Thursday June 23, 2005 - 11:12:03 GMT
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Black Swan Capital - www.blackswantrading.com
Aussie pulling away from Swiss
“Let us grant that swindling grows with prosperity. It increases further in financial distress from a taut credit system and prices that stop rising and begin to decline.”
Finally the Aussie is lower—who knows how long it will last. Everybody’s favorite comdol (short-hand for commodity dollar i.e. first three letters of each word in case my father-in-law is reading this morning) has been flying high relative to the pack.
Notice the currency bringing up the rear (other than the dollar) in the chart of currency futures above? Yup! It is the Swissie. Once considered the premiere safe haven currency during times of trouble and despair—no more it seems.
Is there a reason? Probably! Here is one view: Paper currencies, relative to gold, are beginning to breakdown as investors across the globe realize the emperors—both fiscal and monetary variety—are wearing no clothes.
And it is the Swiss franc relative to the Australian dollar that is hammering home that point to analysts. These comments from Weldon’s Metals Monitor, by Greg Weldon, highlight this theme:
First a close up…then the long-term chart:
And now the big picture, with Mr. Weldon’s commentary:
Source: Weldon’s Metals Monitor
“THIRTY FIVE YEARS of lower highs, and lower lows [the Aussie has made against the Swiss].
“UNTIL NOW, as we have established a lower high, and penetrated the downtrend line in place since 1988 [blue line on top of bars]. Subsequently, an upside violation of .9945 would complete the first secular bottoming pattern in almost four decades, in the Aussie Dollar versus the Euro-inflicted Swiss Franc.
“MOREOVER, think of the MACRO message inherent in SHUNNING a currency linked to a CB [central bank] that has LIQUIDATED the gold ‘backing’ the currency, and dismantled the banking secrecy society that gave the CHF an aura of financial stability and credibility.
“NOW … under the NEW paradigm … a commodity-linked currency with strong ties to the gold market is making a thirty-five year reversal against a financial safe-haven currency.”
So that’s the story that may drive an ongoing theme; it helps explain why gold is acting well with the dollar.
For now, it is just a story…but stories have a way of gathering momentum—stay tuned.
Black Swan Capital
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