We've been talking about ways to take advantage of the weakening U.S. dollar, and another one of those ways is through investing in global bonds, whereby retail investors can invest through mutual funds.
One thing to keep in mind here is to watch for mutual funds whose currency is denominated in U.S. dollars, and of course have been rising against it.
Over the last five years, according to Barclays Capital Global Aggregate bond index, global bonds have returned 6.11 percent on an annual basis; far better than the S&P 500 and U.S bonds.
In 2009, global bonds have been performing much better than even the last five years, depending of course on which ones you invest in.
Showing posts with label US Treasury Bonds. Show all posts
Showing posts with label US Treasury Bonds. Show all posts
Saturday, September 26, 2009
Thursday, September 24, 2009
Julian Robertson: Betting on Inflation
One of the greatest hedge fund managers that has ever lived - Julian Robertson, said in a recent interview on CNBC that he was just about betting everything on the inevitable inflation, which will decimate the U.S. dollar.
He stated one of the key problems with the U.S. financial policy, and that is that it has led to complete dependence on China and Japan buying our debt if we are to economically survive, or at minimum, we'll face "severe economic problems."
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in the interview.
Concerning inflation, Robertson stated, “If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent. It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”
Roberston added that while the Chinese probably won't stop buying US bonds, it's quite possible the Japanese will, and sell their long-term bonds, which he said would be worse than someone not buying at all.
"The U.S. has to quit spending, cut back, start saving, and scale backward Robertson said. "Until that happens, I don't think we're anywhere near out of the woods.”
While Robertson said he thinks the recession is in a temporary lull, because so many of the financial problems haven't been dealt with, and the Federal Reserve hasn't stopped printing money, that could readily change.
He said it's impossible to pay back what we've borrowed, and the only change of that remotely happening is if the Chinese and Japanese continue to buy bonds from the U.S.
As a result, Robertson is betting a lot of his fortune on the fact that inflation will eventually come and soar, something all of us at minimum need to be financially defensive about.
He stated one of the key problems with the U.S. financial policy, and that is that it has led to complete dependence on China and Japan buying our debt if we are to economically survive, or at minimum, we'll face "severe economic problems."
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in the interview.
Concerning inflation, Robertson stated, “If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent. It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”
Roberston added that while the Chinese probably won't stop buying US bonds, it's quite possible the Japanese will, and sell their long-term bonds, which he said would be worse than someone not buying at all.
"The U.S. has to quit spending, cut back, start saving, and scale backward Robertson said. "Until that happens, I don't think we're anywhere near out of the woods.”
While Robertson said he thinks the recession is in a temporary lull, because so many of the financial problems haven't been dealt with, and the Federal Reserve hasn't stopped printing money, that could readily change.
He said it's impossible to pay back what we've borrowed, and the only change of that remotely happening is if the Chinese and Japanese continue to buy bonds from the U.S.
As a result, Robertson is betting a lot of his fortune on the fact that inflation will eventually come and soar, something all of us at minimum need to be financially defensive about.
Wednesday, September 23, 2009
Jim Rogers Selling U.S. Dollars
Jim Rogers has never been one to shy away from stating his mind, and in his chosen field of commodities, he is right far more than he is wrong, and with the U.S. dollar, he has been warning for years that people need to divest of it and put their money in other currencies and investments.
Rogers stated in at the China International Financial Services Conference (CIFSC) last week in Guangzhou that he is winding down his position in the U.S. dollar, and will sell all of U.S dollars before he's through.
Citing the non-stop growth of debt by the U.S. government from administration to administrations, Rogers has asserted for some time that it's a flawed currency, which it is.
Radically and truthfully, Rogers has said the "story of the United States is over. A new story belongs to China.”
Rogers also stated that he no longer has an interest in investing in U.S. Treasury bonds, “because the government is constantly printing more banknotes.”
This means that the inflationary pressures about to hit us would cause an investment in U.S. Treasuries to lose value, even if returns move up some. Even so, Rogers said more than likely bond prices will rise significantly from where they are today, but he will focus on raw materials and companies that do business with a "real economy."
Rogers stated in at the China International Financial Services Conference (CIFSC) last week in Guangzhou that he is winding down his position in the U.S. dollar, and will sell all of U.S dollars before he's through.
Citing the non-stop growth of debt by the U.S. government from administration to administrations, Rogers has asserted for some time that it's a flawed currency, which it is.
Radically and truthfully, Rogers has said the "story of the United States is over. A new story belongs to China.”
Rogers also stated that he no longer has an interest in investing in U.S. Treasury bonds, “because the government is constantly printing more banknotes.”
This means that the inflationary pressures about to hit us would cause an investment in U.S. Treasuries to lose value, even if returns move up some. Even so, Rogers said more than likely bond prices will rise significantly from where they are today, but he will focus on raw materials and companies that do business with a "real economy."
Saturday, September 19, 2009
Investors Flee Money Market Funds
With money market fund interest rates plummeting to close to zero, investors have been fleeing the poorly performing investment vehicle, and moving toward Treasurys as a better and higher yielding safer investment.
Just recently an extraordinary $55.23 billion was withdrawn from money market funds and placed in other investing sectors.
Some of this if from the huge amount of money being pushed into the system by central banks, causing the interbank borrowing rates to plummet close to zero.
This is the reason why Treasurys have rallied some when in these types of economic circumstances they wouldn't have.
Other areas people and institutions are investing in are corporate bonds and commercial mortgage-backed securities. Money market funds should continue to lose billions until interest rates start moving up again, which is doubtful in the near term.
Just recently an extraordinary $55.23 billion was withdrawn from money market funds and placed in other investing sectors.
Some of this if from the huge amount of money being pushed into the system by central banks, causing the interbank borrowing rates to plummet close to zero.
This is the reason why Treasurys have rallied some when in these types of economic circumstances they wouldn't have.
Other areas people and institutions are investing in are corporate bonds and commercial mortgage-backed securities. Money market funds should continue to lose billions until interest rates start moving up again, which is doubtful in the near term.
Monday, August 3, 2009
Dollar Plunges on Inflation Fears
Weakening Dollar
The U.S. dollar plunged against the Euro, pound, and numerous other currencies today, as renewed concerns about inflation drove up the prices of commodities, with many investors adding raw materials like soybeans, copper and oil to their portfolios.
Investors fled government bonds and the dollar looking for a hedge against inflation, as many are expecting the outrageous spending of the Obama administration to devastate the greenback, bringing enormous inflation for the years ahead.
"A falling dollar is viewed as inflationary," said Richard Feltes, senior vice president and director of commodity research for MF Global in Chicago. "The best inflationary hedge is typically to increase one's exposure to commodities."
Another positive thing for foreign investors is the weakening dollar allows them to buy the dollar-denominated commodities at bargain prices as their currencies strengthen against the U.S. dollar.
While the weather looks like it's cooperating with grains in the U.S., that won't matter for some, as while supply is increasing with wheat, for example, global demand is falling, which has caused wheat future prices to drop over the last couple of months, while being down by 33 percent from last year.
Along with gold, silver, oil and gas, many other precious metals also increased in value, including copper, aluminum and platinum. Heating oil also rose to $1.8713 a gallon.
