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« Welcome to the Mania | Main | Gold Prices Blast through the $1300.00/oz Barrier »

The US Dollar is on the Edge

USD Chart 30 Sep 2010.JPG

Every picture tells a story and the above chart shows the US Dollar heading down the tubes in contrast to the ascendancy of gold prices, silver prices and the unhedged mining companies that comprise the HUI. The USD has dropped from '88' to '78' in 4 months, a fall of 11.40%. Just imagine being a cabinet member of a foreign government with a pile of trade generated dollars on your hands, watching them disintegrate before your eyes!

We can also see that the downward swing of the 50dma crossing over the 200dma, sometimes known as the death cross as it usually portends further weakening of the dollar. Gold prices, however, are at an all time high, with silver prices coming to the party with a terrific effort. The mining companies are also showing signs of activity and we look forward to them setting new records both as individual enterprises and collectively as a group of unhedged miners.

Its not just the dollar that is facing a few difficulties, over in Europe Spain has had a general strike and there have been demonstrations in Brussels, so the unrest and discontentment continues.

Keep an ear open today for news from Ireland where the Anglo Irish Bank will declare just how much money it requires to stay afloat. Having had billions the mind boggles at where all this cash is going. The property market there certainly boomed when the economy was in better shape, but those days are well and truly over, leaving behind an all too familiar financial hangover. We doubt that this bank will not be allowed to fail, but even the European Union is not bottomless pit and somebody somewhere will have to endure more belt tightening.

In the United Kingdom the unions are gathering strength and popularity on the back of a stuttering economy and the proposed austerity measures required to balance the books, which are going down like a lead balloon.

The new coalition government will be put to the test and the newly elected leader of the Labour Party, making it New, New Labour, will need to make his presence felt. As they say a week can be a long time in politics.

All in all its a sad state of affairs and being gold and silver bugs is all we can do to protect ourselves and hope that we come through this very trying time with a limited amount of damage.

Over in our options trading den they have updated the chart to show all the closed trades as of today, so you can see exactly how it is going, please click this link.

OptionTrader Profits

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09. On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days, with more positions opened yesterday. Drop by and take a look.

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Reader Comments (1)

Great article from David Merkel from Aleph Blog.

Who Dares Oppose a Boom?‏

At the very heart of financial regulatory reform, an error was made at the very beginning. As is common in American culture, the assumption was made that our laws and regulations were inadequate, rather than existing laws and regulations were inadequately enforced. As such, the law that was eventually passed largely strengthened the strictures against the crimes that happened.

But, the same regulators were left in place. Almost no one was fired for the incompetence demonstrated in not using the regulations that already existed for preventing shoddy loan underwriting. The SEC had the right to set capital ratios at 12 to 1, but waived that right and allowed the investment banks to be unlimited in their leverage. The GSEs took far too much credit risk, but who, if anyone, was fired for allowing them to do so? Or, who was fired for doing so?

October 3, 2010 | Unregistered CommenterBC

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