$$ is the cream of the crap. Gold and silver suffer, but only as knee jerk reaction, as, all paper sucks eventually.
In the meantime get on the right side of the trade, he sez.
The dollar has a real chance of being caught in a classic short squeeze caused by deleveraging. There is SO much dollar denominated debt out there (horrific if derivatives are considered). The notion that the Fed is printing money when they buy all the MBSs and Treasuries is currently wrong - they are creating even more debt.
Eventually (and eventually could be sooner than we realize)the government will be forced to start creating true fiat money, as opposed to debt based money. When that happens it will be the beginning of true hyperinflation. But until then, this is a very dangerous time.
I do not currently own SLW...but I have a shipment of physical silver headed my way as I type. So I'm I 'true believer'. But my felt intuition is that we are close to another serious downleg in the market as folks scramble for dollars to satisfy debts that just can't be rolled over at this time.
I may buy back my January 16's and 15's and substitute Feb 14's sold against into next week, if I can get a placement going. I already have 15's and 16's sold for Feb. Or I may lighten up 1/2 my position.
Gotta see the rest of the week.
Monday'd be a good day to start.
I'm saying Faber sez, pop in the dollar before the drop, because so many piled onto the dollar weakness, there's no one left on the contrarian side.
With no one left who ISN'T shorting the dollar, deadmeat sez that's enough skitterish folks in that population than a rebound in the dollar will send the dollar skyrocketing as that crowd covers. Above 80 or so you've a dollar run back to mid nineties before the cattle halt.
That's a momo play that kills everything 15%, UNLESS Faber is also right and the world decouples from it currency dependency on dollars and suddenly thinks more of them means increased world prosperity. That's NOT the way the world has gone, so Faber is blowing up your skirt on that issue.
Bottom line: A reflex bullinabear (with respect to the dollar) is ticking away like dynamite as the US is made to look like its recovering in govt bogus GDP and housing statistics nobody right now seems to be minding revising downward.
That's a cliff of worry imho for specie, commodities near term. Long term specie wins, but short term is a trial.
Biggs, Faber Predict Dollar Rally as S&P 500 Extends 67% Surge By Nikolaj Gammeltoft
Dec. 29 (Bloomberg) -- Barton Biggs and Marc Faber, who recommended buying stocks in March when investors were dumping them, are again united as they predict gains for U.S. equities and the dollar.
Shares in the largest equity market and the U.S. currency may add 10 percent as economies improve around the world, Biggs of New York-based hedge-fund firm Traxis Partners LP said yesterday. Faber told Bloomberg TV that the dollar may rise 5-10% against the euro while stocks gain, reversing the inverse relationship that existed between March and November.
Biggs and Faber’s advice 9 months ago proved profitable. Standard & Poor’s 500 Index surged 67 percent in the biggest rally since the 1930s. They saw a buying op as investors speculating the financial crisis would cause a depression drove stock valuations to the cheapest level since 1986. Now, Biggs and Faber see gains as the economic recovery accelerates and investors shift money from Treasuries.
“History would suggest that after such a severe economic shock odds are that we’re going to have a pretty good burst of growth 2010, 2011,” Biggs said. “I don’t see any reason why we can’t have a further rally in the dollar and a further rally in stocks on the order of 10 percent.”
U.S. gross domestic product will increase 2.6 percent next year after contracting 2.5 percent in 2009, according to the median economist forecast in a Bloomberg survey. GDP will expand 3.5 the most since 2004, as spending increases and companies boost investment said London-based Barclays Plc’s Dean Maki, the most-accurate forecaster.
Equities started rebounding after a 23-year low of 11.9 times earnings at S&P 500 companies March 9, according to Robert Shiller, who adjusts valuations for inflation and uses a decade of profit to smooth out short-term fluctuations. Shiller’s earnings multiple has surged to 20.3, matching the level before New York-based Lehman Brothers Holdings Inc. collapsed in September 2008, after U.S. government lent, spent or guaranteed more than $11 trillion to end the recession.
That rally in stocks was accompanied by a 17 percent retreat in the Dollar Index between March 5 and Nov. 25, the biggest slump since 1986.
Stocks, Dollar Rise
The S&P 500 has added 1.5 percent since Nov. 25 while the Dollar Index advanced 4.7 percent. Biggs said in a Bloomberg interview on Feb. 18 that the S&P 500 was poised to rise because economic indicators were starting to improve, reiterated his optimism in the March issue of Newsweek. His bullish bets are giving his six-year-old firm its best returns ever. Faber advised investors to buy U.S. stocks on March 9 when the S&P 500 was at a 12-year low.
Stocks may rise as Federal Reserve Chairman Ben S. Bernanke is forced to inject more liquidity into the financial system, spurring inflation that prompts investors to shift assets to equities from Treasuries and cash, Hong Kong-based Faber said. The yield on Treasury 10-year notes has increased 0.64 percentage point this month to 3.84 percent, approaching the seven-month high of 3.95 percent reached in June. The 100 largest taxable U.S. funds returned an annualized 0.06 percent during the past week, according to data compiled by Westborough, Massachusetts-based Crane Data LLC.
“The worst investment will be U.S. Treasuries and cash, which has no return at present,” Faber said. “That money will shift into other assets, and this is the one reason that I am moderately positive about equities.”
Who cares what Faber says? They are losing a grip on things. A bet on paper is a fools game. A fake safe-haven. Maybe for daytraders to be able to flip flop and guess, but let me tell you that Gold will not be fooled.
INVEST IN GOLD AND SILVER RELATED ASSETS ONLY(any lower prices are gifts and should be bought)
His argument is S and P wins on the long side versus emerging markets, in the 2010 time frame, US Treasuries and cash will shift into risk assets BECAUSE Bernanke has to print money to take place of Chinese investments in T Bills.
Short term dollar strengthens for near term, Euro had short term breakout end of Nov which must retract 5-10% as US is "staged" (literally fabricated) to "come out" of the recession. All of this is eventually gold and silver friendly, but is something to "do" while those assets slide sideways next year. (I prefer selling covered calls myself).
The LONG play is assets that appreciate where dollars are printed, namely specie, but the NEAR play is concentrated on the boomeranging dollar off its lows against other currencies, in its position as cream of the crap.
The secret for those whose portfolios contain something other than commodities, gold and silver, is hanging onto 2009 gains without going to cash. If the dollar improves short term, then specie at best goes sideways at best. His is a play that capitalizes on what to do with the rest of your diversified (confused) portfolio that is not gold, silver, or mining stocks.
Hard to believe, some folks own other things besides GG/SLW/CDE/HL.
Wonders never cease.