Among the metals, copper continues to be a huge winner, as it has closed at a 10-month high, gaining 4.4 percent, much of that coming from increased demand from China, whose manufacturing sector has started to rebound a little, promising potentially even more demand.
Some are trying to twist this into some type of recovery, but in general, it's not huge demand driving these prices up, but the expected inflation coming from the weakening U.S. dollar; that, more than anything, will continue to spur foreign investment in commodities which is a bargain for them.
Weakening Dollar
The U.S. dollar plunged against the Euro, pound, and numerous other currencies today, as renewed concerns about inflation drove up the prices of commodities, with many investors adding raw materials like soybeans, copper and oil to their portfolios.
Investors fled government bonds and the dollar looking for a hedge against inflation, as many are expecting the outrageous spending of the Obama administration to devastate the greenback, bringing enormous inflation for the years ahead.
"A falling dollar is viewed as inflationary," said Richard Feltes, senior vice president and director of commodity research for MF Global in Chicago. "The best inflationary hedge is typically to increase one's exposure to commodities."
Another positive thing for foreign investors is the weakening dollar allows them to buy the dollar-denominated commodities at bargain prices as their currencies strengthen against the U.S. dollar.
While the weather looks like it's cooperating with grains in the U.S., that won't matter for some, as while supply is increasing with wheat, for example, global demand is falling, which has caused wheat future prices to drop over the last couple of months, while being down by 33 percent from last year.
Along with gold, silver, oil and gas, many other precious metals also increased in value, including copper, aluminum and platinum. Heating oil also rose to $1.8713 a gallon.
Among the metals, copper continues to be a huge winner, as it has closed at a 10-month high, gaining 4.4 percent, much of that coming from increased demand from China, whose manufacturing sector has started to rebound a little, promising potentially even more demand.
Some are trying to twist this into some type of recovery, but in general, it's not huge demand driving these prices up, but the expected inflation coming from the weakening U.S. dollar; that, more than anything, will continue to spur foreign investment in commodities which is a bargain for them.
Weakening Dollar
Tuesday, July 28, 2009
U.S. Dollar | Monetary Policy China
U.S. Dollar Monetary Policy
With the outrageous policies of Barack Hussein Obama who is pretending he can spend money at will and not suffer any consequences, this has rightfully caused American trading partners, especially the Chinese, to be concerned over the eventual collapse in value of the U.S. dollar, which could devastate China because of their continual and misguided buying up of Treasury debt.
It is assumed that China must do this to continue prospering, (and to a slight degree that may be true), but this has went way beyond that, and American consumers aren't spending, so China is extremely exposed to devastating harm if they don't do something about it.
As a result, the U.S. dollar should be the major focus of Chinese-U.S. talks starting in Washington today as China pushes the Obama administration on how it will manage the fiscal deficit and protect the U.S. currency’s value. Of course the answer is they can't, and any student of the markets and honest economist will acknowledge that.
Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host two days of meetings talking on topics from the economic crisis to North Korea. The Strategic and Economic Dialogue is the first by the Obama administration with China.
The global recession has underscored the common interests of the economies, ranked first and third largest in the world, as Vice Premier Wang Qishan seeks to preserve the value of the world’s biggest Treasury holdings, while U.S. pushes China to rely more on domestic demand and not exports for growth.
Bizarrely, clueless Timothy Geither and equally clueless Hillary Clinton are pressing the Chinese on becoming even more socialist by providing more social safety in order to combat the wonderful habits of the Chinese for saving rather than spending. These wackos need to step down out of office for even bringing up such rot. They don't belong in a U.S. government position when they seek to export socialism to the Chinese. They're getting wackier and wackier by the moment.
China’s exchange-rate policy will be talked about. The U.S. wants a more flexible yuan, though Geithner has avoided a showdown on the issue, declining to repeat more ignorant comments he made in written communication to lawmakers after his Senate confirmation hearing in January that China was “manipulating” its currency.
Both nations are pumping cash into their economies to revive growth. Though Premier Wen Jiabao said in March he was worried about the safety of the nation’s U.S. assets, China bought $38 billion of U.S. notes and bonds in May, taking its holdings to $801.5 billion. The Chinese should never have done this, and they still be pay in the face of the horrid and inexperience displayed by the Obama administration.
The U.S. deficit could go as high as a record $1.85 trillion for the fiscal year ending Sept. 30, almost four times the previous fiscal year’s $455 billion shortfall, according to the Congressional Budget Office.
Federal Reserve Chairman Ben S. Bernanke will brief Chinese officials about how the U.S. plans to keep inflation in check over the next few years, people advised of the plan said this month. In June, Geithner told China that the U.S. wants to shrink its budget gap as soon as an economic recovery takes hold.
Unfortunately, Ben Bernanke is as clueless about monetary policy as they come, and along with the Federal Reserve, is largely responsible for the continued and lengthening recession, which should have been allowed to work its way out without government interference.
The U.S. dollar will continue to suffer under these tortuous and horrible monetary policies until the Keynesian way of managment is completely abandoned and recognized as outrageously deficient and unable to work, as decades of failure have already proven.
U.S. Dollar Monetary Policy
With the outrageous policies of Barack Hussein Obama who is pretending he can spend money at will and not suffer any consequences, this has rightfully caused American trading partners, especially the Chinese, to be concerned over the eventual collapse in value of the U.S. dollar, which could devastate China because of their continual and misguided buying up of Treasury debt.
It is assumed that China must do this to continue prospering, (and to a slight degree that may be true), but this has went way beyond that, and American consumers aren't spending, so China is extremely exposed to devastating harm if they don't do something about it.
As a result, the U.S. dollar should be the major focus of Chinese-U.S. talks starting in Washington today as China pushes the Obama administration on how it will manage the fiscal deficit and protect the U.S. currency’s value. Of course the answer is they can't, and any student of the markets and honest economist will acknowledge that.
Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host two days of meetings talking on topics from the economic crisis to North Korea. The Strategic and Economic Dialogue is the first by the Obama administration with China.
The global recession has underscored the common interests of the economies, ranked first and third largest in the world, as Vice Premier Wang Qishan seeks to preserve the value of the world’s biggest Treasury holdings, while U.S. pushes China to rely more on domestic demand and not exports for growth.
Bizarrely, clueless Timothy Geither and equally clueless Hillary Clinton are pressing the Chinese on becoming even more socialist by providing more social safety in order to combat the wonderful habits of the Chinese for saving rather than spending. These wackos need to step down out of office for even bringing up such rot. They don't belong in a U.S. government position when they seek to export socialism to the Chinese. They're getting wackier and wackier by the moment.
China’s exchange-rate policy will be talked about. The U.S. wants a more flexible yuan, though Geithner has avoided a showdown on the issue, declining to repeat more ignorant comments he made in written communication to lawmakers after his Senate confirmation hearing in January that China was “manipulating” its currency.
Both nations are pumping cash into their economies to revive growth. Though Premier Wen Jiabao said in March he was worried about the safety of the nation’s U.S. assets, China bought $38 billion of U.S. notes and bonds in May, taking its holdings to $801.5 billion. The Chinese should never have done this, and they still be pay in the face of the horrid and inexperience displayed by the Obama administration.
