New Week, New Opportunity?
It seems the slide continues, although Blue-chips tried hard to make a comeback earlier this afternoon, only to be pounded back into submission by world events, subprime mortgage snafus, among other things.
Gold and crude oil continue to sell off, which for some would be worrysome, but I’m thinking this is a buying opportunity for both.
After all, gold is a hedge against the US dollar and the economy, and I am starting to see the forest through the woods. Housing is still in question, and these subprime mortgages are sure to lead to a credit problem, albeit not a personal one but an economic one.
Oil, while falling on questionable demand, is going to continue to rise. We’re mere months from kicking off driving season, and refineries will start going down for annual maintenance and at the same time move from refining crude into heating oil to gasoline.
I’d love to be able to say that this is the time to buy both crude and gold, but I can’t. I may pick up some more shares of PVX if it continues to drop to the $10 level, and GLD shares if they continue to slide.
Disclaimer: I own both PVX and GLD
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THE YEN CARRY TRADE!! I’ve heard a number as high as $2 TRILLION that has been used in this trade. This means that people have been using borrowed yen to bet on other assets. Now that the Yen is strengthening, margin calls are being made and people are having to offload their other bets in order to pay for their plummeting carry trade. THE YEN CARRY TRADE IS INVOLVED IN EVERY MARKET, that’s why there isn’t many good places to be long, i.e. gold. Even futures on the 10yr Notes and Bonds haven’t risen has strong as many were thinking. How much longer this carry trade will have spillover effects on other markets is anyone’s guess, but don’t try and pick a bottom for quick money, you’ll get creamed. However, I do like your idea of adding a LITTLE gold to my position as I have a longer term view….
Good thoughts, Winston.
Are there other “carry trades” we should be keeping track of? Or is the Yen the only carry in effect at this time?
the yen’s been the most popular because of japan’s low interest rate (.25%), and i believe there are some other southeast asian currencies being used b/c of their low rates as well, but the yen is the one that’s leading everything right now.