I can’t be bothered to comment on this again….and just figured a repost of prior thoughts would sufice.
Author: Forex Kong
End Of The World – Kong Attends
The world isn’t going to end….. so for those of you hoping to take the “easy way out” of your current gold positions – please……if only it where that easy.
The Solstice on December 21, 2012 ~ precisely at 11:11 AM Universal Time ~ marks the completion of the 5,125 year Great Cycle of the Ancient Maya Long Count Calendar. Rather than being a linear end-point, the cycle that is closing is naturally followed by the start of a new cycle. What this new cycle has in store for humanity is a mystery that has yet to unfold…
2012 is also considered the completion of the 26,000 year Precession of the Equinoxes cycle, and some say it also signifies the end of a 104,000 year cycle. That is some serious SERIOUS math on the part of the Maya – and as an avid student of “all things Maya” I will be in attendance at the ruins of Tulum – here on the Mayan Riviera, Yucatan Mexico.
As my spaceship is still in “ill repair” perhaps my fellow space brothers will make an appearance, saving me some time and effort. We’ll see……but if all things go right – well………… “It’s been a slice!”
I wish you all the best of luck with your trading, and encourage you to continue looking to the future – as the past will provide little guidance for the “financial reckoning” coming soon to a theatre near you.
Kong…………(literally) Gone.
Forex – Trade The Fundamentals First
The Bank Of Japan is set to release its Monetary Policy Statement here this evening.
It’s among the primary tools the BOJ uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions.
It’s widely expected that the BOJ will announce further easing of monetary policy – the extent of which remains to be seen.
Looking further out – I see that a fundamental shift in value of the USD/JPY has finally completed its long-term bottoming process and is now decidedly reversed. As both countries now battle in the “race to the bottom” it makes for some interesting debate when one considers “which will go down more”? when both countries throw everything they’ve got at currency devaluation.
Who’s got the larger printing press?
This is the kind of thing that currency traders must consider when looking out at longer time frames and potential trends. Monetary policy drives currency markets, and sudden changes or surprises (like an interest rate hike for example) can blow a newbies account overnight. I cannot stress enough – the need to be well-informed on fundamental issues surrounding a given currency or pair – in order to effectively trade it. The technicals and charts always come second for me, after I’ve got a firm understanding of the current and “forward moving” fundamentals.
Short term I have sold all of JPY trades as of last night as well most everything else for a 6% return since Sunday night’s risk on release. Looking at the shorter term charts – I see the Yen /JPY has fallen fast to a well-known area of support and would likely expect a bounce on the release tonight as opposed to further selling.
As well the USD looks to have run its course as expected in falling hard over the past days. I expect a bounce/retracement there as well.
Currency Markets Are Easy To Trade
I get the same response from people almost every single time I mention that I trade currency for a living. The vast majority have absolutely no idea what I’m talking about (well…certainly here in Mexico) or perhaps have “heard of such a thing”… but never imagined it was actually possible.
Trading currency is not unlike trading any other asset class – you want to buy low and sell high. In this case instead of buying gold with your money, or buying stocks with your money – you are buying or selling “money” with your money.
Online I come across many “arm-chair investor types” who suggest that trading currency is a fool’s game, and that I will soon disappear into the sunset “broke and shattered” – the victim of over leveraged trading… and a blown up account.
Have you taken a shot at trading gold / silver or equities in general lately? Oh ya? – Tell me…how’s that going for you hotshot? Making lots of money then are you? – Ridiculous.
Trading currency through November and December have been my most profitable months all year.
A quick peak at a chart I’ve recently been looking at – while teaching my girlfriend how to trade. Can you spot the trend?
Trading Currency
Currencies generally trade in familiar and recognizable “trade patterns” and are well-known for long-term trend trading behavior. Granted, the money management side of it can be a challenge when first getting started – but anyone suggesting that “it´s way to risky” or “you’re gonna get killed” only needs to have a good look at the example above to clearly see this isn’t the case.
These days…currency markets are much easier to trade.
My girlfriend is doing quite well.
Risk On Alert! – Don't Just Sit There!