The U.S. deficit could go as high as a record $1.85 trillion for the fiscal year ending Sept. 30, almost four times the previous fiscal year’s $455 billion shortfall, according to the Congressional Budget Office.
Federal Reserve Chairman Ben S. Bernanke will brief Chinese officials about how the U.S. plans to keep inflation in check over the next few years, people advised of the plan said this month. In June, Geithner told China that the U.S. wants to shrink its budget gap as soon as an economic recovery takes hold.
Unfortunately, Ben Bernanke is as clueless about monetary policy as they come, and along with the Federal Reserve, is largely responsible for the continued and lengthening recession, which should have been allowed to work its way out without government interference.
The U.S. dollar will continue to suffer under these tortuous and horrible monetary policies until the Keynesian way of managment is completely abandoned and recognized as outrageously deficient and unable to work, as decades of failure have already proven.
U.S. Dollar Monetary Policy
Thursday, February 12, 2009
Jim Rogers | U.S. Treasury Bond Bubble
Jim Rogers agrees with Peter Schiff that buying or investing in long term or 30 year government Treasury bonds will be a disaster, and investors should watch them in order to short them when the government stops interceding and artificially propping them up by buying them.
Investement expert Jim Rogers gave a scathing rebuke to clueless Obama Treasury Secretary Tim Geithner and his ideas in relationship to overhauling the bailout of the financial system in the U.S. Rogers in an interview on CNBC said Geithner, who was in charge of the NY Federal Reserve, was wrong for 15 years in a row, and continues to be wrong now. He adds that the Obama plan via Geithner will cause U.S. debt to surge even higher, and is creating an even worse scenario by the same people who didn't identify the crisis coming that we're in. Rogers concludes that Geithner has no idea what he's doing.
Consequently, similar to the insight concerning U.S. debt as Peter Schiff and the
Treasury bond market bubble bursting, Rogers said he has been shorting bonds, although he was ambushed by the Feds when they declared they were going to be buying Treasury bonds, causing Rogers to have to pay out when the Treasury bonds ended up going artificially higher. Just because the government is buying up bonds doesn't mean any of us should buy government bonds, and we shouldn't. Investing in U.S. Treasury bonds for the long term at this time is one of the poorest investment idea out there now.
Rogers added that he is still watching the long term Treasury bond market, and plans on shorting it again, as the amount of debt the U.S. is issuing and the huge amount of money being printed makes inflation almost a certainty. It will also push down the value of the U.S. dollar, making government bonds a risky financial instrument going forward. Another factor making the bond bubble being burst a reality is the low interest rate policy of central banks, which will deflate of cause the bubble to burst.
When the Federal Reserve announced they were going to buy up long term U.S. Treasury bonds, speculators zoomed into the market to buy them up, causing them to hold in value, when in fact they should have been dropping in value. That has added to the bubble being ready to burst, as who's going to be stupid enough to buy Treasury bonds when the government is holding them. They're going to overall get stuck with them, and then what will they do?
Jim Rogers has said in the past he's one of the worst market timers, and doesn't attempt to time the market, and in relationship to bonds said he doesn't know when he'll short long term Treasury bonds again, as it could be sometime this quarter or maybe not till next year.
Government bond prices and bond yields are worthless and meaningless at this time, especially with the 30 year Treasury bond. The only ones buying those bonds are the clueless or the speculators. Long term bonds are dead in the water, and we need to know that before thinking of putting our money down to buy government bonds.
Some people unbelievably think buying bonds is a safe bet at this time, and they'll learn the hard way that they aren't if they go that route. Forced liquidation has been one of the artificial props keeping bonds floating, as well as the U.S. dollar for a short time. That seems to be winding down now, and gold is looking to be the best safety hedge and protection against inflation like it usually is. Forced liquidation has kept gold from performing in its usual manner, but is now starting to act and move like it usually does in difficult economic times.
On a little bit of a different note for Jim Rogers, he started up the Macquarie and Rogers China Agriculture Index fund recently in order to take advantage of the enormous upside potential of China. The China fund measures the consumption of agricultural products by the Chinese, and floats or moves in conjunction with that. The growing middle class in China guarantees that once economic times start to recover, they'll be ready to resume their consumption habits which should make the Macquarie and Rogers China Agriculture Index a good place to put your money for those looking at the long term.
Commenting on Central- and Eastern-Europe, Rogers also said he's not going to put a dime into those areas, as the economic conditions are bad, and they're probably going to get worse before getting better. Currency rates in Eastern Europe especially have fallen since the beginning of 2009.
The key reason Jim Rogers asserts for buying commodities is the inevitable increase in inflation resulting from the misguided government bailout plans. Commodities will resume their bull run and become hot again and extend out longer than he expected because of the temporary lull in buying by consumers and governments.
Back to investing, or rather, not investing in government bonds - specifically the 30 year Treasury bond - Jim Rogers, as I said, is watching the bond market for opportunities to short it. He's also looking at equities in the U.S. the same way, as he's shorting a number of bellwhether companies like IBM, JP Morgan Chase and General Electric, among others. Anything connected to the U.S. dollar, which we should all be moving out of, is looked upon as week, and not something to put our investment money into. General Electric has plunged in value by 65 percent from last year at the same time. Most of the reasoning behind this is the horrid government economic bailout plan which will prolong and deepen the economic conditions.
Investement expert Jim Rogers gave a scathing rebuke to clueless Obama Treasury Secretary Tim Geithner and his ideas in relationship to overhauling the bailout of the financial system in the U.S. Rogers in an interview on CNBC said Geithner, who was in charge of the NY Federal Reserve, was wrong for 15 years in a row, and continues to be wrong now. He adds that the Obama plan via Geithner will cause U.S. debt to surge even higher, and is creating an even worse scenario by the same people who didn't identify the crisis coming that we're in. Rogers concludes that Geithner has no idea what he's doing.
Consequently, similar to the insight concerning U.S. debt as Peter Schiff and the
Treasury bond market bubble bursting, Rogers said he has been shorting bonds, although he was ambushed by the Feds when they declared they were going to be buying Treasury bonds, causing Rogers to have to pay out when the Treasury bonds ended up going artificially higher. Just because the government is buying up bonds doesn't mean any of us should buy government bonds, and we shouldn't. Investing in U.S. Treasury bonds for the long term at this time is one of the poorest investment idea out there now.
Rogers added that he is still watching the long term Treasury bond market, and plans on shorting it again, as the amount of debt the U.S. is issuing and the huge amount of money being printed makes inflation almost a certainty. It will also push down the value of the U.S. dollar, making government bonds a risky financial instrument going forward. Another factor making the bond bubble being burst a reality is the low interest rate policy of central banks, which will deflate of cause the bubble to burst.
When the Federal Reserve announced they were going to buy up long term U.S. Treasury bonds, speculators zoomed into the market to buy them up, causing them to hold in value, when in fact they should have been dropping in value. That has added to the bubble being ready to burst, as who's going to be stupid enough to buy Treasury bonds when the government is holding them. They're going to overall get stuck with them, and then what will they do?
