“The November Hat Trick Letter covers the currency chess game, but also the most powerful currency on the planet, the Canadian Dollar. Goldman Sachs shot it down after extended gains to the 110 level. Soon outgoing central banker David Dodge made some defensive painful comments in mid-October when the loonie had reached the 103.5 level following boastful commentary of deserved loonie strength. With John Thain appointed as the new CEO at Merrill Lynch, the parade continues of former GSax executives taking control of powerful Western financial organizations. See the US Dept of Treasury, US Dept of Energy, World Bank, the Bank of Canada, the central bank of Italy, and now Merrill Lynch. Maybe Goldman Sachs should take control of all regulatory bodies and debt rating agencies and indexed funds and currency controls and financial news media?

SWISS FRANC STEPS FORWARD
In the last couple months, much attention has come to the euro. It hit 147, after being 110 in the summer of 2003 when the late great Kurt Richebächer sipped coffee on his veranda with me, discussing how euro warrants were the centerpiece to his estate. He wanted to bequeath to his children large sums based on designed bets against the USDollar. The European Union economy has a juggernaut within it, Germany, whose export business per capita exceeds even that of Japan, a little known fact passed from Dr Kurt. The Euro Central Bank feels behind the curve with an official 4.0% interest rate, now stuck due to the US problem. The Swiss franc is the real story on the currency front in Europe though. It soon will register a multi-decade high.

Some crucial comments are warranted on the Swiss, from a geopolitical standpoint. As a preface, former USFed Chairman Alan Greenspan took a paycheck from the Swiss bankers. Its size is unknown, so one must wonder if it was indeed larger than his US-based paycheck. A suspicious person (it pays to be suspicious these days) might regard Greenspan as having worked a second hidden agenda, to restore banking power back to Switzerland after sixty years. The Swiss quietly resent the Americans, who after World War II wrested banking power as the spoils from war. They see the US bankers and economists and politicians and war machine as having essentially destroyed the global banking system. The Swiss want power to return to central Europe. Recall that the owners of the US Federal Reserve are reported to reside in both Switzerland and London, in more control of US monetary policy (if not political leaders) than people realize. One signal of power restored to Switzerland can be interpreted as the Swiss franc making decade highs, in order to confirm prominence in its quintessential power center, banking. Notice the increase in trading volume in the last 18 months….”

Read more of this excellent article by Jim Willie of the Hat Trick Letter.

Comment:

Getting it right is sweeter than making money, sometimes. A year ago, when arguing with some of my colleagues at the Daily Reckoning, I came out in favor of the Swiss over the Euro – and have had to grin painfully – but haha! Now we see that the Euro is in a bind and liable to sharp reversals – like the pound – whereas the faithful Swissie is chugging a long. I jumped out of Canadian a little too soon, I admit and I also admit, my currency positions are small – ostensibly, because I am “not a gambler.” But of course, I am long the dollar, the biggest gamble of all. Go figure.

My Malaysia call (made a couple of years ago) – is also getting popular. Property mavens all over the place are signalling that this is a good buy.

Now, if only I would follow my own good advice all the time and not listen to the nay-sayers…