Japanese elections play out exactly as expected with a HUGE GAP UP in JPY crosses here Sunday night.
As the currency wars continue – everything is clearly in place for some serious USD devaluation. If you choose to just sit and “see how things go” you will soon (if not Monday morning even.. ) be left in the dust – as the dollar has absolutely no where to go but DOWN. I don’t go making calls in a minute to minute / day to day type way ( although if you’ve been following the trades at all – you’ll find that I might as well) but…….this is it!
I expect markets to power forward here this week and as simple as it gets – all assets shall rise!
If you’ve got dry powder – I seriously suggest no…..I SERIOUSLY SUGGEST you take this opportunity ( and perhaps get out of bed a little early tomorrow morning) to pull up a chart or two, get that broker of yours on the phone – and place a trade.
I am already trading / initiating further “risk related” trades across many many currency pairs with the same ol underlying theme – buying the risk related currencies….and selling the safe havens. I am expecting to do very, very, very well this week. Watch for “whipsaw” type activity – and please take the time to find entry at areas of support – don’t be surprised if “they don’t make it easy” – but it’s time….I believe Christmas has come a week or two early.
Kong……………………Gone.
Kong Out – Spaceship On Hold
The spaceship I’m building on the rooftop is coming along – but in light of the recent news out of the United States ( the mass shooting at elementary school in Connecticut) I can’t get it done fast enough. What the hell is going on?
What kind of world are we living in where this kind of thing not only happens – but isn’t that like the third or fourth one of these “events” in the past month or so? What the f$%K is going on?
My Kong size heart goes out to each and every individual effected by this, as I cannot begin to imagine the grief and pain brought on by such tragic events. Being an uncle myself, not a day goes by that my little nephews aren’t racing around my brain somewhere – bringing a smile to my face….. on even the worst of days. Again I can’t say how sorry I am for the loss, in this tragic event.
Parts are a little hard to come by here in Mexico – and now I’m considering some modifications / additions that may put me back and additional week or two…maybe more.
Hopefully I can find enough seats for every single person I love and care for – so that we can all get on board……. and get the hell out of here.
I hope the wireless connection will be O.K
Trading Divergence – What To Look For
Definition of ‘Divergence’ – When the price of an asset (or an indicator) index or other related asset move in opposite directions. In technical analysis, traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the money flow index (MFI), are moving in opposite directions (thank you Investopedia).
We all see divergence a little differently depending on what you trade and what you watch. Some traders look for divergence within a specific area of focus (for example if the price of gold is skyrocketing, but the gold miners are taking a bath) and some (like myself) look for divergence across markets (divergence when I see both equities going down as well as the dollar – as well as gold!). Obviously in a situation like this – something isn’t right.
Divergence can often signal that a significant change in direction is in store – for at least one of the assets involved.
If you’ve been following the price of gold as of late, you will see that it has come down considerably in recent days. If you’ve been following the dollar you’ll notice that it too (over the past 3 days) has been falling alongside gold – as well market leader Apple Inc. – down more than 50 bucks over the same time frame.
Ask yourself – if gold (and Apple) are priced in dollars…and the dollar is falling…shouldn’t the price of these two assets be going up? – something’s got to give.
Looking out at larger time frames (I am talking a weekly chart) often helps in spotting the “odd man out”. As well – a good solid “recap” of the fundamentals driving price action in each given asset.
- Ben is printing dollars like confetti – that’s not changing anytime soon. (dollar down)
- Demand for gold is (and always will be) high – I don’t see that changing anytime soon. (gold down?….ummm)
- Apple is the most valuable company well……..ever! (apple down?…ummm)
In this example it looks far more likely that both gold and Apple are merely “pulling back” with larger uptrend to continue as the dollar continues its slide into the basement. The divergence here (and how to trade it) points to buying opportunities in both equities and gold – and a continued downward trade on the dollar.
Japanese Economic Story – Trading The Yen
I am fascinated by Japan’s economic story – and an absolutely huge fan of trading the Japanese Yen (JPY). In fact, I would attribute the majority of my trading profits over the past few years to trades involving the Yen vs the commodity currencies. The moves are usually quite large, and more importantly for me – the fundamental story keeps me on the right side of the trade.
