How far it will go will probably depend on what Bernanke says tomorrow. I have come to the conclusion that he will say QE2 will end as scheduled at the end of June and that they will reinvest expiring treasuries to prevent a "hard landing". This would still be a pretty hard landing and I would expect precious metals, commodities of all kinds and the stock market to drop late tomorrow. The greater risk is that the next treasury auction will be a bust and yields will rise sharply followed by interest rates, forcing QE3.
So the question is, whether a rising dollar in the short term is enough to force a big correction in precious metals. There are times where the two are decoupled. My gut feeling is that Silver could go down to as low as 40, form a new base and head up past 60 on the next run, no matter what the dollar is doing in the short term.
Any idiot knows the dollar is doomed in the intermediate and long term.
On the otherhand, to minimize the risk of a hard landing, Bernanke could announce a continuation and tapering off of treasury purchases. After June's 100 million, July would drop to 90, August to 80, September to 70, etc. until we are down to the 16.7 billion reinvestment threshold.
If that happens, the precious metals correction ends tomorrow afternoon, commodities rise, the dollar drops and the stock market goes parabolic.
So what do you all think it will be?
No matter the news or the tone of bernaks speech tomorrow i'm expecting a slight drop. if dd has been done on this stock (slw) - as a long term investor you know all you need to know.
this has been an adequate pull-back and trying to catch the exact bottom is - not possible. I bought my last today at 39.15 - and will not add again - no matter the direction.
the momentum that we will have after 5/09 should be unreal to the upside - just as this mysterious shake out has been on the downside.
Its when things look good that one has to worry. On Dec 2007 I remember there was all this talk about the fantastic bonuses they were giving out on Wall Street. It scared me so much. In the summer of 73 they cut the hrs on the NYSE. No trading. That was a good sign.
Being a contrarian is good. Except when it is not. Lost quite a bit on small regional banks (many went under).
Never take any advice seriously. Even so - things are looking good. 70% think country on the wrong track. This is vital - because it lets the market continue ever higher.
'Any idiot knows the dollar is doomed in the intermediate and long term'.
If any idiot knows then one can do one of two things -
.Do nothing (one of the two possible things to do)
.Buy airlines, reverse etfs (oil, gold, silver, commodities).
SLW is by the way how one expects a good stock to act. It should lose money for everybody including those who were 'right'.
I don't care what he does. The damage has been done. We as a nation are on the hook. One way or another it all has to be paid back. All Ben's dollars and all Ben's men will not put America back together again.
The only currency as far as I'm concerned is hard assets. I would rather own a mine than a bank. SLW is the ultimate silver bank, with no currency risk to boot!
What I think is, you have a pretty good understanding of some of the possibilities.
Remember this; They have many more tools than the average person thinks. We do not know which tools and what strategy they will use but after a few days it will become clearer.
Longer term, no question in my mind. None
Short term, it's a bet. It's a trade.