World Currency War – just started

Ref: 10-004 of February 5, 2010         Download from ScribD or from Download Pool>> Article

Only a day before I have warned in Indian Stocks Observatory “Serious currency wars are going to be major feature in second quarter of 2010. BEWARE”. And it turned out to be true within a day. Now watch the following event which happened in quick succession on Thursday night:

  1. Dow Jones cracked to close at 10,002 (- 268; -2.68%) S&P 500 at 1,063 (-34; -3.11%)
  2. There was turmoil in the currency market. All major currencies went down against USD. That is, only USD went up. Look at the numbers here:
  3. Gold & Silver prices went down by huge margin:
  4. Oil Prices too dropped to $ 73.19 (Down – 3.79%)
  5. NOW, look at the US Dollar Index known as USD Index. It went up to 79.96 (+2.23; +2.87%)
  6. Wild rumors were spread that GREECE was about to default, next in line was PORTUGAL followed by SPAIN. What have they in common? They all belong to (1) Euro Zone and (2) They are all corrupt countries (3) except for Spain, other two were very small countries.
  7. Another rumor was spread that United Kingdom (Britain) might be degraded as it had highest debt level vis a vis its GDP
  8. In short, the scenario was created that only US$ could go up, all other assets will go down. Thus, an impression was created that SELL all assets and BUY only US Dollar
  9. This is a repeat scenario of Asian Crisis when it was started from Thailand, a small Asian country, then Indonesia, Korea, Taiwan – all had one common feature – they were all corrupt countries. Thailand was used as “Pilot Project” how the world was going to react, so that future strategies could be refined.  During Asian crisis, all assets were going down, stocks, bonds, currencies, gold, silver etc but only one asset was going up, that is, US Dollar.  It was like a scenario when you are locked into a room with 7 doors closed and fire was ignited. There was only one outlet – a window named US$
  10. 10.  The Asian Crisis was timed to synchronize with the birth of Euro.  US feared that Asian Reserve lying with Fed might be diverted to Euro, so the crisis was initiated. When Thailand needed $ 25 billions, Japan, China, Malaysia, Singapore etc contributed $1 billion to $ 5 billions. In Fed book only book entries were passed – Debiting Donor and Crediting Thailand. The funds remained with Fed – it did not move out to the treasury of ECB

Who is buying US dollar anyway?
At least at the time of Asian Crisis, there were not much of economic difficulties for US. Today, however, consider the following:

  • US lost almost $ 1.9 trillions in 2009 in bailing out the banks, brokers and insurers
  • Citigroup, JPMorgan, General electric, Goldman Sachs, Morgan Stanley, Merrill Lynch, Wachovia Bank, Wells Fargo,  AIG, Lehman Brothers, Bears Stearns were all bankrupt or nearly bankrupt.
  • 7 millions jobs have been lost in last 2 years.
  • AIG, Fannie Mae, Freddie Mae are all teetering on collapse.
  • The entire economy is in the state of collapse.
  • Bankruptcies galore.
  • All auto companies and airline companies are nearly bankrupt.
  • Housing market is dead
  • Credit market is dead. No one is lending to no one.
  • 70% of State governments are bankrupt.
  • There is no yield on Bonds – it is kept nearly Zero.
  • Most IPO for even $ 100 to 300 millions have been postponed or failed. In that case, how Bank of America, Citigroup could collect over $ 100 billions in public offering?
  • Pres. Bush spent $ 700 Billions, Obama $ 787 Billions, Health care will cost trillions, and new stimulus package will cost another $1.9 trillions in 2010. They are simply nuts.

In such scenario, who in right mind will invest even $10,000 in United States and buy dollar. If people do not buy dollars who is that invisible God giving almost $ 2 trillions? No one knows. All are bluffing – Governments, Obama, Geithner, Bernanke, Senators etcetera. It is obvious that politically affiliate banks like JPMC, Citigroup, and Goldman Sachs appear to be the biggest buyers.

How GOLD was whacked yesterday by $ 41or nearly 4%?
Gold always goes up in Asia and goes down in USA? See yesterday’s picture:

It will be seen that on Nymex the Gold was trading at $ 1111 whereas as on New York liffe it was trading down at $ 1074 in very small volume of just 6 Mini gold contracts, causing panic. What these SEC, FBI, CBOE are doing out there? Are they still mis-managing whole business of supervision, control and regulatory mechanism? Or they have all syndicated with the authorities?

Also look at the data alongside on left. April 2010, where most positions have been rolled over, the Open Interest is huge – 301,656 contracts or 30.165 millions of Ounces = $ 32.182 billions (= Rs 1,480,372 crores)

There is no recovery, but they go on brain washing investors that US has “job less“recovery. It is like “Condom Economy” with lot of stimulants like Viagra, and other aphrodisiacs, where one can have sex but no babies.

The fact of the matter is that the United States is in final stage of cancer. All companies go on giving lower estimates first and then show having beaten them to prove that the economy is growing @ 5.7% in December Quarter.

ALLIES – Europeans and British people are betrayed:
The Europeans and Britain under Tony Blair sacrificed thousands of their soldiers and citizens in fighting hand in hand with Americans. Same Americans are now trying to wreck their economy by attacking their currencies in “Asian crisis” style. The American rating agencies and TV media are constantly spreading mischievous news that those countries are in trouble. The Motive: to prevent China from diverting its $800 billions reserve to Euro zone or HM Treasury of British government.

Will European Union survive?
This is a serious attack on European Union. The Americans want to break up the EU but the Europeans are just stupid not to read the writings on the wall. Look at the sequence – Iceland, Greece, Portugal and now Spain. Britain is the next one to be attacked. They were all loyalists to Americans one day. But the fact is “MONEY TALKS”. Every friendship is dispensable in love and war. Even Saddam Hussein was heroic friend of United States, who was finally hanged after destroying his beautiful Iraq in the name of WMD and democracy.