Jim Rogers has said in the past he's one of the worst market timers, and doesn't attempt to time the market, and in relationship to bonds said he doesn't know when he'll short long term Treasury bonds again, as it could be sometime this quarter or maybe not till next year.
Government bond prices and bond yields are worthless and meaningless at this time, especially with the 30 year Treasury bond. The only ones buying those bonds are the clueless or the speculators. Long term bonds are dead in the water, and we need to know that before thinking of putting our money down to buy government bonds.
Some people unbelievably think buying bonds is a safe bet at this time, and they'll learn the hard way that they aren't if they go that route. Forced liquidation has been one of the artificial props keeping bonds floating, as well as the U.S. dollar for a short time. That seems to be winding down now, and gold is looking to be the best safety hedge and protection against inflation like it usually is. Forced liquidation has kept gold from performing in its usual manner, but is now starting to act and move like it usually does in difficult economic times.
On a little bit of a different note for Jim Rogers, he started up the Macquarie and Rogers China Agriculture Index fund recently in order to take advantage of the enormous upside potential of China. The China fund measures the consumption of agricultural products by the Chinese, and floats or moves in conjunction with that. The growing middle class in China guarantees that once economic times start to recover, they'll be ready to resume their consumption habits which should make the Macquarie and Rogers China Agriculture Index a good place to put your money for those looking at the long term.
Commenting on Central- and Eastern-Europe, Rogers also said he's not going to put a dime into those areas, as the economic conditions are bad, and they're probably going to get worse before getting better. Currency rates in Eastern Europe especially have fallen since the beginning of 2009.
The key reason Jim Rogers asserts for buying commodities is the inevitable increase in inflation resulting from the misguided government bailout plans. Commodities will resume their bull run and become hot again and extend out longer than he expected because of the temporary lull in buying by consumers and governments.
Back to investing, or rather, not investing in government bonds - specifically the 30 year Treasury bond - Jim Rogers, as I said, is watching the bond market for opportunities to short it. He's also looking at equities in the U.S. the same way, as he's shorting a number of bellwhether companies like IBM, JP Morgan Chase and General Electric, among others. Anything connected to the U.S. dollar, which we should all be moving out of, is looked upon as week, and not something to put our investment money into. General Electric has plunged in value by 65 percent from last year at the same time. Most of the reasoning behind this is the horrid government economic bailout plan which will prolong and deepen the economic conditions.
Saturday, February 7, 2009
U.S. Dollar and FOREX in 2009
This year promises to be a very interesting year for the FOREX in connection with the U.S. dollar, as everyone is expecting the collapse of the dollar, but the obvious question is when that process begins, and which currency will exploit that weakness, to the benefit of those participating in foreign currency trading. Now that online currency trading has made it so much easier to trade the U.S. dollar against other currencies, many more traders are doing their forex trading online, making it a very busy business, even more thant currency trading of the past. As far as the forex goes in 2009, it promises to be a wild year this year, and there are probably a lot of opportunities to make a lot of money on the coming collapse of the U.S. dollar if we're patient and willing to wait. Eventually we'll benefit from the fall of the U.S. dollar and U.S. Treasury bond market if we watch things closely and enter the foreign exchange in a timely manner.
2009 should be a good year to put our money in the forex, and the online forex should help those of you who are looking to move in and out of the market with little difficulty, by using the software offered by a number of online forex trading companies.
We may see more currency fluctuation this year on the forex market, and so while their could be more risk, there'll also be more reward for those trading the dollar on the forex. If you're not too familiar with currency trading, the forex market, or even online forex trading, you should probably get yourself a good commodities broker while you learn about forex trading strategy and how to even trade currency in the forex market.
To me, the greatest thing to know this year for trading foreign currency, is simply watching how the currencies interact with the U.S. dollar, and simply watch and wait until the downward trend of the dollar begins. We're probably already at the beginning stage of this, so getting familiar with the forex exchange or if you know what you're doing, getting ready for your 2009 currency trading, because it's going to be a whoper this year, and a lot of money will be lost and made by trading the forex.
Other than tracking the strength of the U.S. dollar, also watching the interest rates other nations set for their currency will partly determine how they may fall or rise against the dollar, and currencies will respond strongly to what nations determine there. Build your forex trading strategy aroudn that this year, as it simplifies things, and unless you're completely in the forex market, and immersed in how it operates, that should be the determining factors going forward for investing in currencies via currency trading.
You can of course trade outside the U.S. dollar as coupled with other currencies, but even if you have knowledge of other currencies and their strengths or weaknesses against one another, the U.S. dollar, for now, will continue to have an impact on currency trading, whether its online currency trading or directly through a commodities broker. So trading the forex doesn't have to be complicated, but you do have to keep up with trends and the general economic and financial states of the nations' currency you're looking to invest in. How they specifically relate to the dollar in that context is the key to foreign currency trading.
If you're comfortable with it, I would definitely look at the way you can formulate an online currency trading strategy on the forex market. Forex trading online is pretty simple, fast, and you can get immediate feedback on the market and currency you're trading in, and many times you can get a dummy account to trade the forex and practice before committing your cash to it. I've seen a number of these online forex software programs and websites, and many of them do a great job. You do have to watch to make sure you close you online forex trades, as forex trading online doesn't ensure those things, and you could make a trade thinking you've locked in profits, and then forgot to close it with the software. Trading the forex online means you're dealing with something mechanical and not human, so you've got to realize it's dumb, and online currency trading can be risky if you forget the proper steps to take that you would otherwise simply tell a currency broker to do. The best thing in that case for forex trading online is to make a cheat sheet list and have it right beside your computer. Once you learn the process of online forex currency trading, you can then put them in a list and just follow it step by step as you make the proper currency trade inputs on your computer.
This year, in spite of the economic turndown, promises to be exciting, and as gold and silver start to move upward, and the U.S. dollar starts to collapse along with U.S Treasurey bonds, we'll see all sorts of opportunities to partcipate in foreign exchange trading. The forex and the dollar will do a lot of business this year, and we need to get a basket of currencies to watch as the story of the collapse of the U.S. dollar unfolds, and we are ready with a forex exchange trading strategy that can be very profitable for us in 2009.
2009 should be a good year to put our money in the forex, and the online forex should help those of you who are looking to move in and out of the market with little difficulty, by using the software offered by a number of online forex trading companies.
We may see more currency fluctuation this year on the forex market, and so while their could be more risk, there'll also be more reward for those trading the dollar on the forex. If you're not too familiar with currency trading, the forex market, or even online forex trading, you should probably get yourself a good commodities broker while you learn about forex trading strategy and how to even trade currency in the forex market.
To me, the greatest thing to know this year for trading foreign currency, is simply watching how the currencies interact with the U.S. dollar, and simply watch and wait until the downward trend of the dollar begins. We're probably already at the beginning stage of this, so getting familiar with the forex exchange or if you know what you're doing, getting ready for your 2009 currency trading, because it's going to be a whoper this year, and a lot of money will be lost and made by trading the forex.
