Good read......input appreciated! Wild times,eh?
Take a look at what’s happening around the world …
Washington is dead broke, drowning in $136 trillion of debt and unwilling to make meaningful spending cuts. But even if they were willing to make cuts, they simply could not make enough cuts to get out from under the crushing debt load, not to mention the interest on the debt. As a result …
Our Federal Reserve is printing a tsunami of dollars to try and patch together everything … to support current spending … to try and support our bond markets so they don’t collapse … and to inflate away our debt problems. Meanwhile …
Most U.S. states are dead broke. But unlike Washington, they can’t print money; they must slash spending.
Tens of millions of municipal and state workers will lose benefits, retirement incomes, their jobs. Basic services such as fire, police, medical, waste removal, and more will suffer.
All of this will also hit consumer confidence again, put another round of pressure on the housing market, slam consumers’ wallets and purses shut, and hit the economy.
Europe, Ireland, Greece, Portugal, Spain, and Italy, are all effectively bankrupt. So many of the same forces are already unfolding there. Spending cuts in broken countries, protests, shut downs of basic services, and more.
Plus, the European Central Bank, though more conservative than the Federal Reserve, has also shown its willingness to print trillions of paper euros to try and stave off a crisis.
In the Middle East, populist uprisings are ugly, violent, and threatening to disrupt the world’s crude oil supplies. In the long run, the despotic governments that are being overthrown are a good thing, in my opinion.
But in the short run, there’s no denying it could put serious crimps in the world’s crude oil supplies.
And now there’s Japan …
Facing the costliest natural disaster in history, an estimated $200 billion to rebuild, Japan is already hugely indebted from trying to spend its way out of almost two lost decades of economic quicksand.
All of the above are enough to make the hair on the back of anyone’s neck stand on end. That’s for sure.
But when combined, as they are now, I see — more clearly than ever before — that …
The Dollar’s Doomsday Is Here Now
The fact of the matter is, the government of Japan doesn’t have the money on tap to rebuild its economy. The Japanese people do, they have huge savings.
But those savings have largely been recycled into, guess what? The U.S. dollar, via the Bank of Japan’s (BOJ) purchases of U.S. Treasuries.
The BOJ, our country’s second largest creditor after China, holds nearly $886 billion of U.S. Treasuries.
Here’s the thing: In 1995 when the Kobe Earthquake hit Japan, the BOJ sold 13% of its treasury holdings, cashing in $30 billion in needed cash to rebuild.
If they were to cash in 13% of their holdings now, that would be more than $115 billion of Treasuries they would have to sell.
Big question: Who’s going to buy the U.S. Treasuries Japan will need to sell?!
China? Heck no. China’s been selling U.S. Treasuries too. For three consecutive months Beijing has been dumping our much-loved, ultra-safe Treasury notes and bonds. China dumped more than $5.4 billion in January, $34.2 billion in December, and a net $11.2 billion in November. It’s getting out of U.S. Treasuries as quickly as it can.
So will Europe buy U.S. Treasuries back from Japan? Doubtful. Europe has its own massive problems.
How about Russia, or Brazil? Also doubtful. Both countries have been very vocal about Washington’s fiscal irresponsibility and have also been calling for an end to the dollar’s role as the world’s reserve currency.
And even if they were willing to help Japan cash out some of its U.S. treasury holdings, it simply would not be enough.
I also doubt Canada, Australia, or any other country out there has the means, the wherewithal, or the desire to redeem U.S. Treasuries for Japan.
That leaves one, and only one, logical buyer: Our own Federal Reserve!
Yes, I believe the Fed will be forced to print even more money, to buy back bonds from Japan.
In fact, I think it’s already happening.
You can see it in the action in the U.S. dollar.
The greenback, normally a safe haven in times of crises like we have today, is sitting on the edge of a cliff.
Consider this updated long-term weekly chart of the Dollar Index. Notice a few things about this chart …
FIRST, the dollar has lost a devastating 40.9% since its high of July 2001. A major bear market by any measure.
SECOND, there’s been virtually no meaningful rallies in the dollar in the last 10 years. Each and every rally attempt failed miserably. Especially the rallies in 2008/2009 and 2010.
THIRD, you don’t even need to be a master technical analyst to note that the dollar has been unable to breach even the simplest of overhead resistance on the charts, noted by the red horizontal lines.
