Tuesday, November 2, 2010

The PIIGS Are Squealing And Yet The Dollar Is Still Tanking Today...

The spread between Ireland's bonds and German bonds is blowing out again today.  I believe the bonds of Greece and Spain widened considerably yesterday.  A good chart of today's action can be found HERE (this is a decent site to keep track of FX news during the day, by the way).

Given the above, we would have expected the US dollar to firm up today, right?  Here's a 5-minute chart of the overnight action in the USDX:

(click on chart to enlarge)

As you can see, the dollar has been in "el-cliffo" mode ever since London opened and HK was winding down.  Since I've been awake today, the dollar inexplicably dropped another 400 basis points, from 77.08 to as low as 76.68. 

Not sure exactly what is occurring (yes, I know the euro broke thru 140 resistance, but this is not supported by the action in PIIGS bonds).  Given that the last time around when PIIGS paper blew out into a full-blown EU "crisis," and the dollar's response was a big rally, the action today suggests something is also "brewing" behind the scenes in the U.S.

Not good but we will know when we know what is going on...


  1. If the European Union comes to Ireland's rescue, which seems likely, I would expect that the Euro will begin to fall as it did before and during the Greek bailout.
    During the same period the US dollar index rose from 75 to 88!
    "A repeat performance of this appears to be on the horizon.
    My own target for the dollar index is 90 to 92.
    What will be most interesting to watch is the performance of gold during this period, as it appears to be gradually decoupling from the dollar.
    Is it possible that we will see both the dollar and gold rise at the same time?"


  2. Bill I respectfully disagree with your call on the dollar LOL. BUT yes not only is it possible for the dollar and gold to go up in tandem, that very thing occurred in late 2005 for a few months before the dollar rolled over and gold ran from $500 to $750. If the dollar and gold start moving in tandem this time around, it may spell serious doom for our system.

  3. Agree Dave tough call either way. Check this out as well Dave....Much respect as well! :)

    Today, the US Mint put the one ounce individual 2010 Proof Gold Eagle on waiting list status. **This means that orders have been received to fulfill the maximum product limit of 25,000**. As of last week's sales report, sales had reached 21,302, meaning that buyers snapped up the remaining 3,698 coins over the past week.


  4. I am uber-bullish on silver right now.

  5. I am uber-bullish on SDRG right now.LOL.

  6. I spent an hour on the phone with Marc Hazout, the CEO yesterday. I bought more this morning and put more in the fund I manage.

    There's too much info to type. I suggest it might be a good due diligence experience for you to call him. If you don't get him but leave the message that you are a shareholder he will 100% return your call when he can.


  7. What time will the QE2 announcement be?

  8. LOL. Not sure if they'll unveil the QE program tomorrow. But the Fed decision on interest rates is around 2:15 p.m. eastern time

  9. For QE, what number will benefit gold and silver prices immediately?