Today's Trade & News

"Imagination is more important than knowledge.
 Knowledge is limited. Imagination encircles the world."
-Albert Einstein (1879-1955)

Here Rich Roffman radio talk on oil and dollar (Play from half way 600 point)... http://www.therichroffmanshow.com/component/option,com_eventlist/Itemid,25/func,details/did,33/

Dear Members,

Today I would like to begin by speaking about the world market and the economy.

We have previously talked about the three major revolutions, which brought the world to where we now stand. Though we seem to be in a confusing stage in which there are several transformations occurring together, we can at least agree that capitalism is a dominant part of this era. In the last 150 years, we have moved from “Agriculture” to “Industrialization” and to the “Technology Revolution”. We are now in a different era of capitalism where financial market cycles have complete domination and playing a key role in world economy and it future. The current era is also marked by an absence of fear for authority, as well as a lack of integrity and sense of responsibility; in a word, this is despotism. This despotism is gradually but completely taking control of the world economy and it is extremely difficult to know if we shall carry on, or indeed, if we are fit to survive. After the agricultural, industrial and technological revolutions, the question is whether the current financial wheel shall be able to serve the more than 6 Billion people. As far as I can see, financial policy makers and politicians have abdicated their responsibilities and they are steering the world towards greed and uncertainty.

The era of capitalism has created a bubble that makes the rich richer while the middle class continue to battle against higher living costs (which inflated by this richer group for their own benefits) to an extent of being unable to cope, thanks to the effects of rising inflation. Following the technology burst 2000, there was widespread uncertainty in the financial market, which drove powerful people to create a bubble in real estate by providing easy cash. Financial institutions and lenders began to change tact when they saw the crunch coming; and we witnessed interest rate cuts while the Federal Reserve began to dish money to financial institutions in order to stem the uncertainty but still situation is out of control. However, the low interest rates seemed not to make enough money for them and they devised ways and means of making quick bucks to cover loses and this gave birth to greed. As a result of this new born greed among the hedge funds and financial institutions herded together to bet against each other as though they were in a casino, the strongest taking away the spoils but one thing they are forgetting that they are in casino or they are gambling. Behind this game, there is an easy access to cash, thanks to the fed providing the means to gamble and create a historic bubble of inflation. Indeed, this explains why financial and banking stocks have been losing value because real money is away in gambling. The situation is very scary and I don’t know how many will come with real money from these casino or gambling room and in future where these powerful people will play once the current bubble bursts, or will new gaming room will be created for this people by policy maker.

Today the common man is fighting a vicious war for survival; a worse war than the one in Iraq. For instance, People do not know up to what price people are willing or will be able to pay to fill their cars with gas. The choice confronting people now is whether to first buy gold or get food for their children. Many do not know what instrument shall be used in the future to provide better financial security for the people. Though I do not have many answers today, I see for sure that the people’s purchasing power will drop very drastically in the next three months and a sudden depression or deflation will result, but this will be short-lived. I am naturally a very optimistic person and I see the world riding through and continuing well despite the ups and downs.

My most nagging worry has nothing to do with the USA, but with China, India and Europe. My prediction is that within the next three months, the GDPs of China and India will drop substantially and it will be too late by the time the rest of the world realises. Consequently, I urge that one be very cautious about where you place your money. The truth is that the USA still holds 61% of the world’s economy and if anything goes wrong with it or there is a further fall of the dollar, the world’s economy will soon be on its knees. The growth story will be finished and people China and India will talk about how to survive because burst of GDP growth. As I have said, I am an optimistic person and I see the world moving ahead despite the various ups and downs. Indeed, I am certain that the USA and the USD will survive in coming most uncertain period, but I am not so sure about Europe and some countries in Asia. If there is drought, all vegetation affected as the existing one wilts and dries, while growth of new vegetation cannot occur. Only big plants or those specially adapted can withstand and survive the effects of prolonged drought till the following rainy season. Such is the situation in the market as this analogy of the natural cycle of life is still applicable to our situation. I therefore hope that you find some answers and act accordingly.

Financial predictions for 9 to 13 June 2008:

GOLD:

Gold began to make gains from Thursday last week, and we all know that this was a result of the sudden rise in oil prices and the weakness in the dollar that we expected on Thursday and Friday. This week I see gold opening positively on Monday and it will trade in a narrow range. We shall see some weakness during the last few hours of trading in New York and day traders can therefore sell on the higher opening and cover back the position by the end of the day.

On Tuesday gold will open positively, but I doubt that it can remain in a positive trend till the end of the day. This means that a weaker trend of gold could begin any time and one should take the opportunity of selling gold and gold stocks on Monday and Tuesday’s rising. On Wednesday, Thursday as well as on Friday, gold will fall sharply and drop towards last week’s lows. The trading range for gold this week shall be $908 to $872. Once again, you can cover the gold position on Friday during the last hour of trading.

SILVER

This week silver will follow the trend of gold though the trend of silver will turn more negative from Tuesday. Short term traders should therefore stay away from any new buying positions until Friday. Silver prices will also drop towards last week’s low and the trading range will be from $17.61 to $16.81. If silver prices break the $16.81 level, then there is a possibility of their attaining a new low in coming days.

ZINC, COPPER, PLATINUM & PALLADIUM

One should avoid buying these side metals at all at this stage. If you still like gold and silver, you should hedge your position by selling base metals and base metal stocks. You could also buy precious metals stocks, but do not own precious metals and precious metal stocks without hedging the position as time ahead is very uncertain. Meanwhile, sell copper, platinum and zinc during the middle of the day or during rising on Tuesday.         

IMPORTANT NOTE!!!

