Thursday, April 1, 2010

Update 4/1

My silver trade is going smashingly well as the USD weakens; today it was up another 37 cents, which for this mean old bastid means another 370 (increasingly worthless & overtaxed) dollars in my wallet.

It looks like the race to the bottom has begun in the currencies, and while we're trashing our currency quite effectively, apparently the Japanese are even better at this event; the Yen continues to lose value versus the dollar. Therefore, I'm going to once again purchase two hundred of the Short Yen ETF (ETF YCS) at $21.60/share. MadHedgeFund & Mauldin both are deeply pessimistic on the Yen, and this last week's action proves they're right. (The Euro and UK Pound were advancing versus the USD) So for now, Japan is winning the Great Race to Ruination, and I'm hopping aboard their southbound train. If Mauldin's hunch of strong deflation in April pans out, this trade will pan out very nicely, though my silver will be stopped out.

As for copper, I still believe it is in for a major fall thanks to less demand in China and the US, despite the recent upsurge. Today's Ambrose Evans piece lends credence to my theory. I'm going to bump up my "sell" order to $3.41 (today's close was $3.58) with the customary five cent trailing stop. A deflationary environment would help this trade immensely as well.

Update 7:00pm:

The Fed has announced a meeting (unscheduled) to discuss the various rates. This means that somebody sees something they don't like. Speculation is of a rate hike in one form or another to curb inflation. Problem is, I see no inflation; Mauldin makes the point that money supply is in fact drying up rather quickly. Such a move would explain today's strong move up in the USD (Ben's Friends and Family List got word of this a day or two ago and are acting accordingly). Anywho, here's Mauldin's word on money supply and why the upcoming move is perhaps the exact wrong thing to be doing at this time:

In plain English, what this is explaining is that while the Fed continues to print money like no other, it's being stashed in banks at an even faster pace, sucking the system dry of cold hard cash. Banks are not lending unless you have a 775 FICO score and a co-signer who's credit is even better.. or unless there is a Fed guarantee on the deal (mortgages). When was the last time anybody reading this article got a credit card offer in the mail ?? The Fed's rumored move would slow the pace of their printing a little, meaning even less cash in the system.. the last thing they need to do in the short term. The USD will go up; my silver trade will get stopped out, but my Yen trade will do smashingly well. Copper should (uh hum) go down and I may "sell" a copper next week if it hits the $3.41 mark.

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