Prechter Reiterrates Call For Dow 1,000, Even As Surging Gold And Plunging Dollar Leave Much Credibility To Be Desired

Tyler Durden's picture

One has to wonder by now just what is so magical about the Dow 1,000 that Prechter has been so infatuated with since time immemorial. Why not 999? Or 1,001. Oh well, as the rest of the world continues to expect the Dow's drop to precisely 1,000, Prechter's call for a surging dollar (ahem), for a plunge in gold (ahem, ahem), and for a rout in stocks, has left quite a few investors with some unpleasant margin calls. What is odd, is that Prechter seems to completely miss the natural hedge offsets of his bearish trade, and he confuses both inflationary and deflationary outcomes that reinforce each other's loss, in his blind pursuit of a market crash. Perhaps Mr. Prechter would be wise to heed the statement from Brazilian finance minister, who earlier acknowledged there is now a full-blown war of central bank attrition. And, no this is not a zero sum war, as all currencies are devalued equally against each other, but absolutely lose value against other fixed assets like gold.

 

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GFORCE's picture

If you look at today's intraday $15 plunge on a nothing day, it should highlight the paper risks to price from a panic unwind; much like the one which decimated commodity prices in 08/09. Forced unwinds would take the wind out of this market completely.

People have a very limted amount of 'scenarios' available and a very short memory.

Although there are 'hedge' properties in regards to his calls, that is only if we were to see a continuation in this broken game of 'risk' and steady march to dollar zero and gold 'x'. History has destroyed these naive expectations time and time again.

Zerohedge bays for the blood of this broken system but seems unaware of its involvement in the current gold rally. Of course there are fundamentals and a dying fiat involved but will this be the first penny to drop?? What if a failure of a euro bank or 20bn hedgefund caused a run on liquidity once more?

 

 

GFORCE's picture

Just to add to my points above. In the article on bank exposure to Irish debt, you say that a 20-30% 'haircut' on UK/Germany holdings alone would be a 'lights out' event for the banks.

This is only Ireland? Are we really printing to prop up a couple percent inflation? or are we printing to prevent complete financial system meltdown?

On that note, what would happen to gold liquidity and access to comex etc in the event of this type of bank failure?

This paper run up means nothing in that kind of event.

pamriallc's picture

FIAT is really a poor form of savings--- they don't even make decent cars.

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