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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: sciAticA errAticA who wrote (32739)	5/1/2003 7:35:49 AM
From: sciAticA errAticA	Read Replies (1) of 74559

How do you spell D I V O R C E? April 30, 2003 Mineset I'm told that the major seller of US dollars is Saudi Arabian interests. This dollar sale falls on the heels of a highly public divorce between the United States and Saudi Arabia. Once a major U.S. ally in the Middle-East, Saudi Arabia is now a country where a U.S. military presence is no longer wanted or desired. The US government has announced publicly that it won't stay where it's no longer wanted and will close down its military bases there. The current situation with the Saudis has multiple cause factors. There is a litigation in which a famous Washington, DC attorney has named certain members of the Saudi Royal Family as alleged financial supporters of the perpetrators of the 9/11 terrorist event. There is also a growing fundamentalist movement in Saudi Arabia that opposes the presence of U.S. forces there and which also poses a threat to the Saudi Royal Family. It could even have something to do with the huge put (short) activity in airline stocks just prior to 9/11. Regardless of the reasons, this certainly sounds like a major break up in a long-term relationship. We are hearing harsh words between previously close allies that had looked after each other's interests. So I ask you, do you really believe that Saudi Arabia feels a pressing obligation to experience huge losses by continuing to hold dollars that have the market action of the NASDAQ as it was unwinding from the March 2000 highs? The really disturbing part of this negative dollar situation is that the dollar has the same four distinct Head and Shoulders classically-bearish neckline breakdowns that preceded the crash of Enron. GE had three similar breakdowns and it lost over 50% off its high. Behind Saudi Arabia are all the big six oil producing nations who are now quite disturbed with what appears to be a plan for long-term operation of the Iraq oil fields by U.S. interests ─ protected of course by our military forces who might well be hunkering down for a long stay. Who said there wasn't an oil component to the invasion of Iraq? As I've said in the past, the cost of the Iraq War could still be enormous in light of the many destabilizing forces in the region. Gravity may finally have taken hold of the dollar. By that I mean a downward force that can beat up the Exchange Stabilization Fund and all the king's men no matter how hard they try to put Humpty Dumpty (the dollar) back together again. Gravity in the dollar is the downside of having used the World Bank and IMF as the salesmen of the world-wide U.S. Dollar Reserve Currency Standard. At one time, all the world's central banks were happy with appreciating dollars as a reserve asset. Today, they can't be anything but depressed over their depreciating dollar reserve assets. In the end, this bodes well for gold. To say that gold today is a non-performing asset is impossible. The dollar now is a non-performing asset because it has declined orders of magnitude greater than the interest it is earning. If central banks applied the rule they applied to gold for many years, they would be selling dollars and buying gold. That is exactly what the Asian/Islamic interests are doing. So if you have given up on gold, you have given up at just the wrong time. jsmineset.com

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