U.S. dollar

The euro's chart looks more bullish than the U.S. dollar's at the moment, suggesting that the latest deal to keep Greece afloat has passed muster with the global banking establishment.  Index futures are up as well, but only by enough -- six points -- to imply DaBoyz are more interested in distributing stocks than buying them tonight. See you in the morning!

In the Rick’s Picks forum, Gary Leibowitz is a square peg in a round hole. A steadfast Obama supporter, his outlook for the economy is almost as annoying. He actually thinks we’ll muddle through 2012 without a global financial collapse and believes the U.S. economy is on the mend.  Here’s Gary in his own words, posting to the forum yesterday:  “As Obama is being bashed for his outrageous spending spree over these last three years, the economy is showing improvement across the board. The dollar has to do well in this scenario, which will place pressure on commodities. The corporate earnings picture is a bit more cloudy. Overseas exposure will certainly hurt the bottom line.” Crazy, right?   In the first place, where would economic growth even come from, given the shrunken state of America’s manufacturing sector and the death spiral globally of our former bailiwick, grotesquely leveraged financial “products”?  Factor in an apparently intractable deflation in the housing sector, and the best we could hope for in 2012 is to keep the Second Great Depression at bay for another year, right? And yet, is it possible he could be right – that 2012 will end, just as 2011 did, with no world-shaking financial catastrophe to end these tolerably hard times?  In fairness to Gary, we should note that he is not all lollipops and roses. “I am not proclaiming all is well, or that we will come out of this unscathed,” he continued in his post. “I just don’t see the Armageddon everyone is expecting.  If we do hold off a recession this year, then the odds of a severe recession in 2013 increase greatly. Real estate and other ‘assets’ will most likely take it on the chin. Deflation pressures will mount. Can’t see many winners except cash.” We’d have

It’s days like yesterday that seem to suggest the central banks could keep stocks afloat more or less indefinitely. How can shares possibly go down as long as there’s a sea of digital dollars to support institutional players with no better use for interest-free money? Actually, it took relatively few dollars to push the Dow Industrials up 260 points at the apex of yesterday’s short-squeeze.  That’s because the rally was all but over minutes after it began. Stocks opened on a gap well above Friday’s close, with almost no shares changing hands in-between.  Indeed, it wasn’t a buying stampede that added tens of billions of dollars to the value of publically traded stocks; rather, it was the premium sellers tacked on when pent-up demand, mostly from bears, exploded after a three-day holiday. With shorts caught in the ringer, why would sellers want to get in the way of the resulting melt-up? So they stepped aside. And anyone who was not long stocks when the market closed on Friday was locked out.  In retrospect, we can’t understand why we weren’t in more of a betting mood ourselves when trading wound down last Friday, the final session of the year. Betting the pass line would seem to have been a no-brainer for anyone who “knew” that nothing horrific would happen over the weekend.  As it happened, the headlines concerned arson in L.A. and the Iowa caucus. No scary new bailout plans from Europe. No tankers sunk in the Strait of Hormuz. Just routine stuff. Although popular wisdom has always said the stock market hates uncertainty, these days it would appear that nothing thrills Wall Street quite like a dull-news weekend. *** (If you’d like to have these commentaries delivered free each day to your e-mail box, click here.)

As promised, here are my predictions for 2012. So many things could go horribly wrong that it's probably best that we simply try to live our lives to the fullest and not worry too much about the headlines.  Before I start listing away then, let me wish you all a happy New Year. Whatever the news brings in 2012, may you and yours enjoy good health, happiness and inner peace. Here they are: *  After taking a strong lead in the primaries, Ron Paul will be bludgeoned into defeat by the mainstream news media and its Evil Masters. The Establishment has far too much to lose if Paul becomes President, and it will fight him openly and shamelessly with every resource at its command. *  European borrowing rates will threaten to explode above 7%, pushing the PIIGS into bankruptcy (although it won't be called that). The euro's fall will be arrested at $1.08 nonetheless, buttressed by a Rube Goldberg "restructuring" plan that, fortunately for the global financial system, no one will be able to understand. *  'Mother' nature will continue to rampage with yet more earthquakes in places where earthquakes don't usually happen. *  Yields on U.S. Treasury Bonds will fall to 2% simply because there aren't enough mattresses to hold the world's money. *  Despite its intrinsic worthlessness, the U.S. dollar will soar, pushing the Dollar Index above 90. *  Toward the end of the year, deflation in the U.S. housing market will enter its climactic stage. Before the washout ends in late 2013, homes prices will have fallen 80% from their 2007 peaks. *  Gold will stage a powerful rally after bottoming at $1445 in January, but the buying spree will fall well short of $2000. Silver will fare relatively worse, falling to $18.35 before finding traction and

