Dollar Drop Hop

The dollar and everything it is tied to is getting a comeuppance lately.

The dollar is dirt cheap, but there is a saying if it’s cheap, it’s cheap for a reason.

There is two scenarios going on right now.

1) a speculative top that will end bad and the dollar putting in it’s all time low. If this happens I don’t think that mining stocks will go up that much since the craze is in the futures market. And a notion that I haven’t read anywhere…The banks and hedge funds that took it on the chin with real estate are doubling up their bets in the commodity pits through leverage to make back money they have lost…If that is the case, imagine what would happen to this deck of cards if commodities came tumbling down (unimaginable)…A hedge fund lost a billion dollars on natural gas bets…300 billion was lost in the exotic mortgage business…Which is why this pessimistic scenario is the one I pray will not happen but option 2 which makes everyone happy…

2) the flight of the dollar which will show up in commodities (already has) and eventually in the windfall profits of the miners (many of them have production problems, even at these high prices, which truly reflects how amazing banks and tech companies can have such smooth earnings from year to year-Emeril couldn’t cook it better) who will need to replenish their resources and buy cheap prospective companies out there.

If case 2 is occurring presently then 1999 will occur, but amazingly more so then the tech mania, because this will be driven by fear and not greed.

I bought options on some gold mining companies but obviously not enough. But one has to look at the general market and see how amazing these commodity related companies can keep going up in the face of such bad news out there.

Here are some great cheap on book value basis that are volatile but have great potential

GROW (my favorite) IPSU ROSE (cheap till 30) ABH ROIAK AU LMC (this one is moving!)

I currently missed the boat on most physical commodities market,. but the mining stocks are cheap and have not reflected the reality of the new possibly sustainable commodity pricing; obviously some have but most haven’t and that is where Im going to focus on.

Of course physical uranium in an illiquid market is lagging and has dropped 50% from the top and I expect this to rally as well and I will not be driven from this horse.

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN2823687320080228

Nuclear is back. And I bought my first uranium futures contract out to September.

I believe NAT gas will be hitting 12 which I have been saying for way too long. So on any pullback I will be buying UNG. A commodity that I don’t think we missed the boat on either.

Either way the dollar is in no man’s land. But so is the stock market. And as money is being poured into small commodity markets and driven to nosebleed levels, stocks that have been traditionally invested in will be drained. There is a statistical service I use and they are quite bearish which I have to agree on the general market especially real estate.

SRS should hit 200-300 by the end of this mess.
Oh and I cannot stand the Chinese mania so short that market FXP that is so 2006, but not their currency.