Other than tracking the strength of the U.S. dollar, also watching the interest rates other nations set for their currency will partly determine how they may fall or rise against the dollar, and currencies will respond strongly to what nations determine there. Build your forex trading strategy aroudn that this year, as it simplifies things, and unless you're completely in the forex market, and immersed in how it operates, that should be the determining factors going forward for investing in currencies via currency trading.
You can of course trade outside the U.S. dollar as coupled with other currencies, but even if you have knowledge of other currencies and their strengths or weaknesses against one another, the U.S. dollar, for now, will continue to have an impact on currency trading, whether its online currency trading or directly through a commodities broker. So trading the forex doesn't have to be complicated, but you do have to keep up with trends and the general economic and financial states of the nations' currency you're looking to invest in. How they specifically relate to the dollar in that context is the key to foreign currency trading.
If you're comfortable with it, I would definitely look at the way you can formulate an online currency trading strategy on the forex market. Forex trading online is pretty simple, fast, and you can get immediate feedback on the market and currency you're trading in, and many times you can get a dummy account to trade the forex and practice before committing your cash to it. I've seen a number of these online forex software programs and websites, and many of them do a great job. You do have to watch to make sure you close you online forex trades, as forex trading online doesn't ensure those things, and you could make a trade thinking you've locked in profits, and then forgot to close it with the software. Trading the forex online means you're dealing with something mechanical and not human, so you've got to realize it's dumb, and online currency trading can be risky if you forget the proper steps to take that you would otherwise simply tell a currency broker to do. The best thing in that case for forex trading online is to make a cheat sheet list and have it right beside your computer. Once you learn the process of online forex currency trading, you can then put them in a list and just follow it step by step as you make the proper currency trade inputs on your computer.
This year, in spite of the economic turndown, promises to be exciting, and as gold and silver start to move upward, and the U.S. dollar starts to collapse along with U.S Treasurey bonds, we'll see all sorts of opportunities to partcipate in foreign exchange trading. The forex and the dollar will do a lot of business this year, and we need to get a basket of currencies to watch as the story of the collapse of the U.S. dollar unfolds, and we are ready with a forex exchange trading strategy that can be very profitable for us in 2009.
Sunday, January 25, 2009
US Dollar: Imminent Collapse?
The forces that have allowed the US dollar to remain strong seem to be coming to an end, and it could be any time that it collapses under the weight of its inherent weakness.
A number of dollar experts, including Peter Schiff and Jim Rogers, agree with the sentiment that the US currency has nowhere to go but down.
Forced liquidation and deleveraging have kept the currency artificially high, but now those positions are unwinding, and so they won't prop up the US dollar any longer.
This will have a significant impact on dollar related investment vehicles like US Treasuries and bonds.
With the Federal Reserve running the money printing presses non stop to pay off its promises, there's nowhere for the US currency to go but down. Inflation is just around the corner, and it's a matter of when, not if, it comes.
Commodities have already started to rise, especially the metals, as gold and silver enjoyed a big jump recently, and that will continue throughout 2009. Some think platinum prices will also rise in 2009, even though the demand from the auto industry has slowed.
As far as the future of the US dollar, it's going to plummet in value in the near term for sure, while some are even beginning to think the unthinkable, that there will emerge an alternative currency the world favors, just as the pound was dropped for the US dollar long ago.
China is even beginning to experiment internally with using its own currency for transactions within its more successful economic regions, rather than the US dollar. We know the reason that experiment is going on, as the China currency could sometime emerge as the favorite to use in global transactions.
Any investment connected to the US dollar will suffer going ahead, and the dollar will not continue to retain its strength or go up over the long term. It will of course have its small seasons of upward movement, but overall the chart will go down.
This will get even worse because of the US government interfering in the free market and bailing out tons of poorly managed companies and sectors, all in the name that they're "too big to fail." Too bad, as the economy always cleans and flushes out the poorly run companies and emerges stronger than in the past.
That won't happen now as taxpayer money will be used to support the badly run companies and allow them to last in the face of the quality companies that would have taken over the bad.
In the short run, the US dollar will remain the currency of choice, but I don't see how going ahead, and the failed big government policies that are destroying the dollar, will allow the currency to remain as its been. It won't happen right away, but it will happen unless we get people in the government that understand monetary policy.
The future of the US dollar is bleak, and it will buy less and less going forward.
For the Treasury bond, the reason it's in a bubble and will collapse, is nations are starting to cut back on buying it, and speculators have entered the market giving it the illusion of strength. In reality, the US government will be the final holder of the bonds, and nobody will be there to buy them. Then what will they do?
The US dollar is heading for a fall, get out of them while you still can.
A number of dollar experts, including Peter Schiff and Jim Rogers, agree with the sentiment that the US currency has nowhere to go but down.
Forced liquidation and deleveraging have kept the currency artificially high, but now those positions are unwinding, and so they won't prop up the US dollar any longer.
This will have a significant impact on dollar related investment vehicles like US Treasuries and bonds.
With the Federal Reserve running the money printing presses non stop to pay off its promises, there's nowhere for the US currency to go but down. Inflation is just around the corner, and it's a matter of when, not if, it comes.
Commodities have already started to rise, especially the metals, as gold and silver enjoyed a big jump recently, and that will continue throughout 2009. Some think platinum prices will also rise in 2009, even though the demand from the auto industry has slowed.
As far as the future of the US dollar, it's going to plummet in value in the near term for sure, while some are even beginning to think the unthinkable, that there will emerge an alternative currency the world favors, just as the pound was dropped for the US dollar long ago.
China is even beginning to experiment internally with using its own currency for transactions within its more successful economic regions, rather than the US dollar. We know the reason that experiment is going on, as the China currency could sometime emerge as the favorite to use in global transactions.
Any investment connected to the US dollar will suffer going ahead, and the dollar will not continue to retain its strength or go up over the long term. It will of course have its small seasons of upward movement, but overall the chart will go down.
This will get even worse because of the US government interfering in the free market and bailing out tons of poorly managed companies and sectors, all in the name that they're "too big to fail." Too bad, as the economy always cleans and flushes out the poorly run companies and emerges stronger than in the past.
That won't happen now as taxpayer money will be used to support the badly run companies and allow them to last in the face of the quality companies that would have taken over the bad.
In the short run, the US dollar will remain the currency of choice, but I don't see how going ahead, and the failed big government policies that are destroying the dollar, will allow the currency to remain as its been. It won't happen right away, but it will happen unless we get people in the government that understand monetary policy.
The future of the US dollar is bleak, and it will buy less and less going forward.
For the Treasury bond, the reason it's in a bubble and will collapse, is nations are starting to cut back on buying it, and speculators have entered the market giving it the illusion of strength. In reality, the US government will be the final holder of the bonds, and nobody will be there to buy them. Then what will they do?
The US dollar is heading for a fall, get out of them while you still can.
Tuesday, January 20, 2009
U.S. Dollar Collapse 2009 | The Perfect Storm?
The idea of the U.S. dollar collapsing in the way it's being thought of today, would have been unheard of in times past. Sure, we've had times of steep inflation where it was dollar was devalued, but nothing like the perfect storm approaching us now.