Japan’s monetary policy is extremely accommodative and “quantitative easing” is more or less a mainstay.
The Japanese model is well worth studying, as it serves well as a possible pre cursor to what the Americans may soon expect to see – as a result of their “more than accommodative” monetary policy. Some economists project that the U.S is headed down the exact same path as Japan – and advise that the end result may not be exactly…….what’s desired.
Japan’s debt to GDP ratio is now well over 200% if you can get your head wrapped around that. Interestingly (very interestingly) only 5 % of that debt is held by foreign countries, while around 50% of the U.S debt is currently held by foreign countries. This is where things get interesting.
Japan’s conservative Liberal Democratic Party (LDP) is on track for a stunning victory in Monday’s election, returning to power with hawkish former Prime Minister Shinzo Abe at the helm.
An LDP win would usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear power energy policy despite last year’s Fukushima disaster, and a radical recipe of hyper-easy monetary policy and big fiscal spending to end persistent deflation and tame a strong yen.
Short term I see the Yen sitting at a well-known level of support and in all would favor a bounce here, but with the election panning out as it should – it’s safe to say that the currency wars will continue as Japan is likely be the next country announcing further monetary stimulus and easing.
Gold Stolen – Only The Aliens To Blame
The theory that human beings are a product of alien genetic manipulation, and were more or less “created in their image” for the sole purpose of mining gold – is a personal favorite of mine. It keeps things simple, and provides me with the answers I need when gold goes off the charts – as it has done overnight.
It’s simple. The gold has been stolen and we’ve only the aliens to blame.
The Illuminati’s “secret knowledge” of human creation (which defies both creationist and evolutionary theories) is bound up in the tale of the Anunnaki, who according to the Sumerian clay tablets – arrived around 6000 BC in Sumeria (modern-day Iraq).
A growing number of researchers say the Annunaki bred human slaves known in the Hebrew bible as “Adamu” and in English as “Earthlings” to mine gold necessary to the survival of their home world and it’s inhabitants.
Considering the slew of completely ridiculous “conspiracy theories” out there as to the “manipulation of gold prices” this looks to me as equally plausible in that – we still don’t know whether the reserves of gold “said to be there” in the United States – are really there at all.
So there you have it. Any time you get caught up in the minute to minute watching of the price of gold, or the endless debate over price manipulation or corrupt governments etc…just keep it simple.
Blame it on the Aliens.
I would love to enter the market here this morning – but just can’t pull the trigger in light of overnight action across the board. Dollar flat, equities up, currencies “wonky” ….and gold stolen by aliens makes me a touch nervous.
Death To The Dollar – Reserve Status In Question
I clipped / edited this as I found it to be most interesting:
A common believe is that there is no credible substitute for the dollar – so the dollar is safe as the reserve currency.
Another believe is that it would take decades to replace the dollar (central banks need to have “some” assets that hold or increase in value right?).
Increase in value right? …………………………………………………………….obviously the dollar is not doing this.
In truth almost any other asset is a better reserve than the dollar. There is no need for every central bank to pick the same one.
Some believe that it would take the Gulf States many years to replace the dollar as the currency oil is priced in. This is a peculiar claim since Iraq and Iran switched to non-dollar sales in short order (Iraq before the war). As should be expected with a dropping dollar, Iran says it profited from switching to non-dollar oil sales. Other countries can see this and can just as likely – switch too.
Imagine that central banks currently had their assets as 60% Dollars and 30% Euros. If the value of the dollar were to drop in half, then they would have equal value in Euros and Dollars without changing anything.
For thousands of years gold and silver have been used as a store of value. Imagine a central bank with 10% in gold and 90% in dollars. If the dollar goes down by 2 and gold up by 5 it could suddenly have most of its assets in gold.
The point is that the dollar could be replaced as the dominant reserve asset even without central banks ever selling their dollars, just by it’s dropping in value. Several times in the past the dollar has dropped significantly in value in a just a few short years.
Why would now be any different?