THE DURATION PARADOX: It is commonly held that, by setting only short-term interest-rates, central banks leave bond yields for the free market to determine. While mostly true under normal conditions, there are situations in which this is clearly not the case, for example, when the central bank becomes a large buyer of longer-dated bonds.
Back in 2005 I commented in an article that “my investment portfolio is almost exclusively invested in a basket of commodities (gold, silver, potash, uranium and crude oil) of which the bulk is precious metals.
Kenny Rogers may not be widely known as a great philosopher, but one of his legendary songs carried a message well worth knowing. It goes, “Know when to hold them, and know when to fold them.” Last week in the game of world monetary poker, the ECB raised the limit. Now the Federal Reserve will have to demonstrate it has what it takes to play poker with the big boys. Question is not if it will fold, but when it will fold. June or sooner?
There are no good outcomes, only bad, really bad, and catastrophic. Take your pick. Could gas prices drop below $3.00 per gallon if the world sinks back into recession? Yes. But it would only be momentary. The easy to access supply is dwindling. The medium and long term direction of gas at the pump is up. There is nothing that can be done in the next five years to prevent significantly higher oil prices.
The U.S. Dollar Index is in immediate danger again, so lets take a close look at charts from all three time frames, beginning with the daily bar chart. The most important feature on the chart is the bold rising trend line near the bottom. That is a long-term rising trend line that we will see on the longer-term charts.
PSY-OPS are “planned operations” (not mere ‘disinformation’) “to convey selected information… to organizations, groups, and individuals… to induce or reinforce foreign attitudes and behavior favorable to the Originator’s Objective”
Current Federal Reserve System chairman Ben Bernanke believes a simple recession was turned into the Great Depression by the Federal Reserve of the day not doing enough while the money supply contracted 31 percent between 1929 and 1933.
