Thursday, May 5, 2011

US$ could rally - BIG (especially against some ridiculously valued currencies)

The Mad Scientist has been beating the drum, along with Mike Shedlock, about the coming disaster in Australia. I had put off addressing that issue... until today.

Australia's currency, stock markets, and banking system are likely to go through what the U.S. went thru 3 years ago. I have thought their currency to be bubbling for sometime... but I don't short things that are still going up - they have to break first, then I short. I think The Australian $ is doomed, the Canadian $ is over-priced, as is the Yen and the Euro... but the best opportunity to score big is betting against Australia.

Downunder is about to Slip under...

You heard it here first.... sort of. Those guys have been jumping up and down about the Aussie impending implosion... my money says it is here, now, and this is the moment - today's events were the breaking point.

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ROFL!! What Rail system?

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The Baltic Dry Goods Index has fallen completely out of bed. Not a good sign for commodities or commodity currencies. Nor a good sign for industrial growth in China.

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Propaganda is everywhere... read this Drek on why you should step in front of a freight train regarding silver.  To tired to pull it apart here, but the writer is worse than ill informed... he's FOS. Silver might go higher soon for all I know (though I doubt it... once a bubble gets popped its hard to put humpty dumpty together... even Silver), but not for any of the reasons this jerk lists.

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Its all about Oil, and it ain't getting any easier to read the tea leaves. Except the Aussie $$. Party over.











15 comments:

Anonymous said...

I'm wondering if you managed to sell your silver bullion before the price dropped?

Greg T. Jeffers said...

I sold Silver in the futures market. Same thing.

COuld not find a dealer to take my bullion at the then spot price.

Greg T. Jeffers said...

Still short... though expecting a rally at any time, will cover and sell rallies.

Anonymous said...

Paper is easy to unload as the markets are designed to connect buyers to sellers.

Physical bullion is a whole different story.

Greg T. Jeffers said...

I wasn't trying to sell all of my bullion... it was more of a fact finding mission, as I knew I could click a button and accomplish the same net position.

I did want the cash, though, to go and buy some farm equipment from a farmer who was disinclined to accept silver as payment.

tweell said...

My apologies, have been busy and not watching the markets much. I recommend CMI for physical silver (and gold, but I have bought and sold silver through them with no problems). http://www.cmi-gold-silver.com/
You can arrange a sale of precious metal, mail the goods to them and they will credit you with that money when they get your package.

PioneerPreppy said...

Greg

So do you think Iraq down grading their oil production numbers will be enough to send oil back up?

Greg T. Jeffers said...

PP:

Not in the near term.

Please keep in mind that Oil price is driven by the ECONOMY not the supply of Oil (geologically speaking). Until exports decline enough (and it won't take much because of the price inelasticity of Oil) to force bidding, my sense is that Oil will only be the best of a bad bunch (commodities) - in US$ terms, that is. I would go long Oil in Australian $$'s... though there are better bets...

Greg T. Jeffers said...

Hey Tweel:

How's your homestead coming?

tweell said...

I'm back in Arizona for now, alas. My parents had some problems and my brother was making them worse instead of helping. Right now, I'm re-roofing their house.
Hopefully I'll be back at the homestead in a month. I need to help my uncles build their wood gasification plant and finish the truck provider-gas wood burner.

westexas said...

Note the discussion of Chinese inventories:

http://biz.thestar.com.my/news/story.asp?file=/2011/5/9/business/8643962&sec=business
JPMorgan raises oil price forecasts to US$120 a barrel

Excerpt:

JPMorgan Chase & Co raised its oil price forecasts because Organisation of Petroleum Exporting Countries (Opec) and other producers aren't matching rising demand and consumers will take time to react to higher prices. . .

While the bank lowered its estimate of world demand by 100,000 barrels a day, in part because of the earthquake-led disruptions in Japan, it raised its forecast for Chinese consumption, saying data implies China's crude-oil inventories have been “drawn heavily” in the past six months . . .

“We continue to believe that the oil supply-demand fundamentals will tighten further over the course of this year, and likely reach critically tight levels by early next year should Libyan oil supplies remain off the market,” it said.

Anonymous said...

WestTexas,

US oil imports and inventories are up the last couple weeks. I realize that this is a noisy number, but is China starting to soil the bedclothes, or does the KSA actually have excess capacity? Longterm, up is the only direction but short term, the market seems to be easing in supply tightness as well as price.

Regards,

Coal Guy

westexas said...

Regarding US inventories, I'll fall back on my standard analogy--the old joke about the drunk looking for his keys late at night under a streetlight. He lost his keys down the street, but the light was better under the streetlight.

In a similar fashion, we have (presumably) good data about US inventories, but that has not been where the increases in consumption have been in recent years.

Weak US demand is not a new story, since our oil consumption probably peaked for good in 2005.

Anonymous said...

Westexas,

I understand that growth in demand is elsewhere. But for the last few weeks our imports have been up over 1MM Bbl per day compared to the last few months. That extra oil either came out of the ground as increased production, or, if production had not increased, was oil that wasn't bought by someone else.

We may not be driving the market, but we're still part of the market. When extra oil shows up here there is a reason. I'm just curious about what has change in the market to put extra oil in US storage tanks when we've been drawing down for months and there isn't supposed to be a drop to spare.

Our real demand for imported oil seems to be around 9.3 MM Bbl per day when you back out the stock changes. It has been pretty constant for quite a while. The bumps and dips in imports change total storage, and are a short term indicator of changes in the rest of the world. Something has changed in the past couple of weeks.

I'm not Bur, who thinks that above average US inventories somehow mean that there is really a worldwide oil glut, and those evil speculators are driving up the price. Long, or even medium, US stocks don't mean much. But, if we are absorbing bumps in the market, something has gone bump.

Regards,

Coal Guy

westexas said...

One of the problems with short term data is that it is hard to differentiate changes in global production from changes in global inventories.