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I say things on Twitter

12/17/08

Dollar, Dogma and Dinero Dorado

Some enjoyable e-mail banter between your humble scribe and Biiwii Gary (one of those few people that are good at reading charts as mentioned this morning). He tried reminding me that I'm a dollar bull and I said "aha! not no more!" and he said "you can't change opinions!! That's cheating!!!" and I said "don't care" and stuff to that effect etc etc.
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But there is a serious point worth sharing here; with respect to the strong dollar I previously said give me reasons to prove me wrong and I'll happily admit it. The Fed just gave us all the most enormous reason to hate the dollar yesterday, so i go with JM Keynes when he said;

"When the fact change I change my mind. What do you do, Sir?"
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The virtual ZIRP unveiled by Bennyboy yesterday gives MONETARY reasons to like all assets. Things like traded commondities have the other part of the equation to factor in, i.e. end demand. You can see the difference in the way that e.g. copper (a true commod) and e.g. gold (a true asset) have reacted in the last couple of days.
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A fun part of the mix is silver. As pointed out in a recent post, Silver decoupled from tracking gold and started following the broad markets like a faithful dog. Or in other words it moved from its Dr Jekyll asset personality to its Mr Hyde industrial commodity personality. Silver could be the acid test to gauge whether this asset rally has real legs. But remember; there really is nothing new under the sun.