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Adjust Your Plan as Tides Shift in Financial Markets

By    |   Monday, 20 Sep 2010 09:10 AM

During the past couple of months, there have been some new shifts in the markets that I’m not sure the masses are aware of just yet.

For instance, the dollar broke its seven-month rally about two months ago. Last week, the Bank of Japan started intervening in the Japanese yen to change its direction. (Their interventions will work in the near-term but not in the long-term.)

Commodities have also been surging lately. Agricultural commodities have been increasing as “food inflation” starts to rise. But that commodity group isn’t alone. Gold, silver and other commodities are also hitting new highs. In fact, gold is hitting a new all-time-high.

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Stocks have even begun to put in a “higher low” recently. That shows that stocks are likely to bounce at least through the elections. (Isn’t that coincidental?)

I make note of these changes that are taking place because the tendency is for investors to stick to “old trends” and not recognize new ones when they start to appear.

However, the trend of the dollar heading lower and commodities heading higher are here to stay for a good while (months to years minimally).

U.S. Treasuries have also taken some serious jolts lately. It won’t be long before that parabolic trend is over too. When bond prices and the dollar both fall at the same time, all of these changes will become more evident. Why? More money will run out of U.S. bonds and the U.S. dollar and into other assets.

In fact, the commodity-currencies (Australian dollar and New Zealand dollar especially) have benefited greatly lately from this “dollar down, commodities up” theme. I think that theme will continue for months minimally.

The only trend that will probably remain temporary is the yen. You see, single-bank interventions are almost never successful in the long run. Oh sure, the Bank of Japan can really put it to some traders in the near-term and even the medium-term. It can be painful for traders that are fighting against the Bank of Japan’s wishes for three to six months.

But nine months to a year or more out … you will usually find that these interventions are ineffective.

Therefore, if these Japanese exporting companies (like Toyota, Honda, Sony, etc.) are smart, they will readjust their hedges while they get a lower yen in the near-term.

You see, if they catch a break now and get some new hedges on that will account for the yen strengthening further in the long-run, then they will be fine. (There’s never been a better time to have a really good currency hedger on your team).

But what does all of this mean to you? It means that your dollar is (once again) getting watered down. It means that your costs are going up as the prices of commodities rise.

It means that you need to be aware of this … and it also means that you don’t have to stand idly by and let this happen to you (even though it will happen to Americans overall).

You can use this knowledge to buy up foreign currencies that profit from the rise of commodities. You can short the dollar; you can buy gold and silver, etc. There are many things that you can do to make this “American problem” your new friend.

You see, if you’re on the right side of the equation, then this isn't a problem for you or your family. It’s only a problem if you’re on the wrong side of it, like most Americans will be.

But not my readers. You are informed. You are educated … and now you’ve got information to arm yourself with so that you can make any alterations in your portfolio like you need.

I’ve been preaching this to my Money Matrix Insider subscribers for a while now … and now I’m telling you, too.

Position yourself properly and you won’t suffer like most will. The key to success in this area is being armed with the right information in a timely fashion to where you can make the needed changes to avoid the dilution of your dollars and the vicious “gobbling effect” that the rise of inflation has on your finances. 

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.

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SeanHyman
During the past couple of months, there have been some new shifts in the markets that I m not sure the masses are aware of just yet. For instance, the dollar broke its seven-month rally about two months ago. Last week, the Bank of Japan started intervening in the Japanese...
sean,hyman,tide,financial,markets
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2010-10-20
Monday, 20 Sep 2010 09:10 AM
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