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Tuesday, February 24, 2009

The Dollar Is Safest Place For Your Money


Relax, gold buyers and others trying to buy safety. Stock markets are about to hit their lows and offer you real bargains. Obama is not nuts. He undestands that Bush's spending boom has to end. He has a natural air of authority, a good brain and a common sense approach to matters economic.

Reuters yesterday 23rd February 2009 -

Underlining the severity of U.S. debt problems, President Barack Obama pledged on Monday to cut the ballooning budget deficit in half over the next four years.

See whole report HERE

The panic is not over, but things are going to be A.O.K. Take it easy. Hillary Clinton has confirmed with China that a weak dollar is in no one's interests. China will broaden her investment strategy but still underwrite American government borrowing.

Forex news also shows that confidence in the US Administration is growing -

Reuters again Monday 2rd February 2009 -

TOKYO (Reuters) - The dollar steadied on Tuesday, hovering near a three-month high against the yen on expectations the U.S. government will stay more proactive than other nations in fighting the financial crisis.

The U.S. Treasury Department, Federal Reserve and three other federal agencies jointly said on Monday that they will initiate a program on Wednesday to assess large U.S. banks' capital needs and determine whether a bigger buffer is warranted.

"Players in the forex market believe the U.S. government is taking very aggressive steps to tackle bank problems," said Hideki Amikura, deputy general manager of forex trading at Nomura Trust and Banking. "That is helping the dollar."

The dollar also received a boost on Monday after the Wall Street Journal reported the government could take a stake of up to 40 percent in Citigroup by converting preferred stock into common shares.


And yet all financial advisers are telling people to beware of the dollar and buy gold, a highly volatile and risky investment. They themselves will not be buying gold. They are shorting it as the commitments of traders statistics show, and they are shorting stocks on markets. The last thing they want is the investing public stopping buying gold as they intend to make a killing from the coming fall, and they want to clean up on the falling shares as small savers panic and rush for the exit.

UPDATE - Head Gold Bug Jon Nadler of Kitco in Canada runs to the defence of the Gold ETFs today as follows -

Today's critic's prize goes to the gold ETF, which now holds $30 billion in gold assets. Oscar-worthy, that milestone. Some critics (evidently former Rotten Tomatoes writers) charge that there is no gold behind the fund's facade. And, boy, are they ever wrong. Then again, they missed "The Wrestler" too. The award for 'best product comeback' goes to the S.A. Krugerrand - which fell into an also-ran orphaned state following the Reagan-era embargo on imports. From has been, to have-to-have! It's the Mickey Rourke comeback of the bullion coin market! The Rand Refinery has upped its blanking output to 20,000 weekly in the wake of (largely European) demand.

Fine words Jon, but do you offer any evidence or argument? Only 'boy are they ever wrong'!!!!!

As Jon knows not even the ETF's auditors are permitted to know if there is any gold in stock, to check its fineness, or even see it!!!! Such certainty is misplaced. But Jon's keen to keep the gold panic pot boiling as long as he can. His business bonuses depend on it.

But the gold fall is already getting started. Sell. Sell. Sell.

Today's chart showing the gold game is up......



Latest price $972 after touching $968!!! A $25 nearly straight fall. The sellers will take some stopping now.

FINALLY - Obama enjoys broad popular support. See NY Times HERE

8 comments:

Dr. Liz Miller said...

I am not so sure. The UK media are not talking about buying gold, and the advice to buy physical gold, is thin on the ground. Anything but.

Vis, in the months before the property crash, the UK media pumped property.

When the UK media start pumping gold, that will be the time to sell?

tapestry said...

I'm not fully plugged into general UK media but Bloomberg, Reuters and others have been backing the gold boom a while.

I would sell now if I were you. As you say, once media start backing a course of action, it often pays to do the opposite, as media opinions are either political trying to slow a decline, or financial manipulation trying to boost someone'sprofits.

Go against the crowd and you will make more money. But timing as always is crucial.

Good luck and nice to see you are a 'follower'.

Jay Dee said...

