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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Sdgla who wrote (32853)	5/30/2012 12:40:28 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 218689

Does the $16 trillion of debt factor into your thinking re gold and the uup ? Eventually. But right now, IMO, we're seeing financial dominoes starting to fall.. Greece is spilling over into Spain.. and will eventually spill over into Italy, France and the rest of the non-German countries. That's going to push even more capital from the periphery to the center (the US Treasury markets). Was just trying to explain to a friend of mine this morning as to why Obama really had no choice other than to nearly double the US national debt. Interest rates were threatening to go to literally 0% as capital fled equities, real estate, and went into bonds and cash. So when there is such huge demand for bonds, the only way to prevent yields from going to 0% is to increase the supply (deficit spending). This is the real "bailout" that saved the TBTF banks, IMO. I recalled reading a few years back that nearly all of JPM's major profits were being generated from their holdings of gov't Treasuries. I'm not sure what the current ratio is, but I have to believe it hasn't changed much, except for the level of yield they are receiving. As for the USD/UUP, it's been my contention that since May, 2010 (flash crash) when the DXY hit 88, the Fed has been trying to push the USD "underwater", suppressing it's value. This has caused a bubble in commodities, including Gold and Silver as an arbitrage. All of this maintains the "impression" of inflation, not deflation. And I have to believe the Fed wants to encourage the perception that there is inflation. But like any ball that is pushed under water, when it breaks free, it's likely to launch above the water's surface. It's possible that we're seeing this currently happening with the USD now. It's possible that the Fed is resigned that it can no longer control it's rise back to that 2010 level. There's just too much pressure from foreign capital inflows to the "safe haven" of the US. But I don't want to leave the impression that we're not in trouble. We're the last domino, IMO, to fall, after capital flows have ceased. THAT is when I would be looking at buying Gold and Silver. Or possibly when the Fed succumbs to the pressure of a QE3, and Obama and Congress decide to raise the debt ceiling so all of that capital has a place to be parked. But right now I see deflation as a greater threat than inflation. Debt defaults destroy money supply. People de-leveraging and paying down debt does the same thing. In such an environment, "cash is king". It's when debt has reached manageable levels (or is wiped out) that the inflationary cycle begins again. Just my humble opinon. And I welcome alternative views. Hawk