FOURTH, and most importantly, the dollar is now making its fifth attempt at piercing through to new record lows.
Notice the four attempts to make new lows, and the current slide in the dollar which is approaching the bottom, yet again.
I can tell you this, unequivocally: Each time a market attempts to break a level by probing it, the odds of that level giving way increase. Eventually (usually around the fifth effort), the support level gives way and the floor collapses.
Think of it this way. Imagine trying to break down a locked wooden door. You slam your body against it, it gives way a tad. You slam the door again, it gives way a tad more and even creaks. You slam it a third time, and it starts to give. A fourth time, and it gives more.
Then, on the fifth attempt, you slam into the door again … and it busts wide open.
Markets work much the same way when it comes to key support and resistance levels. The more they are tested (hit), the greater the likelihood they give way.
When they do give way, the existing trend reasserts itself with renewed vigor.
I HAVE ABSOLUTELY NO DOUBT THAT THE U.S DOLLAR IS NOW WITHIN A HAIR OF COLLAPSING TO NEW RECORD LOWS.
I HAVE ABSOLUTELY NO DOUBT THE DOLLAR WILL LOSE ITS WORLD RESERVE STATUS AND THAT A NEW MONETARY SYSTEM WILL BE NEEDED.
As soon as the dollar breaks the bottom level that you see on that chart, the dollar doomsday will be here.
One last thing I want to point out to you: Japan’s earthquake is in many ways similar to the San Francisco quake of 1906. Back then, San Francisco was literally destroyed, in the worst natural disaster to hit the U.S.
And back then, much of the nation’s capital was repatriated to the West coast to provide liquidity and resources to rescue the city and to rebuild.
The flight of capital from the East coast of the U.S. to the West coast set off what is now called the “Panic of 1907” ― massive liquidation of assets of all kinds, to provide liquidity and resources for the monetary system to handle the Frisco quake.
Virtually every traded asset plunged as much as 50%, in the worst panic that ever hit the U.S. markets. Even worse than 1929.
The Japan quake is the same type of event, causing massive shifts in capital flows, but on an international basis.
Given that my systems have given me sell signals across the board in gold, silver, oil and the broad stock markets ― I would not be surprised to see “The Panic Of 2011” unfold, any minute.
It is also why I have urged all my readers to exercise extreme caution in all markets, and even hedge core gold holdings.
Yes, long term, gold, silver, oil and all other tangible assets are heading much, much higher. As is inflation.
But that time is not here yet, even if the dollar begins its collapse now.
Hard to understand, sure. It defies logic. But markets are not logical at times. Beware of massive liquidation in the weeks ahead.
Take a look at what’s happening around the world …
Tens of millions of municipal and state workers will lose benefits, retirement incomes, their jobs. Basic services such as fire, police, medical, waste removal, and more will suffer.
All of this will also hit consumer confidence again, put another round of pressure on the housing market, slam consumers’ wallets and purses shut, and hit the economy.
Plus, the European Central Bank, though more conservative than the Federal Reserve, has also shown its willingness to print trillions of paper euros to try and stave off a crisis.
But in the short run, there’s no denying it could put serious crimps in the world’s crude oil supplies.
And now there’s Japan …
All of the above are enough to make the hair on the back of anyone’s neck stand on end. That’s for sure.
But when combined, as they are now, I see — more clearly than ever before — that …
The Dollar’s Doomsday Is Here Now
The fact of the matter is, the government of Japan doesn’t have the money on tap to rebuild its economy. The Japanese people do, they have huge savings.
But those savings have largely been recycled into, guess what? The U.S. dollar, via the Bank of Japan’s (BOJ) purchases of U.S. Treasuries.
The BOJ, our country’s second largest creditor after China, holds nearly $886 billion of U.S. Treasuries.
Here’s the thing: In 1995 when the Kobe Earthquake hit Japan, the BOJ sold 13% of its treasury holdings, cashing in $30 billion in needed cash to rebuild.
If they were to cash in 13% of their holdings now, that would be more than $115 billion of Treasuries they would have to sell.
Big question: Who’s going to buy the U.S. Treasuries Japan will need to sell?!
