Why Dollar Strength Suggests Upcoming Turbulence

dollar surge

A little over 3 years ago, some swanky EU supermodels were refusing payment in the US Dollars. Today, you would be hard pressed to find a single person who is not bullish on the greenback. This worries me and here is why.

We are in an incredibly complex macro economic situation. The debt levels are massive, almost every country is trying to devalue/monetize their currency, there are numerous asset bubbles and the FED is trying to re-load their toolbox before the next recession starts (just around the corner now).

In other words, people are panicking into the dollar at exactly the wrong time. As the chart above illustrates, almost every financial disaster has been preceded by such a run up. Followed by a multi-year decline. Finally, the commercials are heavily shorting the dollar at this stage. We talk about all of that and what to expect next in our latest weekly podcast. Click Here to listen.

Why Dollar Strength Suggests Upcoming Turbulence Google

February 3, 2014February 3, 2014

The Best Investment You Can Make Today. It Will Shock You To Your Core. Guaranteed.

That’s right….. the United States Dollar.

Yeah, yeah, I know what your are thinking. Dollar is a piece of shit and this Alex dude has lost all of his marbles. The FED is printing $65 Billion a month, interest rates are technically negative and hyperinflation is just around the corner.

Americans will soon need to use barrels of cash just to buy anything at the local supermarket. If you are to listen to Gold Bugs or PermaBears you would soon believe that the US will soon turn into Zimbabwe and that only gold and shotguns will save you.

Clearly, there is no love for the dollar, but hear me out. There is a couple of reasons to love the USD.

Reason #1: Everyone hates it. What do I constantly try to teach you here? To generate huge profits you must buy what other people hate. So, instead of buying Google at over $1,000 you buy Stinky Fertilizer, Inc (STINK). Assuming the company is fairly priced and has good fundamentals.

Reason #2: The USD has nothing to do with all the credit being generated at the present moment. There is a distinction between a balance sheet transaction between the FED/banks and the actual “physical” dollars. There is only a few of the real dollars to go around compared to the credit outstanding. That is why when the credit collapses the USD typically surges higher.

That is exactly what happened during the 2007-2009 credit crisis. The dollar index shot up from 71.30 in 2008 to 89.20 in 2009. When credit collapses, people scramble for dollars as there isn’t enough to go around. Typically, driving the value of the USD higher.

Reason #3: From the long-term technical perspective the USD is setup for a large move here. The long-term chart (from 2005…not provided here) shows that the currency is about to break out. Either up or down. Since everyone hates the currency and since my mathematical work predicts the credit crunch as well as the significant stock market decline, I would anticipate the dollar to break out to the upside.

CONCLUSION:

The best investment you can make right now is to accumulate dollars. Worst case scenario is that the dollar stays around the same levels while the stock market declines. Giving you the ability to buy great companies at significant discount.

The best case scenario? Dollar zooms up while the market goes down to the tune of 40%. Giving you a higher purchasing power, no risk and massive returns down the road. Of course, this scenario would work wonders for foreign investors in particular.

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The Best Investment You Can Make Today. It Will Shock You To Your Core. Guaranteed. Google

December 15, 2013

Warning: The US Dollar Is About To Surge

Daily Ticker Writes: Why the Dollar Will Always Be the Reserve Currency for the World

On Friday morning the U.S. dollar came close to its lowest point of the year against the euro, according to The Wall Street Journal, on expectations that the Fed will have to continue its easy money policies for longer than first forecast thanks to the government shutdown.

“I’ve never been very worried about this,” he asserts. “The reason for that is there really is no alternative. The Chinese are not going to offer – and they cannot, given where they are in development, I think, for a decade or more – a genuine competitor for the dollar.”

Read The Rest Of The Article Here

I tend to agree with the premise of this article. As of right now there is no clear alternative to the US Dollar. The Chinese Yuan cannot be that alternative as it is technically not even a freely traded currency. It will be decades before Chinese Yuan approaches the point of even being considered as an alternative to the US Dollar. The Euro? Well, there are too many structural issues in Europe.

There is a real possibility that Euro won’t even survive over the next decade. The majority of European economies (well, almost everyone except Germany) are in a big fiscal mess that is not getting any better. If anything, it is getting a lot worse. With the upcoming worldwide recession over the next few years (I discuss in my previous blogs posts) there is a real possibility that it might force some countries out of the EU and out of the Euro.

That is one of the reasons of why I am so bullish on the US Dollar for the time being. No doubt that the US has some serious economic and structural problems. Yet, that in itself doesn’t determine the value of its currency.

It is quite possible for the currency to appreciate significantly even under dark economic circumstances and that is what I foresee for the US Dollar. Be aware of that.

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Warning: The US Dollar Is About To Surge

October 22, 2013October 22, 2013

Warning: USD Is About To Kick Ass

CNBC Writes: De-crowning the dollar, and the ‘collapse’ ahead

The gradual erosion of the U.S. dollar’s status as the world’s reserve currency has been greatly hastened of late. This is due not only to the perpetual gridlock in D.C., but also our government’s inability to articulate a strategy to deal with the $126 trillion of unfunded liabilities.

Our addictions to debt and cheap money have finally caused our major international creditors to call for an end to dollar hegemony and to push for a “de-Americanized” world.

China, the largest U.S. creditor with $1.28 trillion in Treasury bonds, recently put out a commentary through the state-run Xinhua news agency stating that, “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”

In addition, Japan (our second largest creditor holding $1.14 trillion of U.S. debt) put out a statement through its Finance Minister last week saying, “The U.S. must avoid a situation where it cannot pay, and its triple-A ranking plunges all of a sudden.”

Read The Rest Of The Article Here

I disrespectfully disagree with CNBC once again (no surprise there) for a couple of reasons.

1. As of right now there is no alternative to the US Dollar to even attempt any kind of a shift. Chinese Yuan is not a freely traded currency yet and if anything it is still decades away from any sort of an attempt. Plus, China is in the midst of its own Economic Bubble that is surely to blow up soon. Euro? Not a chance. Europe is a basket case and a one common sense politician away from breaking up. Bottom line is, there is no currency out there to replace the USD. Yes, the US has its a share of problems, but so does everyone else.

2. USD Collapse? What collapse? Listen, we have to make a distinction between Credit Outstanding (which is a huge problem in the US) and the Actual Currency Dollars available. The former is a lot less than Credit Outstanding. That means the demand for USD needed to repay these huge balances will go up substantially over the next decade, pushing the dollar ever higher.

That is one of the reasons I am so bullish on the USD. While it remains everyone’s favorite target, the USD fundamentals and technicals are looking very good. I would anticipate the USD to appreciate substantially over the next few years.

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October 20, 2013December 15, 2013

What Everybody Ought To Know About The US Dollar

Daily Ticker Writes: Why the Dollar Will Always Be the Reserve Currency for the World

Read The Rest Of The Article Here

It is quite possible for the currency to appreciate significantly even under dark economic circumstances and that is what I foresee for the US Dollar. Be aware of that.

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!