When the Europeans and British realize this hidden truth? They are really slow thinkers. It could be too late. Or it is possible that they may ask for return of Gold physically. That is when the test will come. That is the time when the Gold may rise to heroic heights. It will happen.

It looks like that the Slumlords at the top (not ordinary honest Americans – they do not know anything) do not like their No.1 status being challenged by other nation. Even Obama said that. If they can not maintain their status by competition, they will destroy or decimate other nations to remain at top. They did it while busting Japan when Nikkei rose to 38000 +. It is not even 25% today in spite of all touted GDP growth story. Two US based brokers arrived in Japan and used their financial skill in futures and options (F&&O) to destroy the Japan. However, until today and may be tomorrow or day after, the Japanese are not going to learn. They are just “robots”. This is why I never study “Japan”, nor venture into it.

It is said that you get betrayed from one whom you trusted.  The Europeans and British people will learn after a few years that they were betrayed by the nation whom they trusted most and for whom thousands of their citizens/soldiers sacrificed their lives in Iraq and Afghanistan. Tony Blair will bite his lips and nails when he reflects on what he did. He will get into asylum ultimately.

Compare Tues -Wednesday and Thursday events:
Many were asking me whether it was time to buy Gold after having been fallen to $ 1085 level.

On Tuesday and Wednesday
The Gold rose by 3%, enticing real gold investors to resume position.  Yen also weakened. Almost all precious metals rose during these session, commodities rose, US$ index weakened, Euro and Sterling Pound also rose.  The gold appeared to rise in paper, probably on other exchange NY Liffe (I am yet to study this Exchange) this was done deliberately.

On Thursday
Very next day, Gold was shattered from $ 1111 as explained above. In short, the major players, notably large affiliated banks, who were bailed out last year, and prominent broker cum bank, shorted the gold and almost all currency and commodity futures at one go – result almost all precious metals lost over 4%, base metals also. Obviously they carried out the attack at behest of authorities. This was classic PUMP and DUMP game.

The US$ index rose, Yen rose, Can$ also rose (but Aussie$ fell steeply). This means that Japan has agreed to continue with $ T Bills purchases and China did not.  The idea was to terrorize the investors in gold, especially large central banks in Asia like China and India, to prevent them from getting away from dollar into euro, pound or gold, most favored assets amongst Asians.

Please note that the people who caused this crash control exchanges, markets, media (like all business channels), and financial newspapers by feeding them the information they should receive.

In this electronic age of computers and broadband TV, the beautiful damsels go on churning out the stories of economic recovery – what they call – Jobless recovery – and any bad news being reported as “better than expected” to push up the markets when required.

What could happen today (Friday):
It is certain that all markets will suffer “route” today but manageable. The US markets could also go down first, and then these wily players in New York – banks and prominent broker cum bank, Buffet’s favorite, will come out of no where about 45 minutes to 1 hour before close and reverse the trend on every exchange – NYSE, NASDAQ, CBOE, NYMEX, COMEX etc. They will buy the calls when the markets down in morning session, selling puts bought on Wednesday and Thursday.  Please note that no logic is going to work for few days – we are in the middle of covert WAR.

US economy grew @ 5.7% – says President Obama:
If the size of economy is $ 14 trillions, 5.7% growth means that the economy generated extra GDP of $ 800 billions; where from, when 7 million Americans lost job? The $ 800 billions rise in GDP is equal to entire GDP of India. Did US with 300 millions of unemployed and under employed Americans created additional assets of $ 800 billions in worst economic environment that was created by 1 billion people of India in growing environment?

Come on, President Obama. Go back to Primary school and learn some simple math. OR if this is your deliberate move, better dress up in Halloween outfit.

And is the size of US economy really $14 trillions? When I left the field of stock broking, the US economy was estimated at little less than $ 8 trillions. If we take today’s figure of $ 14 trillions as current size, there is a growth of $ 6200 billions or 80% over last 6 ½ years. That is, the annual growth rate is 12.3%, faster than even China and India with almost 3 to 4 times US population.

Only bankrupt persons will show off. They become extravagant spender in their last days. It is almost certain that “United States is technically bankrupt”. The Tsunami has arrived, just a few hundred miles away. Its all over, will be the verdict of the world after a few months. Next few months will bring the world closer to WORLD WAR III.  When the war starts world over, the first casualty will be Internet and electronic banking. Look at Google and China. Go for GOLD and SILVER in physical form, not paper contracts, passbook gold or ETF.

I was right in forewarning all the readers to sell 80% to 90% by 21 Jan 2009 remain in cash, saying that “next 15 days up to 9th February are extremely heavy for United States. They were prophetic words at that time. They are now becoming reality much sooner than expected.

Look at Toyota as indicator – anything can happen at any time within 2 or 3 days
look at Toyota. A simple problem like a mole was made into mountain. It will recall 7 million vehicles. If every repair cost them $ 1000, it may lose $ 7 billions besides production loss for over 6 months. Its sales will plummet. The company may suddenly sign off into oblivion. TOYOTA was a “King of Auto” for several decades. It took just 2 days to destroy them. They say that they will make money. Yes, they surely will if they can print money like Federal Reserve of United States.

Let the final act of war be allowed to play it out. It will take a while but not so long enough. Be prepared. You may not have to wait too long for really long term investment. India, not China, will be the biggest beneficiary of this crisis. Hands Down.

Kalidas (Anil Selarka)
Hong Kong, February 4, 2010         Ref: 10-004

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