I learn something new here everyday!

Never knew "Yen" also meant
yen \YEN\, noun:
1. A strong desire or inclination; a longing.

March weather. They say it comes in like a lion. Well it looks like this year the markets do also! Yen unwinding will drive many hedge funds for the exits all at once. Yen to 110?--see below.

This morning Everbank's Daily Phennig reports:

"The yen rose as a government report showed overseas funds are increasing Japanese bond holdings and less money is leaving the country seeking higher yields. In typical fashion, Japan's top currency official tried to keep the Yen from appreciating too quickly by saying he sees only limited effects from unwinding of so-called carry trades. "There could be some impact of the unwinding, but I believe it is somewhat limited," said Hiroshi Watanabe, Japan's top currency official. He said the size of more "speculative" carry-trade investments has been exaggerated. "Some people say the amount of the total carry trade is $1 trillion, but I don't think so, maybe it's only tens of trillions of yen, he said of the "speculative" transactions. A trillion dollars or a few trillion yen, either way the unwinding of this trade is going to have a positive impact on the Japanese Yen and Swiss Franc . . . . We continue to look for that 110 Yen / US$ level sometime this summer."

I guess I thought the dollar could strengthen on a deleveraging situation. also, I think gold shares could be weak for long enough to trade it. gold shares deflating like all the rest of the speculation, in asia, as well as the US. right now I think bullion will hold up better than the stocks.

I agree that gold is the place to be. But what about the yen? As the carry trade unwinds, FXY should do well. Another option for the infrequent trader, such as myself, might be to purchase the yen through an institution such as Everbank. What I don't like about Everbank is the inability to choose one's entry and exit points precisely, as one can do with an ETF. What I do like about owning foreign currencies through a bank is the FDIC insurance. I'd welcome comments from others regarding strategies for investing in foreign currencies. Also, do you agree that now might be a good time to buy the yen?

I agree that gold is the place to be. But what about the yen? As the carry trade unwinds, FXY should do well. Another option for the infrequent trader, such as myself, might be to purchase the yen through an institution such as Everbank. What I don't like about Everbank is the inability to choose one's entry and exit points precisely, as one can do with an ETF. What I do like about owning foreign currencies through a bank is the FDIC insurance. I'd welcome comments from others regarding strategies for investing in foreign currencies. Also, do you agree that now might be a good time to buy the yen?

ALOHA !!

Yes the tug-of-war is on with the shorts in the Yen but also consider the major short gold positions held by banks such as Goldman Suchs. Helping the FED and US Treasury has been very profitable for Goldman Suchs ... I wonder why? They depend on a rising dollar and falling gold, which I believe the yen carry trade unwinding is bringing more unwound cash into gold and silver. I also believe strong hands will take delivery(100oz gold bars/1000 oz silver bars)on futures not the paper.

"Deep storage" my ass !! A gold price explosion would also have a negative effect on those producers with large hedge books. Barrick comes to mind. Only own unhedged miners.

I agree that gold is the place to be. But what about the yen? As the carry trade unwinds, FXY should do well. Another option for the infrequent trader, such as myself, might be to purchase the yen through an institution such as Everbank. What I don't like about Everbank is the inability to choose one's entry and exit points precisely, as one can do with an ETF. What I do like about owning foreign currencies through a bank is the FDIC insurance. I'd welcome comments from others regarding strategies for investing in foreign currencies. Also, do you agree that now might be a good time to buy the yen?

willa - trading currencies is very difficult and only for pros, imo. It sounds like you would simply putting a position on and not trading though.

If the yen carry trade story is all over the news, the easy money has probably been made for now...probably.

What if the yen drops as gold rallies in ALL currencies as the global liquidity spigot is opened wide?

I find it easier to have lots of cash to buy stocks on sale down the road and to own gold.

just my $0.02

First of all, my apologies for the duplicate postings. (I'm having some connection issues.)

Thanks for your comment, g034. Yes, I would be taking a position in the yen and planning to hold it at least for the intermediate term. I already have enough of my port allocated to precious metals and am looking for places to park my cash, most of which is in $USD accounts. I'm an investor with a long-term outlook, not a trader, but I feel that by holding most of my cash in $USD, I'm standing on the tracks just waiting for the train to eventually mow me down.

willa--I'd heed g034's advice. Currencies are for pros, especially when you're talking about individual country currencies. I follow currencies closely to see the impact on the PMs (gold, silver, plat). That's my main focus.

FYI, this week Rydex reportedly came out with bearish dollar and bull dollar ETFs, which both measure the dollar against a basket of currencies, which is set at what I think is the USD index (57.6% Euro, 13.6% yen, 11.9% pound, 9.1% Can$, 4.2% krona and 3.6% swfranc). These are not for anyone. There are tax implications (long & short) based on gains/losses of the futures contracts. You have to do your own due diligence. I have no position and don't know the symbols.

