the $us bounce from the daily r

  1. 13,526 Posts.
    lightbulb Created with Sketch. 8
    The Rude Awakening

    Wall Street, New York

    Wednesday, January 05, 2005


    *** More comical dollar bearishness and why New York is
    infested with Europeans...

    *** Back to the future: We go back to 1974 to find out
    what's in store for stocks this year...

    *** Doug Casey...Kurt Richebächer...old stooges...and why
    it's hard to make money on the short side, even when you
    know what's going to happen...!



    By Tom Dyson

    The dollar is in a bear market. We've said it so many
    times, we're starting to feel like a stick in the mud.

    Far-sighted observers like Kurt Richebächer have been
    predicting the dollar's demise even longer and although
    they saw the writing on the wall well before anyone else,
    in retrospect it was obvious the dollar had to fall. Why?
    Well, frankly, dear reader, you already know why...the
    argument has been bandied about so much recently, even the
    mainstream press are getting tired of it.

    Suffice to say that Washington's policies of the last few
    years, among other things, have all but assured the
    dollar's long-term decline. We call it the '7-year slide'
    due to the dollar's tendency to move in massive multi-year

    But markets are fickle creatures...and even though the
    dollar's exchange rate is moving lower just as we said it
    would, we must never stop questioning our position. We've
    made good money buying gold and shorting dollars recently
    but a sudden trend change could wipe it all away. Mr.
    Market delights in punishing complacency.

    It was in this vein that we wrote to you several weeks ago,
    making the case for a dollar bounce. We couldn't help but
    notice that the financial media - old stooges like the
    Journal and the Economist - had started covering the same
    themes we've been banging on about for years in the Daily

    We called it 'comical dollar bearishness' and we argued
    that the dollar has fallen too far too fast and is now
    ready for a bounce.

    Here's some more anecdotal evidence in support of a
    bounce...this from a British newspaper:

    A two-night trip to New York from Manchester, England, to
    do Christmas shopping was cheaper than taking the train to
    London for a weekend to buy the same items, said the
    Independent. They added up the cost of a round-trip flight
    to New York, two nights at the Roosevelt Hotel and the
    purchase of an ipod, Nike sneakers, Gap jacket, Seven
    Mankind jeans, Nintendo Gameboy and five top-selling CDs.
    Total cost: $1,863, a saving of nearly $300 when compared
    to the cost of taking a similar trip to London.

    When New York seems cheap, something must be awry. Luckily
    we're not the only ones to notice...

    Doug Casey, long-time hard money proponent and savvy gold
    stock trader, has joined the chorus. We received the
    January issue his newsletter, International Speculator,
    yesterday. To our great surprise, the issue was titled,
    'The Dollar Bounce.'

    "But now," Doug writes, "not despite the dollar being all
    over the world's media as a disaster, but because of it,
    it's probably time for a bear market rally. By definition,
    the masses are trend followers, not contrarians. Regardless
    of what the long-term fundamentals of a currency may be, in
    the short-term its price is set by the psychology of buyers
    and sellers. Right now, everybody knows how badly it's done
    and they're all sellers."

    And capturing the Rude Awakening's position perfectly - at
    least that of your junior editor in Baltimore, Doug reminds
    his readers, "despite my contrarian instinct that gold
    might have a rough month or two, nothing is changed about
    my mid- to long-term views on gold (it's going to the moon)
    or the U.S. dollar (it's going down the drain)."

    Make sure you catch Doug's complete essay, which we're
    publishing in tomorrow's edition of the Daily Reckoning...

    In the meantime, we'll leave you in the capable hands of
    Dr. Richebächer, a man who certainly isn't interested in
    short-term market sentiment...

    "As a matter of fact, we are sure there will be no chance
    to sell stocks, houses or bonds in the future above or even
    at the present inflated prices," writes the Good Doctor in
    his latest issue. "As explained, these prices are
    manifestly not based on a high level of saving; they are a
    temporary artifact of artificially low interest rates and a
    credit explosion. The obvious true name of this game is
    asset inflation, systematically and recklessly engineered
    by the Greenspan Fed."

    "We explained that the United States has two very different
    kinds of inflation: moderate consumer and producer price
    inflation being suppressed by soaring imports, and
    unbridled runaway asset price inflation engulfing bonds,
    stocks, housing and the dollar, driven by rampant credit

    "Now, the easiest thing to see is that all these credit-
    driven asset bubbles are sure to go bust. For us, their
    crash is a mere question of time - actually, of relatively
    short time. Let us say sometime next year..."

    As you'll see in the 'Did You Notice' section below, timing
    is everything. And no matter what happens - come bounce or
    crash - we'll be prepared for it when it does.

    [Ed. Note: Even though he's made tones of money shorting
    the dollar in recent years, Dr. Richebächer still thinks it
    has much further to fall. As least as low as $1.50 versus
    the euro, he predicts...and perhaps even further!

    Find out how this will happen, and what you can do to
    profit from it or protect against it.

    The Richebächer Letter
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.