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

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...

9 comments:

BillTuesday, 02 November, 2010
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?"

Bill
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Dave in DenverTuesday, 02 November, 2010
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.
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BillTuesday, 02 November, 2010
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.

http://mintnewsblog.blogspot.com/2010/11/us-mint-adds-last-opportunity-section.html
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Dave in DenverTuesday, 02 November, 2010
I am uber-bullish on silver right now.
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AnonymousTuesday, 02 November, 2010
I am uber-bullish on SDRG right now.LOL.
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Dave in DenverTuesday, 02 November, 2010
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.

416.223.8500
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AnonymousTuesday, 02 November, 2010
What time will the QE2 announcement be?
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Dave in DenverTuesday, 02 November, 2010
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
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AnonymousWednesday, 03 November, 2010
For QE, what number will benefit gold and silver prices immediately?
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Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.