JG Savoldi's  Instablog

WASHINGTON, Nov 19 (Reuters) - The U.S. dollar will remain the world's primary reserve currency for many years or decades, an International Monetary Fund official said on Thursday.

Spokeswoman Caroline Atkinson's comments came two days after IMF Managing Director Dominique Strauss-Kahn said the world can no longer rely on a currency issued by a single country, and a new global currency may evolve out of the IMF's in-house unit of account, known as Special Drawing Rights. (For more, see [ID:nPEK204168])

"The managing director has said ... he expects the dollar to be the leading reserve currency for many years or decades," Atkinson said at an IMF media briefing.

She said the IMF routinely looks at what is happening in the international monetary system, but was not launching any sort of formal study into how SDRs might one day replace the dollar as a global reserve currency.

"During this last financial crisis, people actually found the dollar a safe haven and preferred to move into dollar assets when risk aversion was very high," she said. "That suggests there's very solid demand, based on the U.S. economy's strength and size and liquidity of its financial markets."

The dollar's role in the world economy has been a topic of debate in recent months as its value fell against a basket of currencies. China, the largest foreign buyer of U.S. government debt, has expressed growing concern that the weakening dollar would hurt its finances. (Reporting by Emily Kaiser, Editing by Chizu Nomiyama)

S & P 500 Crash Set Up



Well, it looks like we're at the moment of truth with respect to the BAM Model's prediction of an imminent stock market crash.  Clients should be well prepared, having been provided ample warning and we've also done our best to warn individual investors who have been following us via our blog, website or Twitter campaign. 

This has certainly been an interesting period for our business launch (to individual investors) and we hope we can assist a few in protecting their hard-earned money.

The catalyst for the expected crash--assuming we get this right--could come from anywhere or nowhere at all, but our best guess is that we'll see USD strength set off a global short-covering stampede in the dollar index. 

Assuming that occurs, that would likely spark a vicious cycle whereby mechanical selling--and buying in markets where Carry Trade money has found a home on the short side--literally unwinds this undiversified single-bet that the masses seem to be clinging on to.

Subscribers will remember that this is the same dynamic the model identified during 2007-2008 vis-a-vis the YEN--and we all know how that ended.  I vividly recall clients telling me the model's very bullish YEN call made no sense at all and that Japan was still many years away from any recovery that could provide the proper fundamental backdrop for strength in their currency.

Don't forget that whatever happens during October, this is only the start of the next leg down according to the model.  We're facing what appears to be a brutal five months ahead of us and our target remains down at SPX 529.

As I said to clients yesterday...the rest is up to Mr. Market. 

 








 

Since we seem to have attracted more than a few skeptics with regard to our recent posts about the BAM model's 2008 crude oil call, we decided to post the original unedited weekly report here on this blog.  All of the unedited 2007-2009 BAM Reports are available for review on our blog at baminvestor.com/blog

The BAM Report

September 15, 2008

Crude Oil Speculative Bubble to be Followed by a Surprising Price Collapse 

As crude oil melted up into the 147 level and the talking heads said we were headed for 200-300 dollar per barrel oil, I sent you all a special report telling you that the BAM Crude Oil Model was expecting a total collapse of prices with a first-stop target of 87.75 into September of this year followed by a return to the 36-47 dollar level over the coming 24 months. 

To prove that conviction I chose the DUG as my #1 long-side recommendation and told you all that the model expected to see that ETF double in price (from the 38 level) as we trade into the end of 2008/first quarter of 2009. 

Crude has now traded down to 90.20 coming less than three dollars from that forecasted target price and although I do see a sharp rally into the 9-18/9-21 period, the first decent lift we see will place crude oil in a position to trigger one of the most vicious sell signals on the board which should create a mind-boggling collapse into year-end. 

Deflationary Spiral Followed by “Last-Gasp” Hyper-Inflation 

As new data has been generated throughout this trading year, I’m now comfortable passing along information about the coming seven years. 

The outlook for price action remains unchanged i.e. a return to the INDU 6565 level followed by a return to the INDU 3971 level, but what has become more clear in my work is a potential timeline for revisiting those price levels. 

My work is now suggesting that we will revisit the 6565 level during 2009/2010 (if we don’t crash to 6565 during the Fall of 2008) and that we could revisit the 3971 level as early as 2010!

Original BAM Report    bit.ly/Fxx2z