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This WILL Happen!
By Chris at www.CapitalistExploits.at
All pegs break!

Capital flows have shifted. They are heading from the periphery back to the core. It's a rotten core but it's the only core we have. That core for the time being is the greenback. It is happening in fits and starts but across almost every currency cross you care to track.
Going back to late last year the tell tale signs of volatility levels at extreme lows, coupled with on the ground reports of slowing capacity made for interesting investigation. It was as if market participants – all of them – had been slipped a tab of acid. Everything was linear and risk was nowhere to be seen. I remember it vividly from the conversations I was having with Brad (Brad will also be joining us at our upcoming Seraph New Zealand Meet Up). It was on the 2nd of October last year that he said this:
Expressing bearish views on the Singapore dollar is a great way to position for rising rates in the US and any crisis that is likely to materialize from rising rates. The preference is to express the view via long term call options on the USD/SGD.
At that time we recommended to buy September 2015, 1.30 SGD strike USD/SGD call options at $0.0148. The current price is $0.0645 which equals to 336% return.

USD/SGD spot (red arrow illustrates the timing of our trade call)
Then on the 2nd of December we went short the renminbi. We detailed all the reasons why here and below is the chart:

USD/CNH spot (red arrow illustrates the timing of our trade call)
While we believe we're heading into a sustained US dollar bull market the real profit potential lies in the pegged currencies.
When you peg a currency what you're doing is effectively underwriting risk. The central bank is drawing a line in the sand. They're saying, "You can't cross this line because we'll hold this line." Traders can bet all they like with this underwriting. They can leverage and arbitrage opportunities across economies. The problem comes when capital moves against the peg. It becomes overwhelming and the peg collapses.
Let's now take a brief look at past experiences with pegs.