Hi I hope you are right and gold will go down. I still need to convert some of my currency holdings into gold. However - I am a bit pessimistic. In 7 weeks I will get money for the appartment I sold and I am really afraid that this time gold will be already 1100 USD. If it's 700 - I own you a beer.
About gold - look - so far banks used to increase their balance sheets with funny financial instruments. It was on cost of shareholders - they might loose due to bankruptcy. Now FED (and other central banks) are increasing itheir balance sheet and try to guess on who's cost. I am almost sure that on cost of currencies. This will be shown up by inflation (increase of prices of goods) that would kill economics. However - there is another way - to depreciate currency (all currencies) - against gold. In this case inflation - that has to appear - will not appear - because currencies will be depreciated against gold. On the other hand also debts coming from toxic assets will be less expencive - because central banks have gold and valorised in this gold these assets will loose their toixicity. However this will happen when the price of gold will be 10 - 15 thousands USD. Other solutions are also possible: a big war like war the II or inflation on the edge of hiperinflation. However - in both cases price of gold will not increase so much.
Ask yourselves who will take this chance and why. I am sorry about your prime minister - he made already funny mistakes in 1999 (with gold), then with VAT tax. UK people are so mainstream that even extremely inteligent friend of mine used to believe that VAT tax will work against deflation!!!
Sorry for this political interruprion - but I worry about UK economy - you are in EU.
The message is that I hope people will think like you and gold will go down - but I doubt. Fears are too big. In fact in normal times and partly also now gold is not a hedge against inflation - it is a hedge against fear of the future. Whom trust:
- Euro - it will melt down when every country will have different needs;
- Pound with Mr. Borwn and printed money - no way;
- USD - with bailouts and sooner or later printing money - no way;
- Currency in China - where officials decide what is going on - no way.
- real estate - I see you do not advise that (thanks God);
- Stocks - think about shrinking demand - maybe all figures next year will be red (losses)
So what you have left???

Anonymous said...

Peter Schiff has opposite opinion about gold, dollar and Obama..
http://www.youtube.com/view_play_list?p=3EBA02237EA29F05

Is he an agent?

Nostradamus, apparently said...

I also noted that Jon Nadler gave absolutely no evidence to back his assertion that those who question the existence of the physical gold in gold ETFs are "wrong."

So far, the only assurances I can get are somewhat vague claims that Deloitte Touche is required to physically inspect the gold twice a year and the audit reports they have filed do not raise this issue. The reports imply that there are no 'scary' issues like missing gold.

Apparently, that is enough for many people to feel absolutely confident the gold is really there.

I'm not so sure.

S&P, Moody's and Fitch all rated mortgage backed securities as "AAA" when they were, in fact, junk, as we now know. I understand they did it in order to keep the clients happy.

If the ratings agencies will do this, it seems possible to me that Deloitte Touche might do it, too.

Sadly, I've seen enough of human nature and the Madoff scandal is too fresh in my mind to feel comfortable accepting the chain of logic being offered to support the claim that the gold MUST be there.

If it's not, there is going to be a VERY bad outcome for many investors...

tapestry said...

Nostra...,

If the ETFs are long on gold in the futures market, they will no doubt be holding the cash in some accounts to back up the trades.

Whoever owns the ETF could easily be shorting the longs in another sister organisation, and using the cash to act as collateral to trade anything you like.

The losses from gold's fall will be funded but out of clients' funds. The ETFs will carry on.

Gold will bottom eventually at maybe $600 or $450, and the ETFs will slowly get back into attracting clients money for the next rise.

However the rises in the price are likely to be bigger and the falls too as speculative money, not jewellery demand will start to control the market.

It will end up with one monster rise and one monster crash in a few years time after a long period of high volatility. Then people will get out of ETFs and life will get back to normal.

I guess we're in for a ten year period of high instability. The fall happening now could be a big one.

Nostradamus, apparently said...

Hi, Tap

Thanks for the comments!

If the money is still on hand, as you say, then it looks EXACTLY as you say.

This would be just a typical swinging of the market to hose the little investors who think the game is fair.

But, what if the cash isn't there? If you're lying about having the gold, why would you stop there?

Human nature is pretty bad and this seems possible.

My experience is that there is seldom just one lie from a liar.

If this is a Madoff scam, it's a big one! That's my big concern.

Or, is there something I'm missing?

Thanks again!

tapestry said...

Why risk the scam by indulging in outright theft or fraud? The ETF Gold game is far more effective as a money maker just as it is. If holders of the ETFs are covered only by long positions in the futures market as some suspect, and not physical gold, their cash is also available to lend or invest elsewhere.

This is as close to crime as you can get without crossing the line, a bit like the mortgage scams that caused the first wave of the credit crunch.

But Gold ETFs will run a lot longer yet, before they are seen as a scam, if that is what they are. Too much money is being made out of them for the underlying story to be revealed.

But outright crime I don't think is very likely.