Disclosure: Small positions for a little more than a year in Profunds and Rydex declining dollar funds when I placed some cash on the sideline. I did this as a hedge in lieu of treasuries paying @5% and have come out ahead. It wasn't spectacular but served its purpose.

I'd save cash for the future as g034 states.

G034 says: “trading currencies is very difficult and only for pros, imo.”

This statement is a mindset, a preference and a belief. A chart is a chart is a chart and can be traded just like any other. Currencies tend to trend much more than stocks and today there are the rydex currency eft’s in addition to futures.

Regardless of what you are trading/investing, when you have your money on the line, you are playing in a world-class arena. Nobody ever said playing on Centre Court at Wimbledon is easy.

Willa, if the trade makes sense to you, in your situation, then you should make it.

jmho

when is a good time to reenter miners? and what miners would you buy?

Wow, gold and silver are really getting hit now and my miner are the weakest I've have seen. Starting to loose money now. Can someone explain where all the money is going? Cash I guess...

Dow 12,232.58 36.05 (0.29%)
Nasdaq 2,405.87 10.28 (0.43%)
NYSE 9,067.41 57.13 (0.63%)

Gold-IAU 65.75 0.79 (1.19%)
Silver-SLV 134.63 6.62 (4.69%)

Oil Crude 37.67 0.05 (0.13%)
US$ 25.69 0.15 (0.58%)
10 yr T-Bill 4.5500

Willa,

"What I do like about owning foreign currencies through a bank is the FDIC insurance."

I don't know about your jusidiction but in Canada, CDIC insurance does NOT cover foreign currency accounts, including $US accounts. Check out FDIC if this is your fallback - it may alter your risk tolerance in decision-making.

Telestar said:

"This statement is a mindset, a preference and a belief. A chart is a chart is a chart and can be traded just like any other. Currencies tend to trend much more than stocks and today there are the rydex currency eft’s in addition to futures.

Regardless of what you are trading/investing, when you have your money on the line, you are playing in a world-class arena. Nobody ever said playing on Centre Court at Wimbledon is easy."

I respectfully disagree.

As soon as 401k's have monthly money being added into currencies, like US equities have, then I may change my mind. In addition to the 401k money flow, you have inflation that pushes equities higher. The US equity market has a definite advantage as to a one way wind direction than any other security on earth. Plus if either Bernanke or Paulson is speaking on any given day, the market will have a "bid" to it ;-)

I use both fundamentals plus technicals and if you think that the fundamentals of the currency trade are as simple as the fundamentals of a stock, you are sadly mistaken.

Just a simple question, any can probably answer.
Willa, you said you already had a sufficient part of your portfolio allocated to precious metals. When you (or anyone) says this, does this imply that you are holding the physical? or do you mean futures, options on hui, etc.? Would you mind clearing that up for me. I am learning so much from this board, it's uncanny.

Thanks

ALOHA !!

Eric ... My current portfolio allocation is as follows:

32% in mining shares
60% in oil shares
8% in g/s physical

The most important part of my portfolio allocation is no "debt" ... no "margin"! Whats the difference between margin and debt? In my mind ... none. Since even if you have no "margin account" as part of your stock portfolio as long as you have "lifestyle debt" it acts like a margin account. Guess where people will go next to get money once they have tapped out their home equity ATM? If they have stocks they will sell stocks even at a loss. How much of the DOW sell off was due to "lifestyle margin"? I have no "lifestyle margin" like a mortgage or car loan. Living life is its own "margin account"!!

kaimu,

what price do you think i should accumulate more slw?

G034, differences are what make the market so interesting.

However, while I do not disagree with your 401k flow analysis; I consider 401k money, dumb money. Money given to mutual funds that run other people’s money (OPM). What a con job the public has bought here, give us your money and we will invest it and in the long-term and every thing will work out in the long run. Maybe, maybe not. Certainly it will work out for the fund managers who make 7 figures and are set for life and their companies reaping obscene fees from the sheep.

Also, that 401k money flow just allows the mutual funds to keep adding to their bloated over owned portfolio of stocks. It is good that the sheep buy this concept because who is going to buy all this stock they own anyway. The last few days give a good example. No one!

With respect to the Greenspan, Bernanke, and Paulson put: Yes, it really gives me confidence that when they speak a bid shows up in the market and bids are pulled in the gold market. They did an excellent job today in the S&P pits.

By the way, I never said that that the fundamentals of the currency trade are as simple as the fundamentals of a stock. However, I defer to your expertise.

