Playing the currency markets?

[Peacefulplanet]

Trend is still holding since June, EUR/USD now at ~1,50, Dow over 10,000. Not sure how long this bear market interim recovery keeps going, but I am selling long positions in EUR/USD and stocks and will be buying short positions.

Everyone is bullish and positioned for a year's end rallye, usually a bad sign, but maybe it keeps going a little longer. Currently there is a big USD carry trade going on: Everyone of the bigger players make debt in low interest rate USD and take this money to buy other better performing assets (anything: stocks, Gold, Oil, assets in non-USD-currencies, etc).

As long as the trend holds (declining USD) the party can go on, as soon as the trend is broken there will be a sharp upward move in USD for a few months and a sharp downward move in those assets that were bought for cheap dollars until now.

If you don't know anything about this stuff, maybe this gives you an idea:

http://zertifikate.onvista.de/snapshot. ... RT=1#chart
http://zertifikate.onvista.de/snapshot. ... RT=1#chart

No doubt, you can lose all your money with those papers, if you're wrong...

Best regards

[Peacefulplanet]

Interesting situation right now. Since the end of November the USD got a lot stronger (=non-USD-currencies weakened), while the stock markets kept going up until last week. So there was a divergence, before both non-USD-currencies and stocks rallied, since my last post the non-USD-currencies declined, while the stock markets went up a few %. This usually can be considered a warning the current trend might break and reverse.

Those papers I mentioned in the last posts show how much you could have made as long as the trend was intact (click on 1 year chart, rally since March), but as I said, other vehicles in the opposite direction were/are worth considering (like this, for example: http://zertifikate.onvista.de/snapshot. ... RT=1#chart ). Anyone interested in additional info? This is just my opinion, you might lose all you put in.

The question about a severe decline in stocks and the general economic situation is not if, just a when. This system of generating growth by additional debt will fail, no doubt. At some time you get to the point when noone is ready to give you any additional credit, because you have overdone it, no matter whether you are a superpower or just a private customer.



More bullish view, the above might be a false flag:



Best wishes to everyone, apart from this gambling get out of paper- and trust-based assets (paper money, insurance, anything intangible etc.) and into real things (anything tangible and not based on paper, which will and always has returned to its real inner value (the value of the paper that it's printed on in contrast to i.e. a silver coin or a piece of land)).

Sorry, JM .02$

[Peacefulplanet]

[stilloutthere]

"paper- and trust-based assets (paper money, insurance, anything intangible etc.) and into real things (anything tangible and not based on paper"

Do you mean I should become a survivalist? Because that's the only way I can think of to do that. We'd have to go back to a barter and raid economy. I'd starve to death, as would most Americans, I think. Maybe I could learn to knap flint spearheads.

I'm glad to see you refer to currency trading as gambling.

[Peacefulplanet]

Thanks for your reply:)

I'd be happy if all what I say in this thread turns out to be bullshit and I end up embarassed to the bone and totally wrong. I don't want this to happen, but my wishes are just that.

Most people alive today in western countries lived a relatively good life compared to many past generations and can't imagine that something like this can happen nowadays with central banks and experts and stuff everywhere.

But the deeper you dig, the more shocking it becomes, really. I studied economics and in 1998/2000(part/full time) I became a finance/stock market editor, since then I spent much of my freetime trying to understand how it works.

Basically it is more debt=more growth, once too many states/consumers/companies are overindebted, the game is over.

And banks being allowed to make their money with gambling instead of basic services for the people even after what happened makes me think Obama is just another installed puppet.

I'd be happy to post more info to back my claims, what do you think?

Best regards

[Peacefulplanet]

A few more thoughts: Look at the 1st chart of the S&P500 in my 3:35am post, the green line shows the downtrend since the high in 2007. If the S&P (and other index) crosses that green line, it is a very bullish sign and we might reach even new alltime highs in the stock markets.

how can this be if the overall situation is so bad?

Stock markets develop according to the psyche of the masses, only little according to fundamentals, remember the internet stocks craze?

Fundamentally not justified at all, but the masses considered it a good idea to buy stocks of companies without a real business model and no revenues, just because they liked the idea and wanted to be part of that giant "getting rich quick" scheme.

