“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” John Maynard Keynes
During the latter part of 2008, I spoke often about a weak counter-trend rally in the U.S. Dollar that shouldn’t get pass 85-90 on the U.S. Dollar Index. I went on BNN on October 24, 2008 and recommended shorting the U.S. Dollar. Since then the U.S. Dollar Index broke down and is merely correcting that sharp decline and filling a gap on the chart.
Since I started a model portfolio for the blog, I couldn’t go back and cherry pick my correct picks of the past. So earlier today, I posted a buy alert on three ETFs. They were:
- FXC-NYSE $82.89
- FXE-NYSE $136.24
- UDN-NYSE $2572
We now have our model portfolio up on the blog on the right side listed under sections- Grandich Model Portfolio
Believing we’ve seen the bottom in oil and knowing Canada is in a far better fiscal position then tired and beaten Uncle Sam, I see the Loonie back at parity in the next 12-24 months. I’m also looking for the Euro to go to new, all-time highs against the U.S. Dollar in the same time period. Obviously if one concludes the same, betting on the U.S. Dollar Index declining would also be quite useful.
After we get past the Obama honeymoon period and the world realizes the fiscal policy of the U.S. is totally out of control and is imploding, its currency has to be debased and will have a 2 or 3 for I sale (or up to 70% off sale) long before my sixteen year-old daughter celebrates her 30th birthday (in an environment I regret she must face).
This video is a bit old but the message is more important than ever.
I would look to add to short U.S. Dollar and long Canadian and Euro positions if the U.S. Dollar Index moves back towards the 86-88 area. Today, it closed a gap and closed just below some key moving averages.
“There is no good in arguing with the inevitable. The only argument available with an east wind is to put on your overcoat” James Russell Lowell
Thought this Barrons article might be of interest to those who have not yet seen it – talking about Treasuries. susan
http://online.barrons.com/article/SB123094029415750267.html?page=sp
Peter, I’m back from vacation and just posted this to Twitter.
http://twitter.com/AGORACOM/status/1098392820
The Greek
Peter, looks like some other smart people agree with you on the Obama Honeymoon call.
http://www.informationarbitrage.com/2009/01/some-thoughts-on-2009.html
George
Here is the opposing viewpoint from Jack Crooks (great name, huh?):
http://blogs.moneyandmarkets.com/blog/currency-corner/0/0/were-bullish-on-the-us-dollar-today—and-tomorrow
–joe
Read http://www.telegraph.co.uk/finance/4125947/Willem-Buiter-warns-of-massive-dollar-collapse.html
I’m wondering why would you recommend buying ETFs that require US dollars, when the crowd knows that the US dollar will fail?
Peter in your model portfolio the symbol GOD, what exchange does that trade on…..lol…we’ll have to start a universal exchange for that one. Btw pgd…perigrine diamonds has almost tripled in the last bit…ment. it on the diamond blog but nobody seems to follow diamonds…do you have an opinion of pgd…I have entered aways back with it’s new discovery that Kaiser is excited about.
Speaking of diamonds, any hope for Rockwell Diamonds?
thanks,
Roger.
Peter, do you think uranium mining stocks have bottomed? If so, can you give us a heads up when you think the current uranium mining stocks rally is due for a consolidation in your opinion?
Thank you!
Hi Peter,
Looking through your mod portfolio and previous posts. What do you make of reports that gold jewerly sales in dubai and india have dropped 40+ %.
Given that the main purchases of gold are jewerly related and not investment would these massive drops in purchases not be bearish short to medium term.
one ( of many )Reference :-
http://www.bi-me.com/main.php?c=3&cg=1&t=1&id=29310
Love your blog Peter and amazed at your selfless posts. Keep up the good work.
PIMCO issues warning too…………..The FT survey also showed growing concerns about the huge rally in government bonds, which benefited in 2008 from fears of deflation and a worldwide recession.
Mohamed El-Erian, co-chief investment officer of Pimco, said: “US Treasuries will face considerable pressure next year from the very large issuance of government paper to finance numerous public sector programmes.”
Of interest to our investments………..
http://ftalphaville.ft.com/blog/2009/01/05/50759/an-oil-price-cracker-too-late-for-some/
http://ftalphaville.ft.com/blog/2009/01/05/50769/beware-commodity-index-rebalancing-ahead/
Charts indicate that the euro is due to correct to the downside i.e bullish for the $. Gold has three times made lower highs since it`s peak in of just over $1K. Bearish. Bullish for the dollar. Long term I would not disagree on the bearish outlook for the $ but you may lose your shirt if you go short near term.
Malcolm, I agree.
Peter,
Aren’t you concerned about the overall sentiment towards the dollar. I have read only one article (Jack Crooks) that is bullish on the dollar short term. However, I can’t count how many i’ve read that are bearish…. at least 20. This seems to go against your philosophy of investing. Is there something else short-term that you see w/ the dollar that made you decide to short it? Thanks.
I agree that gold is overbought and will correct. I am looking to buy more when it hits close to 810. Currently, the whole indices are very bullish and overbought. A correction should be coming and we should see gold and gold stocks coming down. That is the time to get in.
As for me, I maintain core positions which are already very profitable. I will add on correction.
Hi Peter,
I stumbled upon this series via Chris Martenson’s blog on the US Bailout and banking. It is long but I found it very educational. I highly recommend it.
http://www.youtube.com/watch?v=ZUEjRYe7MRk&feature=PlayList&p=BE233FA3D593154E&index=0
Thanks for a great blog!
Hi Peter,
Could you explain why UDN went up when the dollar went up?
Thanks!
It is a delight to finally get around to reading Mr. Grandich’s comments again. But woe is me! and forlorn my eyes! Peter’s sagacious comments are in grey letters, which remain grey even when I push control + until 1/4 of the message is off screen. Dear Mr. Grandich–Lazarus–rise ye then, please, from the grey of death into the gold of dawn light and “Encre de chine” (aka India ink) letters: pitch black, as was the sky over Golgotha the afternoon our Saviour sacrificed His very Life to win forgiveness for our sins and for our eternal Salvation, after torture barely imaginable, despite Mel Gibson’s admirable film, _The Passion of the Christ_. Thanks in advance Peter, for opting for black over grey. Neil
[...] said my favorite currency was the Canadian dollar. I said when it was 80 that it seemed to me to be a no-brainer to get back to par, which would give a 25% return. We’re about half way there. If the U.S. wasn’t [...]