Here is the 'Wrap Up' segment from the
15 page NFTRH86, which went in depth on a range of
relevant issues currently facing financial markets:
Currency
Euro hype to the
upside was expressed for years by touts who had presented a picture that
it was just the big, bad USA alone that had major problems. All along
as a public writer and then in NFTRH I had
presented the euro as just another piece of paper with no real value
backing it. So recent events are somewhat refreshing from the standpoint
of the analysis, which sees major currencies in a race to the bottom
[of the barrel].
It appears that the mania toward the opposite
pole from over-bullish has gone too far however, and the euro can rally
at any time, possibly providing a good relief story for the broad market
to pin its ‘hope’ on once again. Similarly, the US dollar has expressed
itself in ‘too far, too fast’ fashion amid the euro hype.
The
euro just made a weekly close above important support while Uncle Buck
remains below the highs last seen during the worst parts of Armageddon
’08. Again, this is a picture of potential short-term relief for many
markets, first and foremost obviously, the euro. Longer term, these two
debt backed basket cases are featured players in the race to the bottom
in the currency world. All major currencies are contestants in this race
by the way; at least all major paper currencies. That is how pervasive
the ‘debt as economic fuel’ ethic of the current global economic system
has become.
While on the subject of currencies, let’s have a look at the progress of
gold as measured in a few of them by way of our Gold-Dow,
Gold-Currencies ratio chart. The breakout in Gold-Dow from its Hope ’09
consolidation is very early in its progress. While there can be some
post-breakout chop and grind, the risk vs. reward in gold vs. Dow is
favorable.
In the currency panels we see gold correcting from
over bought in British Pounds and euros after having achieved the rough
upside targets of the Cup ‘n Handle patterns. Further upside is
projected after some corrective consolidation. Gold in Canada dollars
breaks out from the handle but hits resistance at the rim of the cup. It
looks to go higher after dealing with this resistance. Gold-Aussie
dollar was noted previously as not being a cup due to very low right
side, yet was bullish above support. This expressed well in a strong
rise up toward resistance.
We are in the age of natural economic contraction being fought by policy
makers in the only way they seem to know; leveraging confidence in
their respective currencies into debt creation in a massive, world-wide
funding scheme. How long can this work? Perhaps longer than you or I
could hold out if we take a strong, active stance against it.
The
last year of euphoric bullish activity tells us something, and that is
that the masses are not yet ready to accept that the Fed, Treasury and
their counterparts around the world cannot ultimately control financial
events. So by definition, a confidence scheme runs as long as its one
underpinning – confidence – remains intact.
Biiwii.com
Biiwii.blogspot.com
Notes From the Rabbit
Hole
