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EURUSD Breaks $1.3000, BIS Steps In To Prevent Rout

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Tue, 05/04/2010 - 15:05 | 331245 Mr Lennon Hendrix
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As posted for ZH:

First, the doelarr "strength" to continue tightening the trading range of Euro/USD.  The move to $1.30 will happen quick, in the next week or two.  DXY to trade roughly at 81.5.  Gold and silver will continue to make nominal highs against the Euro, as well as push back up to the nominal highs for the doelarr.  Then there will be a move down to $1.25 Euro USD with the DXY staying in the 81.5 range.  By late May, the pressure from the doelarr will have peaked, as the State budgets of America will once again be addressed. California, will legalizing pot combine with personal investment by Walled Street in Hollywood save your ship?



Tue, 05/04/2010 - 17:09 | 331533 jdrose1985
jdrose1985's picture

what's your reasoning for the takedown in the POG today and do you see such forced liquidations as likely to continue given the circumstances we have at hand?

Just looking for others points of view.

Tue, 05/04/2010 - 22:58 | 331709 Mr Lennon Hendrix
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Gold has not finished decoupling...yet.  It is on one of the last strings of sinew before the rope snaps.  They have this much more time, and they will use every moment to its fullest.  They must push gold down, or the blind might hear the song of the birds instead of the songs of sirens.  For example, these words are not often discussed:


So they must push it down, their parlor game is not over.  Once the Euro is all put together again they will go after the doelarr.  The doelarr is the last move on the chessboard.

The liquidation is all mythical, as they are not really "selling" gold.  They are selling their positions.  More importantly, the banks are selling their positions.  They do not have the gold!  The gold that should be vaulted is being used for facials by Barney Frank.  In a few short years, the world will know this, Barney will not be getting gold facials, and the Bushes and Harrimans will have retreated to Abu Dabai.

I will add that I think they are actually trying to keep a lid on inflation at this point, and are welcoming bad news to keep prices down.  This has been my reasoning for a few weeks, so if this keeps going this bad, it could get out of hand.  Then my theory is out the window.  We will see.

Tue, 05/04/2010 - 15:10 | 331252 MsCreant
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Gosh, nothing about this on the BIS website!

Tue, 05/04/2010 - 15:18 | 331273 Mitchman
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Tue, 05/04/2010 - 15:10 | 331253 Hondo
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Merkel is right they need an immediate plan for orderly insolvency because that's where is eventually going to end up.  Probably sooner rather than later.

Tue, 05/04/2010 - 15:34 | 331298 mikla
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Tue, 05/04/2010 - 15:12 | 331256 williambanzai7
Tue, 05/04/2010 - 15:17 | 331269 casino capitalism
casino capitalism's picture

Where does the BIS get the money to intervene?  I thought they were just policy makers.

Tue, 05/04/2010 - 15:39 | 331310 Hansel
Hansel's picture

I'd like to know, too, where and how they get the money to "defend" the euro.

Tue, 05/04/2010 - 16:22 | 331406 Hansel
Hansel's picture

Partly answering the question... The BIS says they collect "placements from customers", but their only customers are central banks, so central banks give them money. They offer financial products to the central banks, fixed income investments. I don't know where they get the money to pay interest if they only get money from "customer placements". Sounds like another layer on top of the Ponzi to me.

Tue, 05/04/2010 - 16:29 | 331429 casino capitalism
casino capitalism's picture

I guess the central banks have strategically installed printing presses everywhere they can.  Maybe the day will come when you can go get some fantasy dollars from a 7-11.

Tue, 05/04/2010 - 16:40 | 331462 Gordon_Gekko
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They probably create "money" using ledger entries like other central banks, you know, the usual fraud.

Tue, 05/04/2010 - 17:03 | 331519 mikla
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The Basics:  Central banks debase their currency.  That's what they do.  That's the purpose of the Fed's printing, and the purpose of the ECB's audit failures since the establishment of the ECB (e.g., all member countries print more than they are allowed, and lie about their numbers, because the incentive to cheat is *too great*).

That's also the purpose of SDRs (Special Drawing Rights) and other currency baskets -- it's merely coordinate debasing among central banks.

That's also the purpose of the BIS -- to settle transactions, skimming from the central banks, and to use that "slosh fund" in support of the system -- which is one of debasing by the central banks.

The net effect is that central banks and the BIS have the capital (they merely print it and circulate it first among themselves), and ultimately that value percolates to the rest of the world (through world governments, and then world markets, including stock and bond markets).

The world financial system is ultimately managed through the BIS, whose board includes members from the world central banks.  That's the only place to reasonably discuss a single world currency, should one replace the dollar as the world reserve currency (e.g., with a basket of fiat currencies of some arbitrary unit).

The fact that we are now talking about BIS involvement means we've gone to the "root" -- this is where the buck stops.  All layers below the BIS have some level of accountability, while the BIS does not.  Thus, this must be a big problem (e.g., it's reasonable to talk about BIS involvement as the "end game").

Tue, 05/04/2010 - 15:17 | 331270 Mitchman
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Tue, 05/04/2010 - 15:52 | 331315 kaiten
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No. The New Normal.

Tue, 05/04/2010 - 16:00 | 331331 Mitchman
Mitchman's picture


Tue, 05/04/2010 - 15:20 | 331278 thewhigs
thewhigs's picture

Mr. Trichet, with respect, did you come from the "School of Bernankenomics"??

Tue, 05/04/2010 - 15:21 | 331280 Bonesetter Brown
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What's the big deal?

It's just a 1.5% move.

In a currency.

In a day.

Tue, 05/04/2010 - 15:31 | 331289 TylerJ
TylerJ's picture

What does "BIS" stand for again?  Obviously your refering to that scumbag Bernanke.  Just wanted to get my acronyms straight.

Tue, 05/04/2010 - 15:35 | 331299 Whizbang
Tue, 05/04/2010 - 15:35 | 331302 Pladizow
Pladizow's picture

Bank of International Settlements.

The bank of banks in Basel Switzerland.

Tue, 05/04/2010 - 18:46 | 331683 Mentaliusanything
Mentaliusanything's picture

You are referring to Basel Faulty Bank 

Coming Sibel - where is that Spanish git hiding ;)))))

Tue, 05/04/2010 - 15:36 | 331305 casino capitalism
casino capitalism's picture

I think he means Bank for International Settlements.  If so, I don't know where they get the money to intervene in such a huge market.  I thought they only did policy setting.

Tue, 05/04/2010 - 16:25 | 331411 Cleanclog
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BIS also mentioned as possibly providing bridge loan to Greece in the event that all the EU member states that need to pledge their EU portions of the bailout to  Greece can't do so by May 19th.  Many have process that will likely take longer to ratify.  Still - I am unaware of BIS making such loans in past, even if bridge and short-term.

Tue, 05/04/2010 - 15:31 | 331290 J.Caesar
J.Caesar's picture

gold and silver down a chunk.  the conspiracy is posponed for another week or so (sort of in time with the south will rise again)

Tue, 05/04/2010 - 15:39 | 331311 Rogerwilco
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Kerchunk -- the elevator is on its way down, with all commodities onboard. Margin calls are not condusive to orderly selling.

Tue, 05/04/2010 - 15:59 | 331328 Internet Tough Guy
Internet Tough Guy's picture

No margin call on gold, it's down less than 1%. Probably because it's not a commodity.

Tue, 05/04/2010 - 16:22 | 331393 Cheeky Bastard
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No margin call on gold, it's down less than 1%. Probably because it's not a commodity.


Say what ?

It is very much commoditized and utilized in industrial production but it is perceived mostly as store of wealth and not a commodity. Read more here: http://geology.com/minerals/gold/uses-of-gold.shtml

Tue, 05/04/2010 - 16:26 | 331414 Internet Tough Guy
Internet Tough Guy's picture

And I can put diamonds in my teeth. Just because you can misuse something doesn't change what it is. Gold is in the process of demonitizing/decommodifying. De-everything except what it will be.

