-- Posted Wednesday, 19 May 2010 | Digg This Article | | Source: GoldSeek.com

Rick’s Picks

Wednesday, May 19, 2010

“Phenomenally accurate forecasts”

When the euro staged a brief rally the other day, we professed to have been vexed. Why, we wondered, should there be any euro buyers at all at these levels – currently around $1.20 U.S. – when even the village idiot knows the currency is on its way down to 80 cents or lower? Of course, it’s not the little guys who have been goosing the euro into fleeting rallies the whole way down, but rather the central banks. And their perspective is quite different from that of Joe Sixpack; for although Joe can once again fantasize about being treated like a high roller on the Champs Elysee, and of eliciting smiles rather than scowls from Parisian bellmen, cab drivers and waiters, the central banks of the U.S. and Asia see only a sovereign competitor stealing an unfair advantage over their own exporters. 

However, we somehow doubt that the folks at Daimler Benz and BMW will see it that way. They and other domestic manufacturers have struggled to hold the line on prices as the euro nearly doubled in value off an 83-cent low almost a decade ago. Now, with currency values being driven by factors wholly unrelated to trade in actual goods and services, the Germans undoubtedly sense that the U.S. dollar will fare no better than any other paper currency over the long run. And so it must be unsettling for them to watch helplessly as the greenback ascends for no good reason, if only temporarily, while the dream of a federated Europe sinks with the euro.

Indictment-Proof

Assuming they understand this, it seems obvious that the Germans and their eurozone neighbors will sooner or later come to recognize gold’s primacy as money. They quite obviously failed to do so yesterday, however, sitting idly by as the Dark Side’s agents sacked Comex gold for a loss of more than $20. Such craziness will reverse direction eventually, and do so with a vengeance, but for now institutional mindset is steering much of the world’s surplus capital into dollar instruments. Although the bankers cannot possibly be so stupid as to believe it will end other than badly for the dollar, no one will ever be able to indict them for having pretended otherwise. 

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts.  Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com

-- Posted Wednesday, 19 May 2010 | Digg This Article | Source: GoldSeek.com

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