Eastern Seaboard Coastal Development

Just like after Katrina, we have not seen New Orleans come back to its former population.  Much of its housing was built below flood levels and these developments were unsustainable.  People learned the hard way, the folly of their ways.  Now this lesson is being learned in New Jersey and elsewhere on the East Coast.  I am sure the US Federal Government will try and "fix" everything and make everything right.  And I am sure that we will continue to hear cries of "We will rebuild!", I don't think that will happen.  At least in places where development does not make sense that were heavily damaged and at least on the same scale as before.  I just don't think that the money or energy is there.  It took 75-100 years to build up these areas and forget the harsh lessons that Mother Nature has for those who taunt her.  It has only taken hours for the sea to reclaim what belongs to her.  Best leave it that way.  There will be those who will try and rebuild it the way it was and some will be successful to some degree.  But overall, there will be less development on the beach, because there has to be less.  There are no longer enough resources to support it.

USD Dollar Bull

OK. So my last post projected that the US Dollar was about to breakout.  It didn't happen.  At least not yet.  But it did not break down.  After trying to breakout in June-July, it failed and fell back and looked headed for a breakDOWN.  That has not played out yet either.  So while it is frustrating, my belief is that the bull is trying to frustrate as many as possible.  Now Ben Bernanke may decide to start printing US Dollars like crazy and flinging them out of helpicopters (or some such crazy idea!).  But my feeling is that he is getting fatigued.  And while I am sure that he would come to the rescue in the case of a big crash, it seems to me that he is trying to do "just enough" to keep things together and not let them get out of hand.  He had to do something before the election, but it modest and partially limited through the end of this year.  So I believe the USD bull market is intact.  What does this mean for precious metals?  Not sure, but probably not good in the short run.  Although metals weakness would probably be a good opportunity to accumulate for the long run, because the US currency is as flawed as any other paper currency and may eventually be challenged.  But for now, stay long the USD (and stay away from JPY which seem to have topped recently).

USD Bull?

Recent action has been encouraging but not decisive.  The 82 level mentioned in February is in play and is currently being tested.  A little backing and filling over the next few weeks would not be surprising but July should see a resolution to the upside.

Time to (RE)Move Your Money

Back in September 2011, I posted that it was time to move your money because the system was failing.  Who could have known that MF Global would fail a month later (OK, who else besides John Corzine?).  Actually, anyone who was paying attention.  Because the fact is that we are all being ripped off.  Unless, you are 'fortunate' to be one of those actually doing the ripping off.  That means that you are a banker, a credit card issuer, a Social Security recipient, enrolled in Medicare, work for the government and more.  In other words, 51% of the population is being ripped off by the other 49%.  Yes, it is not 99% and 1%.  It is 51/49.  Republicans and Democrats.  White and black.   Male and female.  We are close to the tipping point.  The point where it shifts to 49/51% (or 21/79%.   Yes, I am making up the numbers up!  Just like the "99%" ers.  But it is a useful way to illustrate complex ideas in a simple statement.)  That is the point where markets become unstable.  Wars begin or escalate.  Riots break out.  Supplies break down.  We are seeing it in Greece.  We will see it in Spain.  And Italy.  France. Britain. China.  Japan.  (Yes, even Japan.  They will just be more orderly about it.) Finally, the good old US of A.

We will survive.
Our society will not collapse.
The country will not disintegrate.
At least that is what I CHOOSE to believe.  (ALL belief is a choice, by the way.)
But there is a question about our currency, the US Dollar.  Will it survive?  I THINK so, but I don't necessarily BELIEVE so.  I do believe that it will be the last one standing and my gut feeling is that radical changes will take place in what we have come to know as the Dollar.  And since I believe that the USD will be the last to fall, but the risk of it eventually failing is not trivially close to zero, what is the best thing to do?

First is to reduce debt.  Ideally to zero.
Second is to get as liquid as possible.  This will be different for different people, but it includes buying US Treasuries of short duration (ideally 3 years or less, since the crisis is likely to occur 0-5 years from now).  It also includes having some deposits in the bank, but it also includes having some cash, FRB Notes, Greenbacks.  One reason, is to have money to spend: to take advantage of opportunities and emergencies.  But the other reason is because the system is failing.  And we savers are being ripped off.  We are being ripped off by the banks which borrow OUR money and pay us 20 cents while lending the same money to some deadbeat using their credit card at Walmart at $28.  We are being ripped off by a Federal Reserve which is conspiring criminally to steal 2% of your money annually through inflation.  But finally, we are being ripped off by criminal organizations like MF Global, which has taken $1.2B of their customers money.  The only way to resist is not to participate.  Don't participate in the markets, banks or the financial system in general to any extent than absolutely necessary.  As yesterday's Non-Farm Payroll report demonstrated to anyone paying attention, the powerful elites running this country will not stop at using fraud and deceit to keep the great Ponzi scheme that is today's economy going.  They will lie, cheat and steal to maintain their grip on power.  And it may be successful for another year or longer, but I doubt it.  So now the only way to protect yourself is to not play their game, because the die are loaded and they have already been cast.  And you and I cannot win.

USD Rally: Bull Pausing or Bear Reawakening?

My last post in November 2011 on the USD pointed out the reversal taking place in the USD and pointed to short term targets of 79.50 and 82.00 on the USD Index.   Those levels have effectively been reached and the Dollar is pulling back to the level of the breakout above 79.50.  The next level to break is the 82 level with the subsequent target being 87.  A retracement to 75+ is possible.  A break below 73 would indicate that the Fed has abandoned the currency and a complete loss of confidence in the USD monetary system.  These are possible and explain why owning some precious metals is intelligent, but I believe that is the longer term concern.  Right now, the currency markets seem to be turning in favor of the USD.  Currency trends tend to last for years. So.... if this trend last for 5-7 years like other trends and the uptrend in the dollar is 0-3 years old, we should expect another 3-5 years of relative USD strength.  The long term support for the USD is 73.  Long term resistance is 118.  This should provide a good risk/reward ratio.  The best part of this strategy is that for it to be successful, it requires US citizens to basically do nothing.  (This is not quite true and the next post will delve into tactics for taking advantage of USD strength).

Buy USD

It appears that we have a buy on the USD.  We recently broke support around 75.5 and reversed (violently) to the upside.  Next resistance is at 79.5.  If we break that look for 82.   Since US Dollar weakness is inversely correlated with Gold and Equity weakness, look for reversals in those rallies.

Time to Move Your Money

Time to move your money out of the biggest banks in America and show the banksters who really should be running the country!

DSK. Guily or not?

I have no idea.  There are only two people who know for sure, but this story indicates, among many lessons, how quickly the fall can occur.  A seemingly inexorable rise leads to an aura of inevitability which further emboldens those caught up in the the luxury of the rise.  The mind, of either an individual or a crowd, cannot see a present danger and continues on a path that leads to vulnerability.  And then a dislocation, small or large, produces a reaction.  This corrects the unsustainable actions, but can develop its own dynamic, which can lead to further destabilizing events.

Is the US Dollar Bottom In Place?

Judge for yourself...
The Monthly chart:

The Weekly chart:

and the Daily chart:

Those getting out of their US Dollars may want to wait and see what the next few months will hold as I think that by August we will have a clear direction of the trend in the US currency.