Menu Close

Uncle Buck in the Dumper

How grim is the outlook for the U.S. greenback?

Pretty darn grim. Check out his piece on the shrinking dollarette, with the obligatory comment on how this is good for gold… Here’s an excerpt, followed by the link:

Of course, anything can happen on a day to day basis in terms of Central Bank intervention and movements associated with technically-oriented trading funds. But we know that Fed is in the middle of engaging in record amounts of POMO (permanent open market operations), in which it goes directly into the market via the primary dealer system and injects funds into the banking system by purchasing Treasuries on a permanent basis (as opposed to the temporary basis of the more typical repo operations).

This is direct currency debasement. In fact this week the Fed injected $5.2 billion, a record amount, into the system via Monday’s POMO. It is on deck to inject another $7-8 billion today and Friday. I was chatting with a long-time colleague yesterday who remarked that he remembered when an occassional bi-weekly POMO of $750 million each would raise eyebrows.

The bottom line here is that the world is now officially engaged in currency devaluation wars and the U.S. is firing is its paper nukes into the global financial system this week with reckless abandon. This is why every attempted takedown of gold and silver over the last week by the Fed/Treasury is failing. Yesterday is the perfect example. In fact my fund partner, who operated a commodities trading firm in the 1970’s and lived through the last gold rush back then, remarked late last week that the “character” of the gold/silver trading right now is very similar to the market of the late 1970’s, which was very volatile but seemed to move higher after every brief pullback.

I don’t know where this current sell-off in the USDX will find support and bounce. But I do know that when the dollar loses 80, and stays below 80 for while, it could trigger an avalanche of selling and possibly ignite a vicious sell-off in the bond market. And anyone who says that gold is in a bubble and topping out here knows absolutely nothing about which they are talking. Gold/silver are headed much higher before the end of the year.

http://truthingold.b…port-at-81.html

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading