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Graham Summers’ Free Weekly Market Forecast (Death of the Dollar Edition)
The single
most critical issue to note right now is the US Dollar’s collapse.
The US
Dollar has broken below its multi-year trendline in a BIG way. Any hope of a
bull market run is pretty much over and we’re on our way to a MASSIVE currency
devaluation.
Things are
even uglier when you do a close-up of the breakdown. The greenback has already
taken our support at 76.59 (its 2010 low). This leaves support at 74.98 (the
2009 low) and then 71.61 (the 2008 low). After that, it’s GAME OVER for the US
Dollar as we will be in uncharted territory.
Indeed, if
we take out these last two lines of support, we’re triggering the massive Head
and Shoulders pattern which forecasts a 50% collapse in the US Dollar.
Understand,
this will collapse not necessarily happen all at once. It might take years. But
the chart predicts the US Dollar losing 50% of its value. The markets are
already predicting this with commodities and other inflation hedges soaring
across the board:
You can
already see this happening as inflation hedges explode higher across the board:
All of these
assets, particularly Gold and Silver, will perform well in the coming months.
However, their performance will pale compared to other, less well know
inflation hedges.
Why?
Everyone
knows that Gold and Silver are the most obvious inflation hedges out there. And
to be blunt, anyone who invests in these two assets will likely do very well in
the coming months as inflation erupts in the US.
However, to
make truly ENORMOUS gains from inflation you need to find the investments
that are off the radar… investments that the rest of the investment world hasn't
discovered yet.
I'm talking
about investments that own assets of TREMENDOUS value that are currently priced
at absurdly low valuations: the sorts of assets that larger companies will pay
obscene premiums to acquire.
Look for the
hidden gems and you could make a fortune from this disaster.
Good
Investing!
Graham
Summers
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USD will not collapse.
There is only one scenario: relatively strong USD and punctuated supply and extraction investment disruptions continuing at least till the end of 2014, when oil will be 200 USD on average. This leads to steady upgoing oil price curve, with a little ( to Brent 130-145) drop after Q1 2012 when the USA will be in recession again. But this time, due to supply disruptions in all oil producing countries due to political instability, oil prices will NOT fall with 2012 -2013 recession in the USA ( and probably elsewhere) :
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=0
http://saposjoint.net/Forum/download/file.php?id=2608
http://saposjoint.net/Forum/download/file.php?id=2609
Graphs were made on february 6th taking into account typical decooperation patterns after too much cooperation (globalisation, cheap credit, herding) caused sharp crisis ( Lehman-March 2009) and its effect on oil prices. Once oil started to grow with revolutions all over the place, further developments became clear, and mappable.
Decooperation as natural reaction to too much cooperation that lead to the boom and bust will ensure countries and companies will start to play zero sum game, leading to short term outlook and practical solution dominance over world wide Utopian schemes.
The logical thing is , that USA will be forced to return to fiscal prudence before it will run up real inflation by rising oil prices which renders all spending senseless. And return to fiscal prudence means strong USD and recession again.
Summers writes: "Understand, this will collapse not necessarily happen all at once. It might take years."
Hey Graham, if it takes years, then it's not a "collapse". It's a fucking decline.
As for the rest of this garbage....
"Look for assets of tremendous value currently priced at absurdly low valuations"?!?!?!?
Read the sentence again, and think for a moment what Summers is advising his readers to do: Graham Summers is telling his readers to look for an asset with tremendous value which is currently priced at absurdly low valuations.
So...if you happen to come across an asset with tremendous value, STOP! Slow down and say to yourself: "Yeah, it's got tremendous value, BUT...is it currently priced at an absurdly low valuation?"
Now he's not even pretending to give useful advice, honestly arrived at...
"The key, my friends, is to look for assets that you can sell higher than you bought. Those are the gems you need to seek."
> Everyone knows that Gold and Silver are the most obvious inflation hedges out there. And to be blunt, anyone who invests in these two assets will likely do very well in the coming months as inflation erupts in the US.
Better than against "food" and "energy", something everybody needs?
Dollar Collapse? Is that something new, or did somebody fail to understand that was the objective?
If charts could predict prices, chartists would be rich.
If fundamental analysis could predict prices, you could make a good living at the race track.
Dollar dropping against what? Silver yes, other fiats, no, except for the Swissie. It's a vintage year for fleeing dictators and drug cartels. As the bankers always say, "Know your client."
and if your client is the Federal Government of the United States "caveat emptor." Still...i do love horses. such fine beasts...and with an eye towards the camera no less. my type of woman.
zero hedge is become MSM . this is not news , this is an advertisement for graham summers news letter. please. dissapointing that ZH is going the way of crapvertising, but then , truth is, all news sites need effort and at some point, effort requires at least a modest amount of compensation by way of raising money through selling advertsing.
is this acceptable. yes......no choice
If you look to the cot report, spec longs are at an extreme. GBP for example, is at extremes not seen since '07 before it collapsed from 2.011 to 1.35ish.
When the entire market calls for the dollar's demise--as they are now--it usually reverses.
I get the DXY break but would not be surprised to see a rebound for the dollar.
Euro for example rallied today despite a greek downgrade, so the market was really following the 'one-way' inflation trade and oil.
Both of which could reverse on a dime.
He has been writing this same exact story for at least two years. DIRE warnings and a by the way, "P.S." at the end. I wish Zerohedge would not promote him so much.
If you would have acted upon his recomendations two years ago, you would'nt make such a comment.
The 2008 collapse was proceeded by a dollar collapse. Although the DXY was low commodity prices also collapsed. The same thing may happen again. Predicting random future events by chart behavior is illogical. it's only value is knowing that since some people believe it, it might have some effect, like selling more news letters.
and more importantly...sky high gold and silver prices that threaten their global fiat currency scheme...?
if you draw the top trend line, the 3rd peak (mid-2010) bested the trend line as well before turning around in a major way.
there is still a possibility that the same situation could be at play here. however, the fact that bonds and USD have apparently lost their safe haven status is a major negative development. it seems that gold/silver have taken over that role.
i think it is only a matter of time until the Fed is forced to raise rates to try to stop skyrocketing food prices.
Have you ever heard of interest rate swaps (derivatives)? Not going to happen, buddy. The Wall St banking cartel AKA the Fed sold million, nay trillions, worth of interest rate swaps back in 2008, swapping a fixed rate for a variable rate. What does that mean?
Well, basically, the banks made a bet. They bet that interest rates would stay low, (maybe even zero) for years. The other side took the bet that rates would rise in the future, so better to lock in a fixed rate now. Now here is the problem. The banking cartel that was betting on future interest rates staying low (by selling fixed rate swaps) SETS INTEREST RATES. Yes, thats right, the Fed is controlled by private banks, who made trilions of bets based on the interest rate, in 2007 through to the present.
So by raising interest rates they make themselves the loser on that trade. Still think the Fed will be raising rates? I would love to hear the argument :)
Check out the Capital Research Institute: "The Gold Standard: Why Now?"
http://www.capitalresearchinstitute.org
Still waiting for the "money shot"...paper is paper and in the end your paper gains may not matter...
Good point. Also, 50% drop from what point? From the index high of 120 or from current levels.
Summers makes very strong statements. 50% drop from current levels is hard to believe since it would give us an incredible export advantage.
Graham, we should be teaming up. Unless you want to continue going it alone, which is fine too.
Check out the latest from the Capital Research Institute: "The King is Dead, Long Live the (new) King!"
http://www.capitalresearchinstitute.org
What is happening right now in the world of finance can best be understood from the perspective of… succession planning? Thats right. What is underway right now has a lot in common with what used to happen every time a King’s reign was approaching its end, with the King on his death bed. Superficially everyone would still be following the King’s orders and scrambling around, summoning the finest physicians (somehow we got Timothy Geithner and Ben Bernanke), but just below the surface everyone knows the score, and is preparing for the King’s inevitable death. This leads to a tremendous amount of posturing and scheming, as everyone gets behind their preferred candidate to become the new King.
This is exactly what we witness in the world of international finance at the moment