The Dollar Index has blasted through key resistance at 80, threatening to “unwind” carry-traders who borrowed dollars for next to nothing in order to speculate on other assets. Chief among those assets is gold, which got savaged yesterday in a $100 selloff that seems hell-bent on testing September’s key low. The low lies at 1543, basis the Comex February contract, but we doubt that it will hold. In fact, earlier, we had told subscribers there was a 60% chance that February Gold was about to dive to at least 1459, a technical target derived from our proprietary Hidden Pivot Method.  We shall see. In any event, gold and silver –  as well as crude oil, the euro and the commodities complex-- will come under heavy selling pressure if the short-squeeze picks up steam. If you’d like access our specific price targets for all of these trading vehicles in the days ahead, click here for a free trial to Rick’s Picks. Concerning the U.S. dollar’s powerful surge, although it was driven initially by fears over the possible collapse of Europe’s financial house of cards, the rally has taken a life of its own that is being driven by dollar short-covering. The buying is not yet at panic levels, but a surge will be impossible to stop if it gains juyst a little more momentum. Although the central banks can affect the markets for a short while with talk of bailouts, all of them acting together are puny relative to the quadrillion-dollar juggernaut that is about to fuel an unwind of the dollar carry-trade. Over the years, we’ve written many times about this potential Mother of All Short Squeezes. The paradox was, and is, that the dollar is intrinsically worthless, a form of debt rather than money. In point of fact, as

This demo was done at the invitation of TradersLog.com and starts with a brief explanation of the Hidden Pivot Method. We then took a close look at some key charts that provide clues concerning how the global financial crisis might play out. Our focus was on long-term charts for T-Bonds, U.S. stocks, the dollar and the euro. The conclusions we drew are somewhat counterintuitive, most particularly a prediction that the euro will not crash when the PIIGs eventually default.

Because securities markets sometimes do crazy things for stretches of days, weeks or even months, Rick’s Picks seldom attempts to reconcile seemingly contradictory forecasts for trading vehicles that are related, such as crude oil and gold (more on these two in a moment).  Nor do we seek to explain the ups and downs of stocks, bonds and commodities by connecting their frequently nutty behavior to events in the even nuttier world.  That futile task we leave to The New York Times, The Wall Street Journal and their ilk, since they are in the business of selling news as something that matters greatly, particularly to investors. It is with the foregoing in mind that we came to contemplate a seeming fork in the road for crude oil and gold. On the charts, the former looks like it’s about to blast off, while the latter seems bent on screwing the pooch for the remainder of 2011. We said as much in the headline that topped yesterday’s commentary:  Doomed Rally in Stocks Could Cap Gold’s Surge. Doomed may have been too strong a word – we did write a column for a Hearst paper for a few years, remember – but bulls could hardly have been encouraged by the egg the broad averages laid yesterday after having rallied nearly 300 points the day before. A few denizens of the Rick’s Picks forum (click here for a free seven-day pass that will also give you access to our detailed daily forecasts and trading recommendations) thought that stocks were simply taking a rest, but we saw them as relapsing into the quagmire of global problems. The most bullish story out there at the moment – bullish, that is, for everything but the U.S. dollar and Treasury paper – is that Helicopter Ben is about to

Gold did everything we’d asked of it yesterday, but Silver still has some work to do if precious-metal bulls are going to go back on the offensive. Comex December Gold need only have achieved 1659.10 yesterday to generate some positive signs on the hourly chart. In fact, it was trading well about that threshold early Monday evening, hovering round 1668 after having gotten as high as 1674.  This suggests that the next upthrust could go as high as 1729.20, a “Hidden Pivot” target that comes from our proprietary Hidden Pivot Method. (Click here to find out more about this method and the “camouflage” trading technique we use to reduce risk.) However, Silver was relatively timid, and although the December contract finished slightly higher on the day, the 31.430 peak of yesterday’s rally fell 48 cents shy of our bullish trigger threshold at 31.905. By our lights, that number is a key “hidden” resistance, and if it is bettered on a closing basis or by more than a few cents intraday, we would expect Silver to launch sharply higher, reaching a minimum 34.715 over the next 6-10 days.  We never want to chisel these forecasts in stone, however, and we will therefore be looking closely Monday night and Tuesday for subtle signs of corroboration on the lesser charts. Meanwhile, there are two non-technical factors that strike us as bullish for gold and silver: 1) bullion quotes rose even though the U.S. dollar was also rallying; and 2) institutional sharks who typically let precious-metal prices waft higher on Sunday night did not slam them back down before the opening, as is their wont. What this suggests is that even though they generally like to fade the trend – in this instance by going short -- buyers were too eager Sunday night to

[In the essay below, Rick’s Picks forum regular Robert Moore explains why a resource so very abundant as silicon could have value, but also why, like so many other physical things, most particularly gold, it is continually increasing in value relative to the U.S. dollar. RA] Why all this recent focus on value? There is so much banter and opinion circulating today about “intrinsic value.” Most often, I see the term being applied to competing monetary instruments: Gold versus government-issued paper currency. Everyone insists that their monetary instrument of choice somehow has more intrinsic value than the competition. While I find these arguments entertaining, I can’t help but dwell on the fact that both points of view are completely short-sighted and arbitrary, to wit: 1) Gold has value as an electrical conductor that does not corrode. In fact, a ship wired with Gold would be able to sail the oceans for millions of years. This makes Gold vastly superior to copper, which corrodes and loses its conductivity exceptionally fast in the presence of saltwater. Now, just imagine an entire Internet wired with Gold -- such a knowledge base would be nearly as timeless as the Universe; and 2) paper has intrinsic value in the fact that if we did not produce it, there would be far more trees around, and therefore less atmospheric CO2. So, paper is incredibly valuable to those who wish to preserve the fear factor that humans are destroying our planet via climate change. Okay, the above points are intentionally facetious, but they are meant to drive home the point that value itself is subjective, and that arguing about it might forever label you as a fanatic (especially if the basis of the argument is a certain yellow metallic substance) When people argue “value” in monetary terms,