EUR/CHF spot

USD/ARS spot

USD/IDR spot

USD/KRW spot

USD/THB spot
When you get married it costs money. And when you get divorced I've heard it costs a whole lot more.
When a currency peg is put in place it costs money. When it comes undone it costs a whole lot more. The marriage has been consummated but the relationship is untenable. Now we await the very expensive divorce. All pegs break and we're heading into a period of increased volatility. Volatility is rarely good for currency pegs. Money will be made...
- Chris
"Everything has to come to an end, sometime." - L. Frank Baum, The Marvelous Land of Oz
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RIP HKD?
I think not. The HKD will, almost automatically, morph into a currency linked to gold-backed trading certificates before this year is out. Will it first de-peg? To avoid excessive volitility and potential chaos, I actually think they may skip that step entirely. The Chinese are not going to be caught off guard by the shenanagins of the neocon/neoliberal elite. In fact, it's obvious that most of the governing world outside of the Anglo Western Empire has a clear understanding of what's going on, and are quickly constructing an alternative trading platform beyond the overreach of meddling US financial powers. I recommend that one cease thinking in terms of the trading principles in use for the last hundred years...
Anybody who can read a DX chart can tell that the dollar has been appreciating. And it's no stretch to imagine that a rising dollar may be stressing currencies that are pegged to it. But to conclude that someone who can make these kind of general observations is therefore qualified to spot entries on your behalf, so that you too can profit from peg collapses, is, to say the least, unwarranted.
Crowing about a couple of successful trades (only two?) begs more questions than it proves. Like, what were the specific critera for those specific entries? (If you told me, would you have to kill me?) And what about your losing trades? How many of those were there?
Following this caliber of advice is exactly why retail traders enjoy a reputation among professionals as LOSERS.
"On a long enough timeline..."
Off Topic: Sam Houston Andrew 111, founding member and lead guitarist of Big Brother & The Holding Company died in San Rafael, California on February 12th, 2015.
To see him and Janis Joplin perform was for me, the purest music experience I ever had.
Not a peep in the MSM.
RIP 'bro.
Many years ago, I worked for awhile as a blackjack dealer. I don't know how many tens of thousands of hands I slipped out of the shoe, but I can tell you that pattern recognition for the numbers becomes a sixth sense. More importantly, it impresses upon one the utter folly of gambling.
So here we all are, looking around the table, and the cards are telling us of an imminent waterfall decline in the relative evaluation of the euro. Whether this event will ultimately morph the euro into some kind of thinly disguised deutchmark, or simply evaporates, like the Soviet Union, before our very eyes, I do not know. But what I do know is, that the process will ignite a trajectory for the dollar that will momentarily push it to the moon, detonating every peg along the way while it simultaneously severs any meaningful functionality to the whole as a global reserve currency. The dollar itself will then sputter, hover very briefly, and then drop like a rock.
So, deflation followed by hyper-inflation...
Deflation, in this instance, is symptomatic of the hyperinflation already, by definition, in progress (just look at the growth in the Fed's balance sheet) which quietly began at the top (the "trickle down" theory of economics, wherein they piss down your neck with "QE" and call it a stimulating rain), which circulates among the elite as massive new "wealth," but then bursts through all suppressive controls and cascades onto the public domain as a source of massive new poverty.
..... followed by revaluation. (Prepare for THAT!)
And as a reply to pull my finger, to time the top of the strong "to the moon" USD , and convert that into gold/silver will be the ultimate trick. Then watch as the USD re-enters the atmosphere and burns up while you hold real assets....
Agreed. If there were not so many other factors at play, such an impeccable call would indeed be the ultimate trick. Unfortunately --as I learned early on-- the process involved is accompanied by, and an expression of, an accelerating chaos of events. For example, it's not entirely impossible for the supply of physical metals to dry up entirely, just prior to the top you refer to. In fact, I think it likely. Consequently, I cashed in my chips for bullion at the first sign of trouble some time ago. There'll be far more opportunities for gain in the aftermath... You can bet on it.
So just stay long US refineries then?
PEIX went through the roof on Cali shortage rumors due to the Exxon fire.
I'd personally be looking at the other issues (like the groundwater supplies).
the dollar may be the last to fall
butt I say,
contagion will get us all...
;-D
"When you get married it costs money. And when you get divorced I've heard it costs a whole lot more."
that is some good observation right there.
The Second Law Of Thermodynamics states (in highly technical mathematical terms) that everything MUST go from the complex, to the simple, state of existence. 'Eggheads' like to nickname this trend 'Entropy'.
As far as YOUR personal situation, 'zeropain'; there is NO SUCH THING as 'FREE PUSSY'. Your daddy should have taught you this law (which has nothing to do with the higher laws like 'Thermodynamics', which describe the process whereby heat energy is transformed into mechanical functions {'WORK'}).
You and I are living, and learning. Perhaps 'Capitalist Exploits' is learning as well.
Live, and learn!
https://www.youtube.com/watch?v=iHmiaIFjk9w
https://www.youtube.com/watch?v=ZVCXw1xJFJ4
NO SHIT, 'Sherlock'. This WILL happen.
(The first link is a bad-ass song, and the second link refers to a video that was released using this bad-ass song)
The Second Law Of Thermodynamics states (in highly technical mathematical terms) that everything MUST go from the complex, to the simple, state of existence. 'Eggheads' like to nickname this trend 'Entropy'.
LMAO. As systems increase in entropy they progress from the Simple to the Complex, from a state of order, to a state of disorder (also known as chaos), from a state of functionality to a state of dysfunctionality
This is UNIVERSAL. It crosses all disciplines of observation.
You might try reading this...BEFORE DEMONSTRATING YOUR LACK OF KNOWLEDGE regarding enthalpy/entropy.
As entropy increases with the arrow of time in any adiabatic system...
http://en.wikipedia.org/wiki/Entropy_(order_and_disorder)
To highlight the fact that order and disorder are commonly understood to be measured in terms of entropy, below are current science encyclopedia and science dictionary definitions of entropy:
Ok smarty pants. I pay my man 5k a month for the privilege of sleeping with him as well as enjoying his carnal delights so what does that make me? ( Besided an incredibly stupid dumb blond). For your information, the First Law is violated daily as well. Plenty of damn energy being created between those sheets! ;-)
Miffed;-)
"incredibly stupid dumb blond"
Is that a double negative? Does that mean you're actually brilliant? Stop playing us with your mind games!
I'd say that makes you a great partner ;-)
He's a lucky man.
Miffed,
Still doesn't violate the First Law, all that energy dissipates as CO2 in the breath, plus sweat, plus body heat. Gone into the universe never to be recaptured.
Entropy to a chemical engineer is the RISE in the UNAVAILABILITY of energy, to a physicist, it's simply the rise in randomness, actually identical concepts that manifest themselves slightly differently.
So what if the USD crashed and burned because everyone goes long my luck it goes short
The USD is one of the most valuable substances known to man by weight, more valuable than its weight in gold by over 2x.
The dollar is going exponentially higher VS other currencies as all other currencies are on their way to zero and the Dollar Reich will last another 1000 years.
There is one thing you should be buying in 2015 and that is USD, sell gold, sell silver, sell copper, sell palladium, sell platinum, sell oil, sell gas, sell softs, sell stocks, sell bonds, sell your house, sell your car, sell your kids and buy the fucking USD because this train is just leaving the station.
What happened with the Swiss Franc does not happen often.
In this rigged casino, risk assessment is impossible and changes every minute.
Stay single guys and avoid both costs.
...by the way, good start on a blog, but don't you think five years between entries is a little long?? : )
The Hong Kong dollar is one of the next likely candidates. I'm not married to it, but it looks like she might blow any time now.
This blog is a great overview of the debt based monetary system ponzi. It starts off a bit slow with the goldsmith bankers but lays some good ground work that is used later in the first post. The bitcoin stuff gets a bit out there but still interesting. I hope the blogger continues to post http://debtcrash.blogspot.com/
I've posted this a few times and appologise for the redundancy but I was impressed with how the main post was laid out. Perfect for someone who is new to these concepts.
Not badly written. Your enthusiasm is understandable. But if one's eyes are just opening up, there is an overwheming volume of mandatory reading to do. In that event, a far more efficient introductory tool is the online movie, Zeitgeist Addendum. For the sake of brevity, I recommend that one simply move the cursor up to the 4 minute, 20 second mark and watch the next fifteen to twenty minutes.