Tuesday, April 13, 2010

Dollar Update...Weekly Euro Chart is Uber Bullish...

I'm not sure you want to short this chart.  But it sure explains the motive behind the massive long position in the euro taken by the "commercials" aka Big Banks:

(click on char to enlarge)

A big rally in the euro should translate into a big move higher in gold


  1. Yes Dave, and a nice freight train move by Silver. Yes it is coming.


  2. Agree on silver call. If the gold/silver breaks below the 62 area, we could see silver in the mid-20's very quickly.

  3. From Rasmussen:

    "Election 2012:

    Barack Obama 42%, Ron Paul 41%


  4. Rock N Roll! Thanks for the post! Maybe there's hope for after the big collapse.

  5. Have you been following the US Government debt schedules? Many analyst think that the US is already in default and has been for at least a month which is why the Chinese are talking about losses on the $. They think that the Chinese weren’t paid last month on their maturities.

    If you look at the Fed web site US5.4 t of US debt matures this year. The January auction was largely bought by a single source, the February auction failed and the March was cancelled. During this period according to the Fed web site $1.187 t matured and had to be paid out.

    According to Denninger $411 b has been created and be paid out by the Fed, even if the Fed had been coppering up the tax revenues the maths tell you that the Chinese didn’t get their maturities paid last month.

    In addition the COMEX has/ had practically no OI in April or May but June looks horrendous. This is Wylie’s “hit man cometh” with an end date of June.

    There is no way they can keep the COMEX game going with a June US $ default becoming obvious to everyone. The options, are to put it simply, are:

    1. The Fed can break the Bank of International Settlement Agreements and print more than their BIS limit of $411 b and go into full-scale monetisation of the $. Under this scenario all Central Bank Agreements are then cancelled. The crime gang running the BIS have spent over a hundred years putting in this control grid and this would end it all. I think this is unlikely.
    2. The Fed can go into default formally.

    There are no other options for June. As they say, this is it.

  6. Wow. There's a lot of information going on there that I haven't seen back-up on. Sometimes Denninger's site propagates information that is a bit beyond the truth.

    I will say that the Jan/Feb bond auctions were de facto failures when you look at the amount of takedown by the primary dealers aka the Fed Front. But I doubt China didn't get paid. The Fed is printing "credit" currency that doesn't accumulate in the reported "M" accounts.

    I will say that I'm surprised by the amount of silver off-take from the Comex this month. There's 33.9 million ounces worth of gold open interest for June vs. 2.4mm ozs of deliverable ("registered") gold and 10mm oz. of total gold. If 10% of the June longs take delivery, the Comex defaults if the eligibles refuse to register.

  7. The Fed has a limit under the BIS Agreements for US $ 411 b to be used for purchasing maturing debt. They have had US $ 1.187 t mature between December and April any purchases over this limit and the Fed is in default with the BIS Central Bank Agreements. The numbers don't allow Japan and China to have been paid out in April.

  8. The only positive note for the dollar is Spain. Spain built 750,000 houses on the Costa's last year to sell as holiday homes. This is the largest real estate bubble ever, dwarfing Dubai. They only took last year 220,000 deposits and since then there has been almost universal cancellation of these sales. The residential market in Spain all of which is financed by bank development finance is going to blow a hole in the Spainish banking system the size of which is almost unfathomable. The bonds on these developments should roll over in June for the last time. Spain will make Greece and Ireland look like thrifty Jane and this is going to send Germany heading for the exits on the euro as they can't swallow these numbers.

  9. Here's how the Fed gets around that limit: the Primary Dealers front for the Fed. If you look at most of the Jan/Feb auctions, the PD's took down over 50% of everything. But that debt sits on the PD balance sheets, not the Fed's. The Fed obviously lends the money to the PD's but it doesn't matter.

  10. The Bank Of International Settlements is not run by children and the agreements they reach are between parties who can claim sovereign immunity and so are in a real sense unenforceable. Also there corset for Central Banks takes into accounts these items and they have given the US a very generous allowance of US$ 411 b which has now been breached if the Chinese got paid out. These games with the primary dealers are for domestic local consumption and in the real world there is a limit of US$ 411 b a breach of that level has consequences.

    The first consequence of which is that the standstills put in place by the Central Banks to prevent a run on the dollar caused by a sell off by the smallest lenders are now invalid. The Fed can sqawk all they like about primary dealers and book keeping but the limits are hard and have been breached so the standstills are no longer valid. This makes the dollar inherently very unstable. You can't preferentially pay off the Chinese with printed money without the other lenders wanting out immediately. This is a breach of a stanstill and has to be seen in that context.

    Furthermore now no countries are bound by their monetisation constraints with the BIS as the reserve currency is now no longer constrained and this has huge consequences for the whole world. This is before you look at the regulation of the whole global financial sector which now goes out of the window.

    Put at it's simplest either the Chinese have not been paid out or the financial Mad Max has begun. The US can't have it both ways and put the genie back in the bottle, it's either out or it's in. If the Chinese have been paid it's out if they haven't it's in.

  11. Financial Mad Max. It's just starting. It's going to get REALLY Orwellian/Huxley-ian/Darwinian. The TRUTH will get you killed LOL.

  12. Here's the Denninger's article showing the increase in Fed loans to the limit. As you say Denninger propogates that the money went to Greece!!! for Lord's sake Greece!!!!

    When you look at the Fed pay down schedule anybody with a brain can see it went to China who have rolled over short and are now taking all the money back they can before the default becomes formal.