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Trillion Zimbabwe Dollars

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When we move: Gold, USD, Oil

When we move: Gold, USD, Oil

Smolski Investment Newsletter

E-Mail: smolski@gmail.com

The year 2008 will be written about in finance textbooks for future generations. The inevitable collapse of the boom, built single-frivolous on credit, finally came home to roast. Ironically, further liquidity is, as before, assured the survival of the system. After receiving the rubber stamp for a $ 700B bailout, leaving it to politicians to decuple this figure to a now estimated 7 trillion dollars. A responsibility that is set to fall on the shoulders of your children and grandchildren that realistically will never be paid. By next year, America will join the likes of Japan and Italy in GDP-to-debt ratios above 100%. How will Congress dig themselves out of this whole? All fingers point to monetization of debt.

Basic things could not look better for gold. The printing presses are running on overtime, and there seems to be no end to this Japanese-style bailout of America. Helicopter Ben is well on track to meet his legendary promise to never allow deflation. The explosion in money supply has been unprecedented, only comparable to Zimbabwe and the likes of Argentina, Poland and the Roman empire, among many others. History is paved with examples of nations that have taken this destructive path. Since the current events is precious metal markets react the way they should be? Many would argue NO.

Gold has retained its historic face redemptions and the rush for liquidity, but had a predicted current events To most analysts have predicted gold to be four digits in such an environment. It is impossible to buy bullion in the last few months has given further cause for manipulation argument. Is the proposition that the Fed may have a hand in the gold price so ridiculous a theory? Referring to the 1980s, said Paul Volker itself "bike gold go to $ 850 was a mistake. "gold is money to more than 2000 years. Watching the price of U.S. dollar plummet in gold terms would signal nothing less than the slow extinction of our dollars. This apparent loss in the value of our currency is a direct consequence of the Federal Republic Reserve, whose primary responsibility is to ensure growth (as adamantly do now), but to maintain the dollar's value (an irony in itself with the U.S. dollar has lost 96% of its value since the beginning). Nevertheless, there is a hand in the gold market or otherwise, we use the charts to evaluate our investments.

In emergencies, the best solution is often to take a look at the long-term picture of things. Over the long term chart we have seen no change in gold, it continues to be one of the best performing asset classes of the decade. Carnage in the markets has dragged down gold and remains in a trend to lower lows and lower heights, so caution is required, but gold is still a long bull market. Short term, MACD convey that gold is oversold is a consolidation in the cards. Ideally we would like to see a breakout through the green downward trend, with a curling up and crossover of 200 and 50-day moving average. Gold will again have its day, but patience is required.

Gold stocks seem much healthier than physical gold. After the sharp dive in October, the gold stocks have been very smoothly, almost doubled from their lows of the 150th Ideally we would like to see HUI consolidated between 250 and 300, while gold corrects before blasting higher by the end of the first quarter. It is important to note that the HUI has very favorable in relation to the market generally. This is crucial as gold stocks always lead the gold price at the start of any leg up.

The U.S. dollar has had an impressive run into the second half of 2008, after building a base in the earlier part of the year. A small head and shoulders topping pattern raised from October to December, the dollar has now clearly broken its uptrend line and the long-term wear will win the stronghold again. The forced redemptions and liquidations that brought life into U.S. dollars, are now to a close. All asset classes were jointly sold for U.S. dollars to buy Treasury bills. The days of running for T-Bills as a safe haven is also numbered. It is only a matter of time until investors throw in the towel and refuse 0% return on a currency whose supply is literally more than doubled the recent years. We can almost hear the popping sound of the last remaining bubble in Treasury bills. The dollar is likely to consolidate here for a couple weeks before they resume its downward spiral towards its intrinsic value, zero.

A commodity that is necessary to maintain our industrial and technological dependent lifestyle that would never be expected to fall off the proverbial cliff in this way. Oil has lost nearly three quarters of its value in the second half of 2008th This retracement can only be seen as temporary, with the world's oil reserves are declining in almost double-digit rates and money supply grows exponentially as the price of oil on recover. Oil needs to get over the 50-day moving averages to show signs of life, but a relief rally is inevitable. A 50% withdrawal of decline leads us to a goal of at least $ 70.

CONCLUSION:

Over the long term gold is set to continue its dramatic rise, as long as the printing press continue to run full-tilt. We will maintain our long-term precious metal stock positions established in late October and November. trader may have chosen to take some profits and run their GLD positions. A consolidation should give us new opportunities to re-positions can be held for the remainder part of the year. We will maintain our positions in oil, set up the last few weeks. It appears that the crisis has subsided somewhat, and this should provide some stability back into the markets going forward. We will review the stock market is headed and the specific sectors that exhibit the most promising in the next few questions.

For a limited time, we open our services to new subscribers and is currently offering a free trial period Smolski Investment Newsletter. We had an extremely profitable year in 2008, but we are convinced that 2009 will be one of the best in a long time, those properly positioned to reap the greatest rewards. In the next few weeks we will continue to monitor markets and identify which sectors are ready to give the greatest returns. Do not hesitate to send us an email with "SIGN UP" as the subject line of smolski@gmail.com .

Daniel Smolski

About the Author

Daniel Smolski is the founder and editor of the Smolski Investment Newsletter. A highly successful newsletter that incorporates both fundamental and technical analysis. Subscribers to his service depend on Daniel's unique ability to find investment opportunities that provide rare opportunities for profit. He has been a leader in teaching his readers how to successfully trade markets, especially during these turbulent times. Daniel was educated in Canada and Sweden and currently holds degrees in finance.

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