Mack,

I'm still staying with gold for the next year or so. I just don't see any reason to believe the dollar will have any extended rally. However, I do see a dead cat bounce coming up pretty soon. Could be wrong on both counts, though.

I got another opinion and a question for you on the markets, in general. The government shows no sign or inclination of curbing liquidity for major financial institutions. How much does this effect the stock markets? It would seem to make them less vulnerable to a major downtrend for the next few months.

Thanks,
Steve

Howdy, Steve!

I'm still staying with gold for the next year or so.

In terms of a strategic position, I believe a certain allocation of one's portfolio to gold -- as well as gold-related equities and exchange-traded funds -- makes sense during your time frame (and thereafter). In terms of a tactical position, I think I can do better elsewhere in the short to intermediate terms.

I just don't see any reason to believe the dollar will have any extended rally.

Me, neither. Of course, I could not see any reason to believe in March the eurodollar would significantly rally versus the U.S. dollar. But it did (http://tinyurl.com/ykkjf67).

However, I do see a dead cat bounce coming up pretty soon.

I am on the lookout for it.

Could be wrong on both counts, though.

I know that feeling!

I got another opinion and a question for you on the markets, in general. The government shows no sign or inclination of curbing liquidity for major financial institutions. How much does this effect the stock markets?

Employing Occam's Razor, I believe the liquidity theory of asset prices gives us the best explanation for the movement in the Standard & Poor's 500 (SPX) between the 1,009.06 level on Aug 21 and the 1,101.36 level yesterday. Ergo, I think government-provided liquidity has had a significant effect on the equity market in general and the S&P 500 in particular.

It would seem to make them less vulnerable to a major downtrend for the next few months.

I completely agree. Of course, I am aware the Federal Reserve is in the process of removing a small amount of liquidity this month, but I suspect this move will have minimal impact on asset prices because of its diminutive size.

Good luck!

MackTheKnife

Mack,

Thanks for your thoughts.


Steve

Howdy, Steve!

Thanks for your thoughts.

Ditto! And good luck!

MackTheKnife

Mack,

Like your SDS sell position. It does seem predicated on the dollar's continual slide, which brings me to the question at hand. Given the dollar's hard downward bounce off the 20 weekly sma, is it gonna break through the current resistance level anytime soon? I'm obviously playing the breakdown, but I don't like the implications for the long term effects.

Thanks,
Steve

Howdy, Steve!

Like your SDS sell position. It does seem predicated on the dollar's continual slide

For the duration of the SDS trade, I actually was assuming the eurodollar would either oscillate between about $1.47 and about $1.50 on the one hand or -- as you indicate -- move higher versus the U.S. dollar on the other hand.

Given the dollar's hard downward bounce off the 20 weekly sma, is it gonna break through the current resistance level anytime soon?

Before bloviating on this issue, I note the following two points:
-- (1) I am not a currency-market guy but an equity-market guy who monitors the U.S. dollar strictly in self-defense; and
-- (2) In doing so, I focus more on the relationship between the eurodollar and the U.S. dollar, primarily via the Euro Index (XEU) [http://tinyurl.com/ybc63wj], and less on the U.S. Dollar Index (USD) [http://tinyurl.com/yctx47v] itself.

With my bona fides thus duly discredited, I see nothing on any of my charts suggesting USD is about to soon break through its currently most significant resistance level, which, in my estimation, envelopes its 13-week simple moving average (now 76.63) on its three-year weekly chart (http://tinyurl.com/ycv3fg6). Although I am not an aficionado of chart patterns per se, even I have to acknowledge the double-top (or M) pattern on this chart pointing to the area between about 70.70 and about 73.00 could well prove to be a more or less accurate prognostic. Eventually. (February 2010 looms large in my scenario, timewise.)

I'm obviously playing the breakdown, but I don't like the implications for the long term effects.

Even though I am enjoying the short-term gains caused by this condition, I share your concern about the long-term pains it may engender. ("[F]or the slight present advantage the great prospective evil was forgotten . . . " -- Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds)

Good luck!

MackTheKnife

Yo, Goldie! I Surrender . . .

MackTheKife

My personal sentiment concurrs with you in respect to gold...it does appear that gold has risen too high too fast. However........
One of the best (probably the best in recent times) hedge managers, John Paulson, is currently very bullish on gold and gold mines. He has been right on the mark in his analysis of the market in recent years that it's hard to go against him (until he is proven wrong). He recently set up a new gold fund and has brought into a large position of (c) and sold all his (GS). I believe one of the factors in the price drop of Goldman Sachs from 189 to where it is today..is because of his moving out of GS. He carries a large influenece in the market (right or wrong) at this time.

Mack! I didn think the frenzy in GLD would ever stop. Wouldn't it be sumphin ifn GLD topped out on the eggZack's day you closed out the chort? :-) Ifn it do it'll certainly help with yer "quest fer 2%" ...I only wish we could play thisn right cheeeya >>> DZZ. Gold gonna fall to like $475 dollahs over the next 12 to 18 mumphs and that's about the eggZackt same % fall I'm "expecting" in the SPX...so I'm wonderin ifn a GLD chort is even werth it. We need the DZZ availability but as always >>>> Ooooh well >>> :-( This Paulson joker....is he related to Uncle Fester? that "might be" considerd inside info-may-shun if this clown is selling GS.....but you are wrong. It fell from 189 cuz I sed so. *-) now watch what I do to this Paulson clown and his gold moron fund. Also, I finished my "stated task" with that thur QCOR thingy...so you will see the results showing up on yer score almost immediately...ifn not sooner. *-) have a Happy Thanksgiving, Mack! *-) 3J

Howdy, MightyMo!

One of the best (probably the best in recent times) hedge managers, John Paulson, is currently very bullish on gold and gold mines. He has been right on the mark in his analysis of the market in recent years

Although I have a low opinion of John Paulson because of his employment of the objectionable objectivist Alan (I Got Mine) Greenspan, I have a somewhat higher opinion of the hedge-fund manager due to his persistence in maintaining short positions in various mortgage mills years before they imploded. However, I do not consider Paulson a market timer of any kind, so I believe anyone who follows his recent gold-related moves under the assumption that he is one may be courting disaster.

Meanwhile, I clearly mistimed my short of GLD here at P&P, so I am happy -- and, in the spirit of the holiday, thankful -- to be rid of it.

Good luck! And have a great Thanksgiving Day!

MackTheKnife

Howdy, 3J!

I'm waiting for you, Joe (http://tinyurl.com/2pv5c):



Good luck! And have a great Thanksgiving Day!

MackTheKnife