Weekly Commodities Report – Dropping Dollars From Helicopters

Weekly Commodities Report – Dropping Dollars From Helicopters

Bernanke Fires Up the Printing Presses

Earlier this week, Ben Bernanke announced the US Federal Reserve will buy up to $300 billion of US long-term Treasury securities over the next 3 months.  Where will the Fed get that money?  It will essentially create it out of thin air – also known as “printing money.”

Surprisingly, the markets were not amused by Ben’s announcement, as the dollar suffered it’s largest one-day decline since 1971, while gold got a nice pop, rallying from sub $900, currently sitting around $950 as I type.  
Gold’s recent rally may have had something to do with the fact that it, unlike the US Dollar, cannot be created out of thin air.

Amusingly, this accouncement comes on the heels of a key Chinese official lamenting the bad stench emanating from US Treasury Bonds.  Some reports I’ve seen recently suggest that foreign investment in US debt has fallen precipitiously, and this represents the Fed’s last gasp to hold interest rates low – possibly attempting to drive them all the way down to zero.
If you’ve been thinking that deflation would rule the day, I’d highly recommend revisiting an important guest piece penned for us by Bud Conrad about this epic battle between inflation and deflation.

If You’re Short the Yen, You’re Long the Dollar – Oops

The past couple weeks I’ve been on my soap box, calling the demise of the Japanese Yen.  I made the case that the Yen was circling the toilet bowl at a faster rate than the US Dollar.
The Yen spiked sharply, and unfortunately I was stopped out of my short position at a large loss.  After I was stopped out, then Yen continued to rise a bit, and has since corrected back down.
This is why my wife yells at me for trading currencies.
Ah well, sucks, but have to respect your stops.
I have to admit, this trade gone awry may have killed my appetite for currency trading for awhile.  It was easy when the dollar was on a one-way trajectory to the cellar.  
Things are just a bit too crazy in the currency markets right now for an armchair trader like me to figure out.

Depression Economics for Kids

And just when you thought things couldn’t get any stranger in the financial world, Disney announces a new exhibit at EPCOT center called “The Great Piggy Bank Adventure”.
The exhibit will teach kids such valuable life lessons as staying ahead of inflation, and diversifying your investments.  
You can’t make this stuff up.

Current Futures Positions

Date Position Qty Month/Yr Contract Entry Last Profit

02/27/09 Long  MAY 09  Sugar #11  13.79  13.42  ($414.40) 

Net Profit/Loss On Open Positions ($414.40)
Current Account Value: $25,312.72

Cashed out: $20,000.00
Total value: $45,312.72
Weekly return: -12.7%
2009 YTD return: -50.2% (yikes)

Prior year’s results:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial stake: $2,000.00