Best to you.

ALOHA !!

If you're long term on this then I would say about ... right about ... N-O-W !!! Obviously this stock reacts to gold and silver spot prices so in the short term if spot prices tank more then SLW would come down more. Yet it is already on the oversold side ... I usually don't gamble on further downside if its already this oversold.

I do not have a direct position in SLW but I do through GROW.

Thanks to everyone who responded to my post about the yen.

TerryC, you mentioned the issue of FDIC insurance. At Everbank, foreign currency accounts do carry FDIC insurance, which covers bank failure but does not, of course, protect depositers from losses related to currency fluctuations.

Eric, you asked if I'm using futures or options in the precious metals markets. No, I don't go there--instead, I own gold stocks and some CEF; the latter, of course, is a closed-end fund that holds physical gold and silver. I hope this helps.

Faber on liquidity, the Yen, and Gold
This is a must play video interview with Marc Faber.

Summary

* "Markets obviously peak out when everything looks best and bottom out when things look horrible"
* "In this sense we have the goldilocks outlook and things look fantastic. This is precisely the climate in which stocks can make a longer term high and start to decline"
* "At every market peak.. you have excess liquidity. At the present time a very significant part of what people call excess liquidity comes actually from the American current account deficit". That 800 billion dollars flows around the world and boosts economic activity.
* "Credit standards are now tightening. That leaves the consumer in the United states vulnerable ... and consumption in the US will hardly grow this year, which means the trade deficit in the US will not expand therefore international liquidity while still plentiful will not grow at an accelerating rate ... therefore markets may come off quite a bit more than the typical portfolio manager now expects"
* "We can easily have a correction of 10-15% on the S&P ... followed by a summer rebound but I doubt that we will make new highs as the economy deteriorates towards the end of the year that will get another big selloff in equity markets around the world"
* India and China can easily drop 30-40% before they become buying opportunities.
* Prefers Japanese Equities over other markets on an relative performance basis
* The Yen is very undervalued
* The moment other markets weaken, carry trade money will flow back to Japan and strengthen the Yen
* Prefers agricultural commodities like cotton and sugar over industrial commodities
* Likes gold on a pullback of 5-10% but always holds some gold
* "The gold bull market will end when there will be lines of people in front of gold shops buying gold because they want to move out of cash... when they really become afraid that paper money loses all its value."
* "I don't by gold for jewelry purposes, I buy it as cash, as a currency whose supply is very limited"
* "Certainly you don't want to [store] any gold in the United states because if I am right and the price of gold goes up as much as I think it will, I would imagine that at time in the US they will expropriate gold"
* Everywhere else money supply is growing rapidly, in the US, Europe,and all major countries. "Debt growth is very strong".

That was a great interview. Play it.

http://globaleconomicanalysis.blogspot.com/

I found this on another site and decided to pass it on.

t3d

"BANK OF JAPAN

Something smelled funny when the Bank of Japan raised interest rates a week ago, yet the USDollar rose, US rates remained quiescent, and the Japanese yen remained moribund. Spin was critically woven by the financial media, that the BOJ offered no forward indication on additional rate hikes. These guys read from the same playbook apparently. Last year, moronic spin was woven by the Euro Central Bank governors that their first rate hike was not necessarily the beginning of a fresh new rate tightening cycle. It was, of course.While the financial system depends upon the cheap yen and the infinitesimal cost of borrowing yen for a powerful speculative engine to operate and provided the idle aristocratic wealthy their easy income source, the Japanese economy must heed the inherent risk extended from cheap money in torrents over years on end. My contention (my gut) remains that the BOJ might hike again, but it will do so very very gradually, in order to preserve the Yen Carry Trade. The YCT stands as the primary perverse pillar to the global financial system.

Harken back to June 2006. The BOJ drained a mammoth 13.2% of yen money supply from the system in preparation for their first rate hike in years, to a paltry 0.25% at that. The shock waves were real and palpable, as every major stock market and especially the emerging stock markets shuddered. Afterwards, the BOJ received a scolding, the US assisted in a CPI doctoring episode (a specialty), and almost another full year passed before the second BOJ rate hike came to pass. More warning was given before this rate hike. For a time it looked as though politicians in Tokyo would keep the BOJ on a short leash. They might still keep BOJ governors on such a shortened leash. The time until the next BOJ rate hike might not be closer to a full year. Rising crude oil prices wield damage to their economy more forcefully than most others, slowing it down naturally, since they import 99% of their oil. One should note that the Japanese economy is twice as energy efficient as the bloated wasteful bulbous US Economy. My gut says the Japanese keep the monetary spigot open wide, even with the current slightly higher official 0.50% rate."