We have everything from the many variables connected to the economy, foreign governments eyeing the dollar suspiciously for the first time, low interest rates, U.S. Treasury bonds about to burst, China slowly moving out of U.S. dollars (selling bonds), out of control government bailouts, more government bailouts, increased socialization of American economy, and finally, the misguided idea of the dollar printing presses running day and night to provide the money to deal with all of this.
This doesn't include the bloated budgets needed to handle the ongoing policies of FDR - which President Barack Obama foolishly has asserted he's going to continue and expand - like social security and medicare, which will skyrocket even more on a yearly basis as baby boomers swarm into their retirement years.
We have to understand the U.S. dollar can collapse in a number of ways, and it's not always obvious that it has, especially with its ultimate enemy: inflation. But there's no way inflation isn't going to come, as the promises and misguided policies of politicians hoping to hold on to their government positions, ensures the printing presses will continue to run, and also ensures the dollar will buy much less. This is the type of collapse that hides what's really happening and the cause, as most people don't understand the direct correlation between printing hoards of money and the consequential devaluing of the dollar ... or any currency for that matter.
The reason America's been able to get away with pushing the limits with this has primarily been the acquisition of U.S. Treasury bonds by China. China is now abandoning that strategy and moving its money elsewhere. That means with China no longer financing the U.S. economy, America will have to look for financing elsewhere. Where would that be, as no other country is going to buy up an asset like the U.S. dollar when it could be on the verge of collapse.
There is no other recourse for the Federal Reserve (in their minds) but to keep the printing presses running. It doesn't occur to government leaders that they have no power in these affairs, and the real answer should be to downsize government, along with its unrealistic programs it offers citizens to buy their votes and generate dependence upon them.
One unfortunate side effect of this is people could remain in the dark if they don't understand that printing money will weaken the dollar and push the prices of goods and services up. If they don't understand this, we'll be doomed to repeat the fiasco again and again, as we continue to follow the same strategies and make the same mistakes.
China Using Yuan instead of Dollars in Transactions
China has already said it will allow its yuan to be used internally for settlement in some of its riches provinces:
"China will allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta, China's two economic powerhouses, and the special administrative regions of Hong Kong and Macau, according to the central bank.
"Meanwhile, exporters in the Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China will be allowed to use the yuan to settle trade payments with members of the Association of Southeast Asian Nations.
"Those moves are expected to facilitate overseas trade, as Chinese exporters might face losses if they continue to be paid in US dollars..."
Putting the inevitable inflation scenario aside (which will happen, it's only a matter of degree) we could have a more robust slaughter of the dollar, based on the other numerous factors we've mentioned above.
If China decided to take drasic measures and sell a lot of their Treasurys, that would put tremendous downward pressure on the value of the dollar, while there's also the real possibility of OPEC, and others, deciding to get out of US securities as well, again, making America's only choice to print more money to pay off its debts and faulty social programs.
Another important part of the economic puzzle is that China has obviously been the primary provider of inexpensive goods to American consumers. So even though the U.S. has pressured China to increase the value of the yuan, the result would be higher prices of goods for Americans, which would end up causing even more pain. A perfect storm ending with the collapse of the U.S dollar?
Many financial and economic experts have told government officials they needed to stay out of the economy and just let things run their course. Past experience has shown that government interference makes things worse, not better, for the economy.
So will the U.S dollar collapse in 2009? It's a very real possibility. We have a perfect storm of variables that could together bring the dollar down to emerging markets status.
We have everything from the many variables connected to the economy, foreign governments eyeing the dollar suspiciously for the first time, low interest rates, U.S. Treasury bonds about to burst, China slowly moving out of U.S. dollars (selling bonds), out of control government bailouts, more government bailouts, increased socialization of American economy, and finally, the misguided idea of the dollar printing presses running day and night to provide the money to deal with all of this.
This doesn't include the bloated budgets needed to handle the ongoing policies of FDR - which President Barack Obama foolishly has asserted he's going to continue and expand - like social security and medicare, which will skyrocket even more on a yearly basis as baby boomers swarm into their retirement years.
We have to understand the U.S. dollar can collapse in a number of ways, and it's not always obvious that it has, especially with its ultimate enemy: inflation. But there's no way inflation isn't going to come, as the promises and misguided policies of politicians hoping to hold on to their government positions, ensures the printing presses will continue to run, and also ensures the dollar will buy much less. This is the type of collapse that hides what's really happening and the cause, as most people don't understand the direct correlation between printing hoards of money and the consequential devaluing of the dollar ... or any currency for that matter.
The reason America's been able to get away with pushing the limits with this has primarily been the acquisition of U.S. Treasury bonds by China. China is now abandoning that strategy and moving its money elsewhere. That means with China no longer financing the U.S. economy, America will have to look for financing elsewhere. Where would that be, as no other country is going to buy up an asset like the U.S. dollar when it could be on the verge of collapse.
There is no other recourse for the Federal Reserve (in their minds) but to keep the printing presses running. It doesn't occur to government leaders that they have no power in these affairs, and the real answer should be to downsize government, along with its unrealistic programs it offers citizens to buy their votes and generate dependence upon them.
One unfortunate side effect of this is people could remain in the dark if they don't understand that printing money will weaken the dollar and push the prices of goods and services up. If they don't understand this, we'll be doomed to repeat the fiasco again and again, as we continue to follow the same strategies and make the same mistakes.
China Using Yuan instead of Dollars in Transactions
China has already said it will allow its yuan to be used internally for settlement in some of its riches provinces:
"China will allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta, China's two economic powerhouses, and the special administrative regions of Hong Kong and Macau, according to the central bank.
"Meanwhile, exporters in the Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China will be allowed to use the yuan to settle trade payments with members of the Association of Southeast Asian Nations.
"Those moves are expected to facilitate overseas trade, as Chinese exporters might face losses if they continue to be paid in US dollars..."
Putting the inevitable inflation scenario aside (which will happen, it's only a matter of degree) we could have a more robust slaughter of the dollar, based on the other numerous factors we've mentioned above.
If China decided to take drasic measures and sell a lot of their Treasurys, that would put tremendous downward pressure on the value of the dollar, while there's also the real possibility of OPEC, and others, deciding to get out of US securities as well, again, making America's only choice to print more money to pay off its debts and faulty social programs.
Another important part of the economic puzzle is that China has obviously been the primary provider of inexpensive goods to American consumers. So even though the U.S. has pressured China to increase the value of the yuan, the result would be higher prices of goods for Americans, which would end up causing even more pain. A perfect storm ending with the collapse of the U.S dollar?
Many financial and economic experts have told government officials they needed to stay out of the economy and just let things run their course. Past experience has shown that government interference makes things worse, not better, for the economy.
So will the U.S dollar collapse in 2009? It's a very real possibility. We have a perfect storm of variables that could together bring the dollar down to emerging markets status.
Friday, January 16, 2009
Foreign Investment in Long-term U.S. Treasury Bonds Falls in November - It's Only the Beginning
We've been talking a lot lately of the crisis with the U.S. dollar and how it's probably already starting to happen, even though there's been some temporary strength in the greenback.