Tue, 05/04/2010 - 16:58 | 331507 Cheeky Bastard
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ITG; wrong wrong and wrong. As long as there is  demand for medical services, medical devices, electronic, conductors,  as long as people use glass, as long as there is a desire to indulge in luxury goods, as long as there are airplanes flying trough the air, as long gold will never, and i can not put enough emphasis on NEVER, enter a cycle of demonetization/decommodification. NEVER. And when everything crashes, and all demand vanishes gold will still be used as exchange mechanism, but it will not be as relevant as the good old fashion barter system will. You should really read something about gold and not just recycle your preconceived beliefs and dogmas when it comes to that metal. 

Tue, 05/04/2010 - 17:17 | 331552 Internet Tough Guy
Internet Tough Guy's picture

Thanks for the (incorrect) lecture. Barter isn't the future, there will always be a transactional currency. Always. But if you need any tips for your summer reading list, just let me know.

Tue, 05/04/2010 - 17:32 | 331582 Cheeky Bastard
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No,thank you.

I dont really like Warren Buffett, Napoleon Hill, Jack Welch type of books. 

Tue, 05/04/2010 - 20:46 | 331817 Unscarred
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No, thank YOU Cheeky, for speaking out against the prevailing dogma and adding badly needed perspective to a conversational topic that has gone too far in the wrong direction.

Tue, 05/04/2010 - 17:40 | 331595 Alienated Serf
Alienated Serf's picture

i like shiny metal.  i bought a nice 5oz silver bar to celebrate a big down day for the market.  if i keep this strategy up, i expect to have a few kg soon.

Tue, 05/04/2010 - 15:35 | 331301 kaiten
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Shares of eurozone exporters will skyrocket if euro goes down to parity with dollar.

Tue, 05/04/2010 - 15:51 | 331313 carbonmutant
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 I'll believe it when I see the price of Reggiano Parmigiano dropping at Whole Foods.

Tue, 05/04/2010 - 18:34 | 331670 Manbarepig
Manbarepig's picture

It'd be nice to have the Locatelli Romano not cost me more than everything else in the dish combined...

Tue, 05/04/2010 - 18:48 | 331691 carbonmutant
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Tue, 05/04/2010 - 19:15 | 331726 dnarby
dnarby's picture


That's *imported*.

...Think about it.

Tue, 05/04/2010 - 15:38 | 331309 GFORCE
GFORCE's picture

The rally will be back by week end and run to August.

Tue, 05/04/2010 - 15:56 | 331323 Gordon_Gekko
Gordon_Gekko's picture

Yeah, DOW 36000 - Here. We. Come.

Tue, 05/04/2010 - 19:45 | 331762 Mr Lennon Hendrix
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After Europe goes all in on their currentsea?  You speak in nominal terms then.  Good luck trading!

Tue, 05/04/2010 - 15:54 | 331320 Gordon_Gekko
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Are you sure it's the BIS, not the ECB? It has to be pretty serious for the Mother Central Bank a.k.a. the BIS to intervene.

Tue, 05/04/2010 - 16:00 | 331330 Internet Tough Guy
Internet Tough Guy's picture

If BIS is playing, the end is nigh. Per FOFOA, they have the nuclear option to rescue the euro.

Tue, 05/04/2010 - 16:07 | 331347 MsCreant
MsCreant's picture

Wasn't that to let the price of gold loose and then pay off debt with Greek gold? {salivating}

Tue, 05/04/2010 - 16:26 | 331416 Gordon_Gekko
Gordon_Gekko's picture

Why did you change your pic MsCreant? I kinda liked the one before.

Tue, 05/04/2010 - 16:41 | 331459 seventree
seventree's picture

I don't want to speak for our Ms, but it may reflect general state of mind.

Possible subtitle: "Sow the wind, reap the whirlwind."

Tue, 05/04/2010 - 17:42 | 331599 MsCreant
MsCreant's picture


I liked it too and I may bring it back. I do feel like we have turned a corner and this is what is in store...

Here is what I would have as an avatar if I could, but it just does not come across, small, very well:


I like her philosophy of life there...

Meanwhile, all of us are running from something we can't outrun, and from a distance, it is kind of funny. No where to run to, ba-beh, no where to hide...

Tue, 05/04/2010 - 18:09 | 331631 Gordon_Gekko
Gordon_Gekko's picture

That's one hot chic (as I'm sure you are)!

Well, I can feel that "something" coming too...we're pinned down on the highway as the steamroller approaches.

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