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The US Dollar: Dead On Its Feet, Dead Cat Bounce, or Dying to Rally?

Phoenix Capital Research's picture





 

Well, the US
Dollar has staged a small bounce at $77 or so. The question now is whether this
becomes anything substantial, or is merely a result of the Euro/USD pair
becoming so stretched that a brief pullback had
to happen.

 

We should
know the deal within a few days. However, the greenback is now only 2% away
from breaking its multi-year support line.  If the Dollar turns down again now then the inflationary
collapse will intensify rapidly.

 

 

I’m inclined
to say that we may get a decent bounce here, possibly to 79 or so. The reason I
say this is that while the US Dollar is so close to breaking CRITICAL support,
the Euro (which comprises over 50% of the US Dollar index) remains well below
its multi-year downward trendline:

 

 

 

Ultimately
all of this is just question of which paper currency will collapse first. From
a fundamental standpoint the Dollar is more sound than the Euro (the Dollar is
backed by the US Government while the Euro is backed by… ???). However, the US
Dollar also happens to be under the watch of a man who thinks nothing of
killing a currency (and indirectly people via soaring food prices).

 

Indeed, only
one currency continues to soar to new highs and is actually increasing purchasing power and that’s
Gold. So if you own Dollars OR Euros, I strongly urge you to consider moving
some of that paper into the Ultimate Currency.

 

After all,
wouldn’t you like to own something that Ben Bernanke and Jean Claude Trichet
didn’t control?

 

 

Good
Investing!

 

Graham
Summers

 

PS. If
you’ve yet to take steps to prepare your portfolio for the coming inflationary
disaster, our FREE Special Report, The
Inflationary Holocaust
explains not only why inflation is here now, why the
Fed is powerless to stop it, and three investments that absolutely EXPLODE as a
result of this.

 

All in all
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steps to prepare AND profit from what’s to come. And it’s all 100% FREE.

 

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Fri, 02/04/2011 - 16:29 | Link to Comment dxj
dxj's picture

The master of the oxymoron: Dead on its feet, dying to rally.

Fri, 02/04/2011 - 07:58 | Link to Comment topcallingtroll
topcallingtroll's picture

I agree hitting 79 is a dcb, but we just might do it. Everybody is net short dollars right now.

Fri, 02/04/2011 - 07:36 | Link to Comment Treeplanter
Treeplanter's picture

Those boys have plenty of control over PM prices, but that will change.  

Fri, 02/04/2011 - 07:36 | Link to Comment kaiten
kaiten's picture

"Dollar is backed by the US Government while the Euro is backed by… ???"

Funny, he´s writing about economics and doesnt know the very basics. So let me enlighten you: Euro is backed by German government, French government, Italian government, Dutch government, Austrian government, Finish government ... there are 17 of them .... got it? 

Fri, 02/04/2011 - 07:52 | Link to Comment topcallingtroll
topcallingtroll's picture

It is very hard to herd cats, my grandpappy used to say.

Fri, 02/04/2011 - 07:08 | Link to Comment bank guy in Brussels
bank guy in Brussels's picture

Graham Summers of Phoenix Capital Research, and others on this site, do please STOP using that horrid 'dead cat bounce' expression - it's offensive and disturbing to many of us.

Companion animals, cats and dogs, are the beautiful creatures of this world - their love and loyalty puts humans to shame.

So please stop it, you don't need to use such a cruelly sadistic locution. Anyone of intelligence can find another way to speak of chart upswings.

Fri, 02/04/2011 - 08:09 | Link to Comment ColonelCooper
ColonelCooper's picture

You forgot the </sarcasm>.

I bought you some books:

http://www.amazon.com/101-Uses-Dead-Simon-Bond/dp/0517545160/ref=sr_1_1?ie=UTF8&qid=1296821178&sr=8-1-spell

http://www.amazon.com/Book-Bunny-Suicides-Andy-Riley/dp/0452285186/ref=sr_1_7?ie=UTF8&qid=1296821178&sr=8-7-spell

Would love to chat, but I have the day off, and am going to go kill shit with semi automaic weapons to sell for it's fur.