A government report confirms it was the experience in November, as demand for long-term Treasury bonds from investors outside the U.S. fell, along with corporate and agency debt.
While many "experts" are saying it's the decline of risk aversion, I think that's totally wrong. That falsely assumed there was risk aversion involved in the first place for their to be a decline. There wasn't, as the Treasury report said.
What serious international investor, whether it's an individual, fund or country, doesn't know what's going to happen to the U.S. dollar going ahead? They know what all this misguided stimulus debt is going to do to the value of the dollar.
A government report confirms it was the experience in November, as demand for long-term Treasury bonds from investors outside the U.S. fell, along with corporate and agency debt.
While many "experts" are saying it's the decline of risk aversion, I think that's totally wrong. That falsely assumed there was risk aversion involved in the first place for their to be a decline. There wasn't, as the Treasury report said.
What serious international investor, whether it's an individual, fund or country, doesn't know what's going to happen to the U.S. dollar going ahead? They know what all this misguided stimulus debt is going to do to the value of the dollar.
Here it is for you in simple terms:
The government wants to spend money it doesn't have
They can't get foreigners to pay for that money
The Federal reserve announces it'll buy up U.S. Treasury bonds
Speculators swarm like sharks around a bleeding body
Speculators buy Treasurys knowing Fed will buy them back
Fed is holding Treasurys with no one to sell them to
Fed prints more money to pay for further debt
The U.S. dollar plummets in value and inflation rears its ugly head
This is what's ahead for the U.S. dollar and Americans. Why do you think foreign investors are no longer buying the U.S. dollar? They know what's going to happen to it, and haven't been viewing it as a place of safety as some have wrongly asserted.
Speculators have been buying up the dollar and keeping it where it's been because they then resell it to the government, which said it was buying it. Some analysts assumed it was people buying to hold the bonds, when in reality they were only buying to resell to make a quick profit.
That gave the illusion of a market for the dollar, when in fact it was something entirely different.
If you aren't sure about that, just ask yourself the question of why foreigners are cutting their investment in Treasurys. This is just the beginning of fleeing from the dollar, it's going to get much worse.
U.S. dollars are not the place to be at this time, investors need to be moving out of them.
Thursday, January 15, 2009
What is it with the U.S. Dollar Continuing to Climb?
The idea is being floated around that the U.S. Treasury bond is being considered the safest place to park your money during the economic turmoil, but I think that isn't the case at all. I'll get to that in a minute.
How the theory goes is people must sell assets in order to purchase the U.S. Treasury bond, and in so doing, pushing the value of the U.S. dollar up.
My own thinking in relationship to forced liguidation, is there could be companies still selling assets to raise cash just to survive, and that could still be playing out. We haven't heard much about that lately. That would offer some support to the dollar temporarily as well.
As far as the idea that the U.S. Treasury bond is being acquired because it's a haven for investors, I think that is completely wrong.
What happened is the Federal Reserve announced not too long ago it would buy up U.S. Treasury bonds, which brought up happy flags to those in the know. In response to that announcement, speculators ran into the market to buy them up, counting on the Fed to end up holding the bag.
Peter Schiff gives his take on this very idea here. I think he's right. Most people aren't buying U.S Treasurys now in order to hold them till maturity, they're buying them to sell back to Uncle Sam.
Some people may get burned believing the talking points of those that don't understand the underlying reason for the U.S. dollar holding its strength.
This has probably become a giant ponzi scheme with the U.S. government ending up holding the final batch of U.S. Treasury bonds that no one else is willing to buy. That will make things interesting.
How the theory goes is people must sell assets in order to purchase the U.S. Treasury bond, and in so doing, pushing the value of the U.S. dollar up.
My own thinking in relationship to forced liguidation, is there could be companies still selling assets to raise cash just to survive, and that could still be playing out. We haven't heard much about that lately. That would offer some support to the dollar temporarily as well.
As far as the idea that the U.S. Treasury bond is being acquired because it's a haven for investors, I think that is completely wrong.
What happened is the Federal Reserve announced not too long ago it would buy up U.S. Treasury bonds, which brought up happy flags to those in the know. In response to that announcement, speculators ran into the market to buy them up, counting on the Fed to end up holding the bag.
Peter Schiff gives his take on this very idea here. I think he's right. Most people aren't buying U.S Treasurys now in order to hold them till maturity, they're buying them to sell back to Uncle Sam.
Some people may get burned believing the talking points of those that don't understand the underlying reason for the U.S. dollar holding its strength.
This has probably become a giant ponzi scheme with the U.S. government ending up holding the final batch of U.S. Treasury bonds that no one else is willing to buy. That will make things interesting.
Saturday, January 10, 2009
Peter Schiff: U.S. Bond Market Bubble about to Burst
Peter Schiff puts forth an excellent argument on not only why the U.S. Treasury bond market is in a bubble, but why that U.S Treasury bond bubble is about to burst. When will the bond bubble burst? We of course can't tell, but the conditions are set for it to happen in the not too distant future.
The underlying cause is the current buyers of US Treasury bonds are primarily speculators. What has brought that about?
According to a recent Federal Reserve announcement, the Fed says it's committed to buying long term Treasury Bonds. What that tells you is other people or governments are getting out of the U.S. dollar and looking at other places to put their money. If that wasn't the case, the Fed wouldn't have made that announcement, as it would have been meaningless if money was flowing in to buy up U.S. debt.
In response to that announcement, speculators are now the ones buying the bonds for the purpose of selling them to the announced spending spree of the Fed. No one is in the market for holding US bonds until maturity now; at least no one that understands even a little bit of what's really going on.
To buy those bonds the Fed will have to print more money to make the acquisitions. Consequently, the more the Fed buys, the less the bonds will be worth. The reason is the more the Federal Reserve prints money, the more the dollar drops and collapses in value.
U.S. Treasury bonds are now a ponzi scheme, because the thing underpinning the success of the US bonds is the dependence on people to continue buying them. If people, funds and countries stop buying bonds, as they are now starting to do, eventually the last buyer comes in and the seller is left with no options but to hold them.
So when people stop loaning money through buying these bonds, the bubble will burst. Schiff believes the bubble is already here, and it's not that far away until the pain comes.
Schiff adds that the Obama stimulus package is a disaster, and will only make things much worse, as the same principle involving the upcoming bond bubble bursting will come about from the continuing debasing of the U.S. dollar by the endless printing of money.
So the illusion that the U.S. dollar is a haven for investors is already starting to burst and collapse, and the bond market bubble about to burst. The collapse of U.S. Treasury bonds isn't going to happen overnight, it'll be gradual and subtle, and we'll have to watch things closely so we're not lulled into thinking they're safe and will hold their value. They definitely aren't going to hold their value in the ongoing U.S Treasury fund bubble.
While it's quite possible the air could come out of bonds very quickly, in all likelihood, it'll be a slow, deflating process rather than a quick burst of the US bond market.
The U.S. dollar is no place to be at this time, and the house and senate are about to pass over $800 billion more in bailouts which will continue to deflate the U.S. dollar and U.S. Treasury bonds.
