Tuesday November 8, 2005 - 11:31:52 GMT
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Black Swan Capital - www.blackswantrading.com
A dollar capitulation...
“I’m short the dollar,” Bill Gates, the world’s richest man said this weekend from his lofty perch as the guiding light of Davos, "The old dollar, it's going to go down."
So why are you so sure about that Bill? Well, it’s the deficits, of course. And plus, I have a real good friend. His name is Warren.
Taken from Currency Currents 31 January 2005
It was nice to see one of last year’s Davos “guiding lights” make a public capitulation on the dollar. We are referring to Mr. Buffet of course. Now we wait for the other shoe to drop—Mr. Gates.
Two of the world’s smartest beings got their very public dollar call very wrong. It goes to show you that intelligence and a belief in the consensus can lead one badly astray, especially in the world of currencies. (The consensus was hung up on, what we have long referred to as, the “Double D’s of Doom”-- the current account deficit and federal budget deficit.)
The Double D’s didn’t just catch the attention of Mr. Buffet and Gates as justification for their multi-billion dollar bets, many of the “really smart” people got it wrong. And what is interesting is the fact that some are still clinging ever so tightly to that theme. Call it ego, call it conviction, or call it crazy, but it tells us there may be more dollar bears out there that still haven’t capitulated.
Though the open interest levels in the US dollar index suggests a speculative bullish extreme is shaping up in the buck on a daily basis, which may need some correcting, on a weekly basis, the chart of the dollar index suggests there is plenty of room to run…
Black Swan Capital
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