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

To: SliderOnTheBlack who wrote (21947)	5/17/2010 7:11:12 AM
From: SliderOnTheBlack	6 Recommendations Respond to of 50428

Congress Must Regulate the Dollar's Value... May 17, 2010 Congress Must Regulate the Dollar's Value By Rep. Ted Poe This is the text of a speech given by Congressman Ted Poe (TX-02) on the floor of the U.S. House of Representatives on May 13, 2010. Madame Speaker, how long is Congress going to sit idly by while the Federal Reserve destroys the value of the U.S. dollar? On Friday, May 7, our dollar was worth only one twelve-hundredth of an ounce of gold. In 2001, it was worth one two-hundred-and-fiftieth of an ounce of gold. This means that the dollar has lost more than three quarters of its value in just nine years. Let's not kid ourselves and think that the value of our dollar in terms of gold doesn't matter. Where gold prices go, other prices follow. We are either going to see the dollar price of gold fall, or we are in for a blast of inflation that will crush the middle class and lead to yet another terrible recession. If you think that this can't happen, let me remind you that this is exactly what did happen in the 1970s and early 1980s. Do we want to go back to the 1970s? Do we want years of double-digit inflation, followed by double-digit unemployment? Well, that is what we are going to get unless we stabilize the dollar. And let's not kid ourselves and think that because the dollar is rising against the euro, all must be well. The Euro and the Dollar are both headed off the financial cliff. The Euro is just jumping first. Madame Speaker, how can we expect to have a stable economy or stable financial markets without a stable currency? The dollar is involved in every single transaction we do. If it moves around, it takes everything with it. We have seen in the past two years just how high the cost of an unstable dollar can be. Robert Mundell, the Nobel Prize-winning economist and advisor to President Reagan, says that it was the Federal Reserve that caused the real estate bubble and bust. He says that the Fed is responsible for the economic crisis we are in. This makes sense. It takes a lot of power to do this much damage, and there is no economic power greater than money. Here is what happened. People aren't stupid. When the price of gold heads up, they sense that inflation is on the way. The way you protect yourself from inflation is to buy real assets with borrowed money. The longer the inflation goes on, the more leverage builds up and the bigger the ultimate crash. Well, we got the bubble in real assets in 2001 to 2007 and the crash in 2008. Do we want another one? Isn't 9.9% unemployment high enough? Madame Speaker, I have here in my hand a copy of the Constitution of the United States. Article I, Section 8 says that "The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures..." What this means is that Congress is supposed to set the value of the dollar. It is a constitutional duty for congress to regulate the value of money. But Congress ignores its legal obligation and does not regulate the value of money. What Congress does is that it gives the Fed the responsibility to regulate interest rates. But, the Constitution does not give the Fed or any government agency the power to regulate interest rates. There is a lot of talk about how important it is that the Federal Reserve be "independent". Well, Madame Speaker, I do not believe that any part of government should be independent of the Constitution. All that Fed's vaunted independence has produced is two boom-bust cycles in ten years, the second worse than the first. Madame Speaker, there is wisdom in the Constitution . This is why I have introduced H.R. 835, which I call the "Dollar Bill". This bill would fulfill Congress' Constitutional responsibility to define the value of the dollar. By doing so we can stabilize the value of the dollar and better stabilize our economy. Madame Speaker, we need to hold hearings on this bill. The American people want a stable economy and stable financial markets, and for this we need a stable U.S. dollar. It is time for Congress to buck it up and fulfill its Constitutional duty and regulate the value of the dollar. And that's just the way it is. Representative Poe, a former judge, is a member of Congress serving the 2nd district of Texas. ==================== ==================== SOTB

To: SliderOnTheBlack who wrote (21947)	5/17/2010 3:26:13 PM
From: Bylo Selhi	2 Recommendations Respond to of 50428

Thanks Slider… You have an uncanny ability to explain those more complex trading strategies in concise and simple terms... Thanks for taking the time to do that! This post is a keeper... Folks who own a lot of PM stocks should save it, and re-read it every once in a while.

To: SliderOnTheBlack who wrote (21947)	5/19/2010 2:36:59 PM
From: SliderOnTheBlack	9 Recommendations Read Replies (1) \| Respond to of 50428

HUI Chart And Gold & PM trading thoughts... re: Gold & PM option hedging/insurance strategies From: SliderOnTheBlack 5/16/2010 1:12:46 PM Message 26541471 Today's a great example of why you must buy puts for insurance/hedging into strength vs. on weakness. Today we actually have some heavy volume selling and the put options are flying. You don't want to have to chase puts when they're up +25-30%. Those Jan. 2011 $90 GLD Puts are up +26% today, and on high volume with 1800+ contracts traded. finance.yahoo.com GLD Jan 2011 90.000 put (OPR: GLD110122P00090000) Last Trade: 1.21 Trade Time: 1:17PM EDT Change: Up 0.25 (26.04%) Prev Close: 0.96 Open: 1.12 Bid: 1.17 Ask: 1.23 Day's Range: 1.12 - 1.21 Contract Range: 0.79 - 25.20 Volume: 1,816 Open Interest: 32,655 Strike: 90.00 Expire Date: 21-Jan-11 And the Jan. 2011 $40 GDX Puts are up +30% today. finance.yahoo.com GDX Jan 2011 40.000 put (OPR: GDX110122P00040000) Last Trade: 3.05 Trade Time: 1:22PM EDT Change: Up 0.72 (30.90%) Prev Close: 2.33 Open: 2.59 Bid: 2.98 Ask: 3.05 Day's Range: 2.59 - 3.15 Contract Range: 1.85 - 13.40 Volume: 105 Open Interest: 28,714 Strike: 40.00 Expire Date: 21-Jan-11 To reiterate what I talked about earlier, I really like puts 6 months out, and about 25-30% out of the money when I'm putting on hedges. If I was shorting here, I would have bought near month options and not quite so far out of the money, more like 10-20% out of the money. I'm cashing in about 2/3rds of my puts here, as I'll never fail to take "something off" on a high volume, down day with +25-30% gains. If this correction continues I'll gradually cash in my remaining puts and then transition to "selling puts" as my initial re-entry trade, and then begin to add shares and/or some "calls" if the correction deepens. Here's a HUI chart showing the present trading channel off the Jan-Feb correction. Gold is still firmly in an uptrend, with the HUI over-sold to gold, and sitting right on support here. Right now I'm not trying to time the turn in PMs' to the exact 'tic... I'm looking for someone to make a mistake. I'm looking for "discrepancies between price and risk" to develop. I think we have solid support at HUI 360-380ish and if gold even holds the old $1033 highs, gold stocks at HUI 360-380 would be a "discrepancy between price and risk" buy. Dennis Gartman who's a "C/D" level gold timer, as usual, got way more press than he deserves. So you have some hedgies following him, and I'm sure JPM et al, into a little smackdown trade to take gold & silver out of the headlines. Nothing fundamentally has changed for gold. And the main risk remains a major broad market correction - which is very possible. And that's why you have to be hedged via puts on gold & Pm shares, long the $VIX (which is up more than the HUI is down today fwiw), or short the broad market via SPY/DIA puts etc. If you played this smart and bought some puts, be patient and make the correction come to you. Ideally, we'll be able to pick up another 15-25% on our remaining puts, and then banks some put "sale" premium and catch a turn with a re-load of shares and a few calls. SOTB