
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