Bernanke already mentioned he has no problem flooding the markets, and that's what his antecessor bubble king greenspan did when the markets collapsed after the internet craze.

That housing bubble was build on cheap money from the Federal Reserve and at least for banks it's cheaper than ever right now...

The current situation would have been appropiate in 2001 already, but greenspan created a cheap money bubble that went into the housing market, "forcing" consumption addicts/wannabe patriots/people brainwashed by mass media (free press? LMAO, a bunch of Wall Street whores!...same in EU) into a second mortgage etc.

Now the prices collapse and people lose their jobs, making it hard to pay for these additional debts.

So, my best case scenario is: They manage to create another bubble (looks like they wanna try eco techs as a bubble vehicle) and we reach new highs in the stock markets etc.

If that happens, the overall soundness/health of the economy deteriorates even more, but we'd have more time to prepare for what is coming. The bubble would develop, the following crash would be from greater highs than now and more devastating.

Don't shoot the messenger, please challenge me and make me prove my point.

Best regards.

P.S.: Buy something tangible, but don't put all of your money into precious metals right now, you will get better entry points, a correction is overdue IMO. New highs possible, but IMO in a few months you might get it cheaper. I'm going to buy a piece of land in SA hopefully (second SEO customer in the making;).

[Peacefulplanet]

One last thought: If you are using vehicles were the banks are the counterpart and you make money, that's legal bank robbery(OK, they can take measures to reduce their exposure, but anyway):-D

Rip those off who destroyed the economy and continue to do so:-)

[stilloutthere]

I'm all for splitting up the big banks into more narrowly focused units. It would help if some of the European countries did the same.

If you rely expect a complete collapse, stay away from precious metals. Gold, for instance, has little real value. You can't eat it, and you can't make anything useful out of it. Its entire value rests in perceived rarity and its beauty. Pretty much the same applies to silver. In a total collapse you need basic things, like a way to produce food.

I've heard there is a book that describes how to do basic things and make basic machines. Now that would be a good investment.

My theory is that if the US falls apart to the extent it doesn't honor treasuries or cover insured bank deposits, I'm going to have much more severe problems than wondering where my money went.

[Peacefulplanet]

I'm all for splitting up the big banks into more narrowly focused units.

Yes, the current system has to be reformed and banks must go back to basics and serving the economy, not exploiting it recklessly. Hope they manage to do this without debtors collapsing, the whole system works as long as you find additional people/companies/govts. to take over additional debt. Hard to put it in words for me, but because of the interest and compounded interest the system works as long as the economy is sound enough to be able to increase debt all the time.

Re Precious Metals: Take a look at this Chart, it shows how much ounces of Gold you need to buy the Dow, the Dow/Gold-Ratio. In times when the economy was bad (1930ies and 1970ies) Gold performed much better than stocks (and anything paper or trust based).



In 1999 for example you needed almost 40 ounces to buy the stocks of the Dow, when the economy was totally down it went down to almost 1 ounce per Dow. We have a bullmarket for years now, so you certainly can't call it cheap anymore. I'm hoping for a correction which should go below 1000, maybe even below 800, Silver under 10$ is possible, too IMO.

Plus Gold and Silver have been highly valued in almost any society (except isolated tribes etc) in history. A piece of gold is perceived something real, as far as I know there is not a single example where paper money didn't collapse to zero sooner or later (the oldest currency so far is the Dollar I think).

But you are right, it's a good idea to focus on things you can really use in a crisis. That book would be very interesting, can you find out what the title was maybe?

To have something to trade and store value in a crisis, maybe raw coffee beans would be one egg to put in your basket (uh, poor english;-). I heard unroasted coffee beans can be kept for decades if you store it savely. If the crisis gets bad, there is still many people who are desperate for a coffee (in WWII coffee and cigarettes was very good to trade over here). Or sugar to distill your own booze for trading, sugar can be kept for decades, too.

Best regards, hope I am wrong, because this looks scary:



(optimistic interpretation: US govt. is just trying to offset the drop in non-military durable goods with something else)