Financial Sense Blog

When one side of any market gets crowded, it is time to prepare for a possible reversal. While there are numerous reasons to be bearish on the U.S. dollar long-term, there are some short-to-intermediate-term factors that may cause the dollar to stage a counter-trend rally in the coming weeks.

The U.S. is a world of well educated, highly sophisticated investors who use an extraordinary well developed set of markets through which to invest into every item that has a market and usually at prices that attract the world of buyers to the oil market, currencies equities bonds and the rest.

A short commentary on money, markets, and the importance of not being afraid of the future.

A miniature potential parabolic trend has emerged in the XAU recently that is driven by greed and the fear of missing out. It is unhealthy, unwise and unsustainable.

Civilian Unemployment Rate: 9.6% in September, virtually steady for four straight months. The unemployment rate was 5.0% in December 2007 when the recession commenced. Cycle high for recession is 10.1% in October 2009 and the cycle low for the expansion that ended in December 2007 is 4.4% in March 2007...

If you could only watch one economic statistic ahead and make judgments about the US domestic economy, and by implication the financial markets, what would it be? Personally, I’d pick personal income. The character of personal income will determine outcomes in housing, auto sales, general consumption, and the pace and level of household deleveraging. In other words, the only way to have sustainable and relatively organic US domestic economic growth ahead is to have growth in income.

Currently I am seeing well defined technical formations across a variety of markets which appear to be invisible to the overwhelming majority of market participants. There appears to be a massive blind spot arising from the current predominant market psychology. This divergence creates a potential opportunity for traders and investors.

We've got it easy right now. Click or call, and you can quickly and conveniently own a gold coin or bar. But if global concerns cause another panic or the dollar breaks down, you could find yourself standing in a line at the local coin shop or getting a busy signal. Simply, for reasons I’ll discuss here, you may find it very difficult to get your hands on physical gold when that time comes.

Since the US economy has failed to recover as widely predicted, pressure on the Federal Reserve to conjure a solution has increased. In fact, the Fed now faces the hardest choices in its history. It can either redouble its past efforts to re-inflate America's bubble economy (risking the destruction of the US dollar) or it can stop pumping and let the economy deflate to a self-sustaining level. Unfortunately, both choices guarantee severe economic pain - but only one offers the possibility of ultimate success.

After its worst August in years the stock market has rallied back strongly in expectation that the Federal Reserve will initiate a second round of policy ‘easing’ that will re-stimulate the recovery. The Fed is not saying whether it will or won’t, alternately holding out the carrot and then withdrawing it, keeping investors and traders uncertain but hopeful.