Wow, finally finding some quiet time on a holiday weekend to get a post in. My life has been very busy and equally stressful as of late. My wife and I will be welcoming our 2nd daughter into the world on the 13th (via c-section), then closing on a house purchase the 22nd, possibly the 18th depending on how things go. Then there will be prepping, painting, carpet installation, and finally moving. We'll make it though!
In my last post I shared my view that Turkey looked like a good longer term investment. I was wrong. I was right in my analysis of tangible returns in interest rates and the potential for a carry trade, but I did not place enough focus on Turkey's central bank governor. The problem with the Lira carry is that foreign money is not welcome in Turkey. This is why even in an environment of accelerating inflation in Turkey, interest rates are being kept artificially low and bank reserve capital requirements remain high. Furthermore, the Turkish central bank is selling Lira daily to buy dollars. This government order flow has significantly devalued the Lira over the last month. The bottom line is that until leadership changes in Turkey, trading the Lira either direction is a bad bet. I'm out at break even and I've shifted my attention to other, more stable markets.
Whenever you are researching possible trades and developing trends, always be sure you know the political risks to your trade--they can be enormous even when everything else about the trade looks great.
As of the 15th, I won't be allowed to leverage up on my gold positions, dang it. Right when the gold market is about to blow up I'll have to settle for market returns. I'll be mixing in floating profits all the way down though. $500 is where gold is headed. Now that gold is falling sharply and US equities had one of their most bullish weeks in two years, the gold apocalypse is upon us.
I'm also bullish the Euro right now, I still think we'll see 1.5 here in the next couple of months. I don't put too much weight on technicals anymore, but the giant bull flag in EU looks to be breaking out and so I took a small bet on EU. Interest rates are on my side, the Greece situation is settling down, and I have no doubt that money will flow from gold into the EU. It's just a game of putting the pieces of the puzzle together.
Recently I've also been buying the Aussie. Yes, even though AUS is correlated with gold. I'm targeting 1.1. At that point in time I believe the falling gold prices will make 1.1 a longer term high in AUSUSD.
Take care everyone and trade well.