China? Heck no. China’s been selling U.S. Treasuries too. For three consecutive months Beijing has been dumping our much-loved, ultra-safe Treasury notes and bonds. China dumped more than $5.4 billion in January, $34.2 billion in December, and a net $11.2 billion in November. It’s getting out of U.S. Treasuries as quickly as it can.
So will Europe buy U.S. Treasuries back from Japan? Doubtful. Europe has its own massive problems.
How about Russia, or Brazil? Also doubtful. Both countries have been very vocal about Washington’s fiscal irresponsibility and have also been calling for an end to the dollar’s role as the world’s reserve currency.
And even if they were willing to help Japan cash out some of its U.S. treasury holdings, it simply would not be enough.
I also doubt Canada, Australia, or any other country out there has the means, the wherewithal, or the desire to redeem U.S. Treasuries for Japan.
That leaves one, and only one, logical buyer: Our own Federal Reserve!
Yes, I believe the Fed will be forced to print even more money, to buy back bonds from Japan.
In fact, I think it’s already happening.
You can see it in the action in the U.S. dollar.
The greenback, normally a safe haven in times of crises like we have today, is sitting on the edge of a cliff.
Consider this updated long-term weekly chart of the Dollar Index. Notice a few things about this chart …
FIRST, the dollar has lost a devastating 40.9% since its high of July 2001. A major bear market by any measure.
SECOND, there’s been virtually no meaningful rallies in the dollar in the last 10 years. Each and every rally attempt failed miserably. Especially the rallies in 2008/2009 and 2010.
THIRD, you don’t even need to be a master technical analyst to note that the dollar has been unable to breach even the simplest of overhead resistance on the charts, noted by the red horizontal lines.
FOURTH, and most importantly, the dollar is now making its fifth attempt at piercing through to new record lows.
Notice the four attempts to make new lows, and the current slide in the dollar which is approaching the bottom, yet again.
I can tell you this, unequivocally: Each time a market attempts to break a level by probing it, the odds of that level giving way increase. Eventually (usually around the fifth effort), the support level gives way and the floor collapses.
Think of it this way. Imagine trying to break down a locked wooden door. You slam your body against it, it gives way a tad. You slam the door again, it gives way a tad more and even creaks. You slam it a third time, and it starts to give. A fourth time, and it gives more.
Then, on the fifth attempt, you slam into the door again … and it busts wide open.
Markets work much the same way when it comes to key support and resistance levels. The more they are tested (hit), the greater the likelihood they give way.
When they do give way, the existing trend reasserts itself with renewed vigor.
I HAVE ABSOLUTELY NO DOUBT THAT THE U.S DOLLAR IS NOW WITHIN A HAIR OF COLLAPSING TO NEW RECORD LOWS.
I HAVE ABSOLUTELY NO DOUBT THE DOLLAR WILL LOSE ITS WORLD RESERVE STATUS AND THAT A NEW MONETARY SYSTEM WILL BE NEEDED.
As soon as the dollar breaks the bottom level that you see on that chart, the dollar doomsday will be here.
One last thing I want to point out to you: Japan’s earthquake is in many ways similar to the San Francisco quake of 1906. Back then, San Francisco was literally destroyed, in the worst natural disaster to hit the U.S.
And back then, much of the nation’s capital was repatriated to the West coast to provide liquidity and resources to rescue the city and to rebuild.
The flight of capital from the East coast of the U.S. to the West coast set off what is now called the “Panic of 1907” ― massive liquidation of assets of all kinds, to provide liquidity and resources for the monetary system to handle the Frisco quake.
Virtually every traded asset plunged as much as 50%, in the worst panic that ever hit the U.S. markets. Even worse than 1929.
The Japan quake is the same type of event, causing massive shifts in capital flows, but on an international basis.
Given that my systems have given me sell signals across the board in gold, silver, oil and the broad stock markets ― I would not be surprised to see “The Panic Of 2011” unfold, any minute.
It is also why I have urged all my readers to exercise extreme caution in all markets, and even hedge core gold holdings.
Yes, long term, gold, silver, oil and all other tangible assets are heading much, much higher. As is inflation.
But that time is not here yet, even if the dollar begins its collapse now.
Hard to understand, sure. It defies logic. But markets are not logical at times. Beware of massive liquidation in the weeks ahead.