The bond bubble will burst and will collapse along with the U.S. dollar. If I was invested in the dollar, I would get out of it as quickly as I could, as once things start to collapse and slide, it'll be like a slow avalanche continually building up momentum until it overtakes anyone on the mountain. Investing in the U.S. Treasury bond market and U.S. dollar are that mountain, and if you continue to ride it you'll find yourself and your money suddenly covered with the snow of a weak dollar and stuck with a bond you thought would be of value in the years ahead.
There's no doubt there's an ongoing bubble in the U.S. Treasury funds market, and nothing will change the disaster about to happen to those holding the bonds in the end. It looks like for the most part it'll be the U.S. government who has foolishly announced it'll buy up the bonds. That has released the plethora of speculators buying Treasuries so they can then resale them to the government at a profit. Don't get caught up in that game.
One final and big piece of the Treasury bond collapse is it's also similar to the forced liquidation which drove down the prices of some commodities like gold, which obviously is the investment of choice in times like these.
Because bonds are one of the easiest to unload investments, being so liquid, we'll start to see, and have already seen, some countries slowing down their investment in the bond, and probably will start to unload them to get access to more cash. When that happens, it's hard to tell how devasted the collapsing bond market will become.
As Peter Schiff says, the US Treasury bond market is in a bubble which is about to burst, don't get caught holding bonds or U.S. dollars when it happens. We don't know when the U.S. bond market will collapse, but we know the conditions are ripe for it to happen. It's not a question of whether the Treasury bonds will collapse, it's only a question of when and how quickly they'll collapse.
The underlying cause is the current buyers of US Treasury bonds are primarily speculators. What has brought that about?
According to a recent Federal Reserve announcement, the Fed says it's committed to buying long term Treasury Bonds. What that tells you is other people or governments are getting out of the U.S. dollar and looking at other places to put their money. If that wasn't the case, the Fed wouldn't have made that announcement, as it would have been meaningless if money was flowing in to buy up U.S. debt.
In response to that announcement, speculators are now the ones buying the bonds for the purpose of selling them to the announced spending spree of the Fed. No one is in the market for holding US bonds until maturity now; at least no one that understands even a little bit of what's really going on.
To buy those bonds the Fed will have to print more money to make the acquisitions. Consequently, the more the Fed buys, the less the bonds will be worth. The reason is the more the Federal Reserve prints money, the more the dollar drops and collapses in value.
U.S. Treasury bonds are now a ponzi scheme, because the thing underpinning the success of the US bonds is the dependence on people to continue buying them. If people, funds and countries stop buying bonds, as they are now starting to do, eventually the last buyer comes in and the seller is left with no options but to hold them.
So when people stop loaning money through buying these bonds, the bubble will burst. Schiff believes the bubble is already here, and it's not that far away until the pain comes.
Schiff adds that the Obama stimulus package is a disaster, and will only make things much worse, as the same principle involving the upcoming bond bubble bursting will come about from the continuing debasing of the U.S. dollar by the endless printing of money.
So the illusion that the U.S. dollar is a haven for investors is already starting to burst and collapse, and the bond market bubble about to burst. The collapse of U.S. Treasury bonds isn't going to happen overnight, it'll be gradual and subtle, and we'll have to watch things closely so we're not lulled into thinking they're safe and will hold their value. They definitely aren't going to hold their value in the ongoing U.S Treasury fund bubble.
While it's quite possible the air could come out of bonds very quickly, in all likelihood, it'll be a slow, deflating process rather than a quick burst of the US bond market.
The U.S. dollar is no place to be at this time, and the house and senate are about to pass over $800 billion more in bailouts which will continue to deflate the U.S. dollar and U.S. Treasury bonds.
The bond bubble will burst and will collapse along with the U.S. dollar. If I was invested in the dollar, I would get out of it as quickly as I could, as once things start to collapse and slide, it'll be like a slow avalanche continually building up momentum until it overtakes anyone on the mountain. Investing in the U.S. Treasury bond market and U.S. dollar are that mountain, and if you continue to ride it you'll find yourself and your money suddenly covered with the snow of a weak dollar and stuck with a bond you thought would be of value in the years ahead.
There's no doubt there's an ongoing bubble in the U.S. Treasury funds market, and nothing will change the disaster about to happen to those holding the bonds in the end. It looks like for the most part it'll be the U.S. government who has foolishly announced it'll buy up the bonds. That has released the plethora of speculators buying Treasuries so they can then resale them to the government at a profit. Don't get caught up in that game.
One final and big piece of the Treasury bond collapse is it's also similar to the forced liquidation which drove down the prices of some commodities like gold, which obviously is the investment of choice in times like these.
Because bonds are one of the easiest to unload investments, being so liquid, we'll start to see, and have already seen, some countries slowing down their investment in the bond, and probably will start to unload them to get access to more cash. When that happens, it's hard to tell how devasted the collapsing bond market will become.
As Peter Schiff says, the US Treasury bond market is in a bubble which is about to burst, don't get caught holding bonds or U.S. dollars when it happens. We don't know when the U.S. bond market will collapse, but we know the conditions are ripe for it to happen. It's not a question of whether the Treasury bonds will collapse, it's only a question of when and how quickly they'll collapse.
Monday, January 5, 2009
Majority of Major Hedge Fund Managers Remain Bearish on U.S. Dollar
The majority of major hedge fund managers are increasingly bearish on the U.S. dollar, and aren't too optimistic about U.S. Treasury bonds or equities either, according to a Greenwich Alternative Investments survey.
Of the hedge fund managers queried, 62 percent said they were bearish concerning how the U.S. dollar would perform in January. That's the highest percentage of bearish responses to the survey since March 2007. It's an 8 percent jump from just December's numbers.
For equities, bearishness rose by 16 percent, as only 46 percent were bullish on how U.S. equities would perform during January 2009, a significant drop from December's 62 percent bullishness.
As for the 10-year Treasury bonds, they remained unchanged, as 54 percent of managers remained bearish, the same as December. What did increase were those who were neutral, as respondents increased to 31 percent in that category, up from the 15 percent neutrals in December. That means only about 15 percent of respondents remained bullish on January 10-year Treasury bonds.
Of the hedge fund managers queried, 62 percent said they were bearish concerning how the U.S. dollar would perform in January. That's the highest percentage of bearish responses to the survey since March 2007. It's an 8 percent jump from just December's numbers.
For equities, bearishness rose by 16 percent, as only 46 percent were bullish on how U.S. equities would perform during January 2009, a significant drop from December's 62 percent bullishness.
As for the 10-year Treasury bonds, they remained unchanged, as 54 percent of managers remained bearish, the same as December. What did increase were those who were neutral, as respondents increased to 31 percent in that category, up from the 15 percent neutrals in December. That means only about 15 percent of respondents remained bullish on January 10-year Treasury bonds.
Subscribe to:
Posts (Atom)
![[Most Recent Exchange Rate from www.kitco.com]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_v8a5jok1nelyDZV6kSmSGYxBkt79vhgbreGicth2BTzXhAgoynBC6YSuNxda1BpU5SY8aStHRddoXHdEyfJIqicGwu7lbvR80B5QV0crN3IPjmptwRr54=s0-d)
