Submitted by SD reader BH
Venezuela devalued their currency the Bolivar by nearly 50% on Friday and it now looks like Egypt will be next. The Venezuelan devaluation is merely a small chapter in the current global currency war.
The story in the Financial Times is headlined “Venezuelan devaluation sparks panic“. I read the article and was surprised at the content because when I read the headline I was fooled. OF COURSE the Venezuelans are in a panic, they just lost nearly 50% of their purchasing power over one evening!! The “panic” that I thought would have been written about was “who’s next?”.
Think of it this way, by not allowing a price rise and also not pressing your hand to the downside is not creating any emotion or urgency to buy…now. Yes it is irritating the long term holders but the lack of movement has taken Gold and Silver out of the spotlight. This way, anyone looking to buy on dips or “trend followers” chasing an uptrend are basically made to sit on their hands. Maybe I am wrong in this thought process but it seems to fit AND is the best strategy available in my opinion. Lock the price down, keep whacking it often and steadily to make as few emotional waves as possible. For long term holders of metal assets this is like Chinese water torture but once this changes the supply demand equation will go ballistic. As I have said all along, “either you are in or you’re out, when the music stops you will not be able to correct or better your position”. If you have not positioned yourself yet, use the current calm before the inevitable storm. You will need to be prepared to ride out whatever comes…with whatever you entered with.