THIS IS THE FINAL WEEK OF TRADING FOR JUNE CURRENCY FUTURES AS WELL AS THE STOCK MARKET. EVERYONE WILL TRY TO SQUARE UP POSITIONS BACK TO ZERO AND POWERFUL PEOPLE WILL ATTEMPT TO END THEIR BALANCE SHEETS POSITIVELY. I HOWEVER DON’T KNOW HOW THEY WILL BE ABLE TO KEEP DOING IT UNLESS THEY PUT BILLIONS AND BILLIONS MORE INTO BUYING OIL AND THE EURO. NEVERTHELESS, LET US SEE WHAT HAPPENS BY THE WEEKEND AS MANY OF OUR QUESTIONS WILL BE ANSWERED BY FRIDAY.

ONCE AGAIN, I SEE THE BEST OPPORTUNITY FOR BUYING THE USD AT THIS STAGE. ONE SHOULD FINISH BUYING BY FRIDAY AND FORGET ABOUT YOUR TRADE FOR THE NEXT SIX MONTHS. YOU COULD THEN SEND ME AN EMAIL ON 12^TH DECEMBER 2008 AND TELL ME WHAT HAPPENED WITH YOUR DOLLAR POSITION AFTER BUYING AROUND $73.

COFFEE & COTTON

Cotton will remain in a sideways trend and I therefore don’t recommend any new buying. However, we shall buy coffee on Thursday. Coffee prices will trade weakly or sideways from Monday to Wednesday.

ORANGE JUICE, SUGAR & LUMBER

One should stay away from all these soft commodities. They have been trading weakly as predicted, and we were very accurate about their fall. However, I recommend that you buy orange juice on Thursday and look for a 7% gain to get out.

STOCK MARKET

There was a sharp correction in the USA market on Friday due to a sharp rise in oil prices. There was a panic among investors that there could be a slow down in economies and many were worried that the risk of higher inflation is rising and this could compel central banks to raise interest rates in coming time. Last week’s selling in the USA market will create a panic in Asian and European markets on Monday opening. I am therefore not in favour of investing money in Asia and Europe at this stage. Indeed, you may have noticed that I have not been enthusiastic about these markets for the last six months.  I have been recommending selling international stocks and buying alternative energy and technology stocks. Overall, the USA alternative energy and technology stocks have performed quite well in the last six months even though the world economy has remained under heavy and dark clouds.

The risk of uncertainty is still out there but planetary cycles suggest that you must hold USA technology and alternative energy stocks if you want to have a productive 2008. I don’t see much drop in the USA market from current levels and the maximum it could decline is another 2%, which would present a great buying opportunity. The media will also talk a lot about the election year, but my advice is that you ignore most of such news and hold my recommended sectors.

In addition, Tuesday shall be the turn-around day for the stock market, but you should take the opportunity to sell on any rise in the international market. Mars changing house around 19th of June, which indicates sharp rise in technology and alternative energy stocks.

GRAINS

The sharp rise in oil prices has pushed grain prices higher on Thursday and Friday. However, grains are simply dancing in a party to which they were not invited and the gate crushers shall be thrown out: watch this prediction closely. I see a sharp correction in soy beans, bean oil and corn. Wheat may try to stabilize and you should therefore hedge your selling position with wheat. (Currently bad weather is playing role but soon they will move down like March 2008, during that period our puts made tones of money on wheat, soyean and bean oil).

OIL

The seven years of a bull era for energy has ended last week Friday. Oil is trading at historic high prices and a time will come when the same will be trading at historic lows. I called the $128.80 high in oil but we saw a further sharp rising last week on Thursday and Friday. As a matter of fact, I never thought that oil would go up so much from the $122 level. I expected that Thursday and Friday would only scale up to $133 or $134, but it surprised me by climbing to highs of $138.

Morgan Stanley analysts have now given a $150 target for 4^th July. I don’t know if they want to force sellers to cut the short position or they simply want to usher in more money and people into the game of oil.

From Monday to early Wednesday this week I see oil prices trading in the range of $139.90 to $134.80. A sharp correction will begin in oil from Wednesday after half an hour of the inventory report. On Thursday and Friday oil will trade weakly together with heating oil and RB Gas. Trade with low leverage if you like to sell even on Tuesday. RB Gas is trading around $3.52, Heating oil at $3.9800 and crude at $139.00 and is great opportunity to take position fearlessly on the predicted day.

CURRENCY

I have kept saying that it is difficult to buy anything at the bottom, and this is what is happening with the USD. It has been hanging between $71.50 and $74.00 for the last four months and I am confident once again that at current levels, the dollar is at a great price for buying. Though I know that most of the world’s economists and analysts definitely don’t agree with me, time will vindicate me. People may say that the dollar is worthless; that the USA economy is finished; or even that holding the dollar is like holding toilet paper, but the theory which enabled me predict the fall of USD from 2002 to early 2007 is the same theory indicating that a great era of the dollar is set to begin. Furthermore, there shall be a drop of all major currencies of the world; therefore be careful where you invest your money.

This week the dollar will put up a good fight for stability and gradually inch its way up, but the trading range will be very narrow.  This may well be the final week to take advantage of the opportunity to buy the dollar because you may never see these prices again. We are only a short distance away from the great era of the dollar and a major crash of other currencies.

Sell the Canadian and Australian dollars on Monday and hold the selling position for the next 55 days.

The Euro and Swiss Franc will trade weakly from Tuesday and they are set to remain weak till Monday next week. The Japanese Yen will trade stable.

In conclusion, the South African Rand will decline from Tuesday. As a matter of fact, I don’t see the Rand appreciating for the next seven years.