Wednesday, March 31, 2010

Update 3/31

I "bought" a mini-silver yesterday at $17.20 and today it's rocketed up to $17.53; so far, Mauldin's call for deflation has fallen pretty flat. I must say that I'm completely wrong on copper; the march northwards continues unabated, with the close today at $3.55. I don't believe in copper enough to buy, but it looks like my sell order at $3.17 is unlikely to be filled anytime soon. I'm still going to keep the order. With my silver, I'm going to add a trailing ten cent stop.

Today the Fed's MBS purchases ended. We'll see.. if mortgage rates go north of 6% look for Bernanke to act in one fashion or another. There was some talk of transfering a lot of the already purchased MBS contracts to Freddie and Fannie's balance sheets to as to properly allow Bernanke to act.

Across the pond, Ambrose's latest article points out the dangers the UK faces:

"Bill Gross, the fund's chief and emminence grise of bond vigilantes, said the UK was on its list of "must avoid" countries along with Greece and others in eurozone's Club Med.
The flood of British debt is likely to "lead to inflationary conditions and a depreciating currency", lowering the return on bonds. "If that view becomes consensus, then at some point the UK may fail to attain escape velocity from its debt trap," he wrote in his April monthly note. Mr Gross said the UK is not yet in crisis but
gilts are sitting on a "bed of nitroglycerine" and must be handled delicately. Spreads on 10-year gilts have crept up to 14 basis points above those of Spain, itself in some difficulty"

The scary part here is that it's Bill Gross.. Fund Manager of the Decade.. saying this. PIMCO is a gigantic fund, and Gross steers his ship masterfully. In other words, he's someone we all should listen to when he speaks. At some point, the UK (and most of the industrialied world in fact, US included) will have to suffer the same fate as Spain and Ireland.. severe budget cuts, drastic levels of unemployment.

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