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Euro At Par With The US Dollar? Posted: May 14 2010 By: Jim Sinclair Post Edited: May 14, 2010 at 12:21 pm
Filed under: Jim's Mailbox
Dear Friends,
Some commentators are talking a euro at par to the dollar. I assure you that would be the end of the union and the beginning of the attack on the dollar that is certain to come.
If you have the emergence of national European currencies as a result of the failure of the union, the mirror image strength of the dollar would instantaneously disappear. Credit default swaps would turn their vengeance on the dollar. The Drachma would be incinerated. The Swiss and DM would be the stronger units.
If the EU fails so does the USDX. With no mirror image to hold up the dollar artificially, the US dollar will fall faster than Greece’s credit.
Dear Jim,
You said that if the European Union breaks up there will be no USDX index to mirror image the euro.
I don’t understand.
Regards, CIGA Arlen
Dear Arlen,
The USDX would be around, but no longer reactive to the euro. The euro would be replaced with the original currencies of member states in various percentages as a synthetic euro, but the demise of the euro in the USDX would be complete. Further shorting would not be met with the same reward.
The attack of the US dollar would commence immediately.
Respectfully, Jim





Dow Jones Versus Gold: The Fight For Real Value Posted: May 14 2010 By: Dan Norcini Post Edited: May 14, 2010 at 2:40 am
Filed under: Trader Dan Norcini
Dear Friends,
I thought it might be a good time for an examination of the Dow Jones Industrials over the last ten+ years in comparison to gold given the fact that the stock market has seemingly recovered all of its losses incurred since last week’s 1000 point intraday plunge.
While it may give the financial press something to cheer about, the sad truth that is lost on a good portion of the investing public is that the gains in the Dow are ephemeral at best; illusory is a more apt description.
Over the last decade the Dow has made an all time high in 2007. Sounds good but upon closer examination we can see that when compared to gold, a store of value, that same year it had already lost half of its value in REAL terms since 1999.
The current ratio is closer to 8.7, a loss of 60% or so within the last three years alone. The peak reached eleven years ago was nearly 45. That totals a staggering loss in REAL TERMS of 80% in eleven years..
Another way of saying this is that a rising gold price is basically the same thing as a loss of purchasing power in the currency in which gold is priced. Gold is not so much rising as the Dollar is losing value. For that matter, nearly all of the fiat world currencies are losing value against gold.
What this means is that while investors may be cheering the fact that the Dow is going higher (or it was until last week), those gains are not compensating them for the debauchery of the native currency. In REAL TERMS, stock market gains over the last decade, when compared to gold, have been as enduring as the morning mist.
This is why gold will never lose its allure. It truly is a store of value during times of economic and political uncertainty. Europe in particular is rediscovering this truth and it will be just a matter of time before the larger investing public here in the US does also.
Click chart to enlarge in PDF format






In The News Today Posted: May 13 2010 By: Jim Sinclair Post Edited: May 13, 2010 at 8:58 pm
Filed under: In The News
Thoughts For The Day
Gold traders today asked if the price should follow the general commodities lower or perform as the only vehicle in a major currency crisis that offers true safety moving higher. Gold will opt on this question to perform as a currency as that is what gold is inherently.
With the euro now below $1.26, $1.2150 to $1.2250 is now in the cross hairs of the shorts.
How deep do you think the entire Western world problems are when a trillion dollars of shock and awe publicly falls flat on its ass? The answer is incalculable and beyond reprieve.
Some commentators are talking a euro at par to the dollar. I assure you that would be the end of the union and the beginning of the attack on the dollar that is certain to come.
If you have the emergence of national European currencies as a result of the failure of the union, the mirror image strength of the dollar would instantaneously disappear. Credit Default Swaps would turn its vengeance on the dollar. The Drachma would be incinerated. The Swiss and DM would be the stronger units.
If the EU fails so does the USDX. With no mirror image to hold up the dollar artificially the US dollar will fall faster than Greece’s credit.
Financial TV had an interesting interview that rated the chance of so many investment bankers having a perfect quarter with no loss day as one in a few billion. This proves that the audacity of these people is beyond the beyond. That type of trading record is simply impossible unless you are cheating. When it speaks of 100 million dollar profit days you have to be stealing big time.





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"A graduation ceremony is an event where the commencement speaker tells thousands of students dressed in identical caps and gowns that 'individuality' is the key to success." -

Robert Orben

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.