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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: praha4 who wrote (6948)	11/7/2007 11:39:10 PM
From: SliderOnTheBlack	Read Replies (5) \| Respond to of 50126

Competitive devaluation is the road to ruin... Last week I talked about how telling Larry Kudlow's interview with V.P. Dick Cheney was in regards to the "real" U.S. Dollar policy: Message 24009107 Ever since the IMF issued their talking points about the need for a lower U.S. Dollar, the "whisper" number has been the 72 level for the Dollar. And now, it's got to be perfectly clear to the entire world that Paulsen & Bernanke have abandoned any and all pretense of maintaining a "strong dollar" policy -- and have instead adopted a policy of competitive devaluation in an effort to inflate away the deficits, and prop up U.S. multi-national export earnings. Team Paulsen's "LIE" Policy is alive and well. Liquidty + Intervention + Exports = Value and Direction of the Market. But, a new vigilante has arrived on the block. On November 1st the Fed injected $41 Billion into the system (the largest 1-day injection since the post September 11th reflation) and Oil exploded. Every time the Fed has made large injections - Oil has popped. The Oil markets have taken on the former role of the bond vigilantes in bitch-slapping Bernanke & Paulsen every time they flood the market with liquidity. And as far as trading gold here? What's not to like about this? -- the Dollar is in free-fall and heading toward "72" like a heat seeking missile. -- Gold is up +30% vs. the Dollar and holding it's trendline. -- Gold is up +20% vs. the S&P 500 and holding it's trendline. Until Gold breaks it's trendline vs. the Dollar & the S&P, there is no reason to be out of the trade. Take some chips off on the pops, raise stops, buy some puts for insurance on the rallies and sell some puts for premium and to discount adds on the pull backs. Is Gold getting over-bought, or too expensive here? Not relative Oil... Divergence will lead to convergence...when, not if. If Oil holds and Gold closes that divergence - it takes Gold over $1,000. And as long as the "Oil Vigilantes" are large and in charge...there's no reason to exit gold. Bernanke & Paulsen are in a box. -- It's an election year. -- The Housing correction is accelerating. -- The Economy is slowing. -- 16 Million ARM Mortgages reset over the next 16 months. -- Foreclosures jumped 30% to 635,000. -- The subprime/derivative credit crisisis hasn't gone away. -- The PPT will undoubtedly defend the DOW's 200 dma which looms dead ahead at 13,211. - And Fed Funds are still pricing in another Fed rate cut in Dec. In my opinion, you still have to give Gold some leash. Don't get greedy and don't be afraid to rake some chips off the table and to buy some insurance...but, until Oil rolls over...you have to stay long. And as far as Oil. Oil broke so much earlier than gold and so much stronger, that it seems like someone knew something the general market didn't. Fwiw, and it may be worth "nothing"... 3 times over the last few weeks I've seen massive trainloads of fully dressed out Hummers heading East. Now the Hummer plant is located in Northern Indiana and seeing Hummer's shipped by truck, or train is not an unusual sight. But, what is... is train car, after train car, after train car...and not just the usual "camo" Hummmers, but fully dressed out Hummers with the cage boxes and the machine gun turrets...and shipments that make up virtually the entire train load. I've never seen this many shipped...and never with so many of them "fully dressed out" with the cage boxes and the machine gun turrets. That along with multiple news reports about National Guard units in the midwest being put on alert... plus, the price action in oil...makes you wonder. Republicans are desperate. They have virtually no chance of winning the Presidency given the present economic conditions. Their only chance would seem to be rallying America around the flag... in the face of War. $80 Oil speaks volumes about a weak dollar. $100 Oil in a slowing economy speaks about something else. S.O.T.B.