Fri, 02/04/2011 - 07:55 | Link to Comment topcallingtroll
topcallingtroll's picture

OMG are you serious? This is how traders roll.

Fri, 02/04/2011 - 06:43 | Link to Comment fredquimby
fredquimby's picture

The ECB "made" 33 billion Euros from their 31 Oct MtoM to their 31st December MtoM of the Euro gold reserves.

33 BILLION!!

And the Euro is backed 30% by gold.

My bet is on the Euro as it was designed by people who KNEW the dollar was on the way down...

Fri, 02/04/2011 - 05:23 | Link to Comment Djirk
Djirk's picture

Ben is going to get pressure internationally and from the US. People are not stupid, they believe their bank account and purchasing power, not the GDP fiction.

Not to mention some political pressures from the outside world. people starving due to yield chasing and putting a floor on overleveraged housing?

Budget cut time

Fri, 02/04/2011 - 04:47 | Link to Comment hero HNL
hero HNL's picture

My bet is USD will be finished faster than the euro...nothing scientific though.

 

hero

Fri, 02/04/2011 - 05:59 | Link to Comment 4xaddict
4xaddict's picture

Given the US has been lending money to Europe to stop it collapsing I'd say the US will be reposessing the Eiffel Tower, Leaning Tower of Pisa and the Colosseum before the USD collapses.

Just an observation.

Fri, 02/04/2011 - 07:17 | Link to Comment kaiten
kaiten's picture

You weren´t lending money to Europe, you lent money to some european banks, and they repaid most of the loans. You may still have wet dreams, though.

Fri, 02/04/2011 - 03:08 | Link to Comment Jasper M
Jasper M's picture

My money is on a rally, a strong one. 

The euro is toast, read Reggie's stuff, it's done. And No One will be running into Euros when the next geopolitical shock hits. 

At this point, betting on a soft $US means counting on both 1) peace on Earth, good will towards men (and best of luck there), & 2) Bernanke being allowed to have his foul way with our currency, without any objection. WkiLeaks and the Tunisians appear to have put paid to #1, and I think we can count on Ron Paul, and Bernanke's own manifest failure (seriously, can no one read a chart anymore?) to lead a movement to prevent #2. 

I know it is the height of fashion here to refer to the average joe as "sheeple", and state categorically that the ruinous status quo will be maintained indefinitely, no matter what damage is done. But history does not support that premise. It's Not "different this time". Really, it's the same. 

And, at the risk of seeming petty, I will remind the doctrinaire ZHers to note that WTI, silver, and yes even gold (a good day, but still miles off the recent high) have abyssmally failed to confirm their expectations. In a true inflation, money supply would be moving fast enough to lift all assets. Seems to me its lifting a few, but only at the expense of dropping others (mostly housing and debt instruments).    

Fri, 02/04/2011 - 08:03 | Link to Comment ColonelCooper
ColonelCooper's picture

Agree with Dollar coming out on top of Euro.  Will not matter much as it will collapse on top of Euro shortly thereafter.  At least we get to say we won though, right?

Things are NOT the same, because we have fired up a printing press, thrown a cement block on the gas pedal, and walked away.  Your "true inflation" is just getting rolling.  We are NOT going to stop printing; at least not for more than a week.

I often wonder why the PM markets are the only ones who aren't allowed corrections.

Let's have the exact same conversation a year from today. (If our government still allows us the priveledge of internet.)  We'll see if either of us feels differently about anything.  Good luck to you.

Fri, 02/04/2011 - 05:29 | Link to Comment bigkahuna
bigkahuna's picture

Have US gov't deficits ever been monetized the way they have been recently? I am not sure that you are correct when you say that things are the same.

Gold and silver have been on a 10 or 11 year tear. The weak hand might say that they have failed to confirm.

I guess we'll all see though right?

Fri, 02/04/2011 - 02:19 | Link to Comment zebra
zebra's picture

get to 79 is dead cat bounce imho

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