Last Call on the Pound Sterling Rally?

It might be time for us to grab a pint...and short one of our favorite whipping boys once again.

The British Pound - the only currency that may actually be sicker than the US dollar (two turds circling the bowl really) - looks like it's recent rally may be running out of steam.

Grab a pint...and short the Pound?

(Source: Barchart.com)

The BP has plummeted since early 2008 - from around $2, all the way down around $1.37 at it's low earlier this year - and is now back up around $1.62. That looks like a standard fare retracement to me of roughly 40%.

With the dollar starting to look frisky once again, we could see the BP get smacked down once again soon.

If you'd like to short the BP, the ETF FXB is probably the easiest way to do it.

The trouble with shorting the Pound straight up is that you're short in dollar terms - so if you prefer to hedge with another currency, you may want to pair it up with a long position, such as say FXA (the nice, sound Australian dollar).

Further reading: Australia caught sandbagging the A$!

Gordon Brown Tosses Final Nail in Coffin of UK Economy

Gordon Brown appears to now have fulfilled his destiny as one of the worst leaders in the UK's illustrious history, as he tossed the final nail in the coffin of a wheezing economy, courtesy of a budget that would make one of Ayn Rand's villains blush.

Brown, like most politicians, appears to have read few if any history books, as he plans to tax top wage earners at 50%.  Those who believe that budgets can be balanced by soaking the rich are naive - capital, like water, flows downhill, according to the path of least resistance.  The exodus of capital from the UK will only accelerate as a result of these socialist taxation rates, and the UK will continue it's slide into oblivion.

Don't laugh too hard, fellow Americans, we're not far behind.

To top it off, the UK's budget plan is based on projections that have no chance in hell of coming true - calling for economic growth of 1.25% in 2010 and 3.5% in 2011.  I'll parlay the under on those two picks, thank you very much.

One guy entitled to say "told ya so" is Daniel Hannan, the Brit who layed the smack down on Brown in Parliament a few months back.  Classic clip.

Other lowlights of Brown's career, now that we're piling on?  How about his massive sale of 60% of Britain's gold between 1999 and 2002, essentially calling the absolute 20-year bottom for gold!  Earning him the hilarious nickname from the Casey Research folks "Goldfinger Brown."

Brown's party is almost a shoe-in to get voted out of office next year.  In the meantime, we'll leave with this parting shot - the collapse of the British Pound under his watch.  Gordon, we hardly knew ye.  Please remember to write us often.

Jim Rogers: "I Would Not Put Any Money in the U.K."

Jim Rogers tells Bloomberg News that he would avoid investing in the U.K., and that he's sold all of his Pound Sterling.

He also mentions he's been buying Chinese shares and commodities (agriculture, metals, and energy) since the October/November "selling climax."

Weekly Futures Positions Review - December 14, 2008

Top posts from the past week:

• Marc Faber: The 2009 Global Economy Will Be A "Total Disaster"
  
• US Bailout Price Tag Heading for $10+ Trillion(!)
  
• Yearly Oil Demand Drops for 1st Time in 25 Years
  
• Consumer Credit Crisis: The Next Shoe to Drop
  

A review of my futures trades from the previous week:

• Covered my British Pound short. British Pound futures have been trading sideways over the last few weeks. And it looks like the US dollar rally is starting to run out of steam.
  

Existing positions I've got:

• None!

My wish list...and it looks like these commodities are at least starting to form a bottom, at last:

• Sugar
• Coffee
• Cotton
  
• Natural Gas
• Silver
• Crude Oil
• Wheat
• Corn
  

Account Balances

Current Cash Balance	$49,196.88
Open Trade Equity	$0.00
Total Equity	$49,196.88
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$49,196.88

Cashed out: $20,000.00
Total value: $69,196.88
Weekly return: -2.7%
YTD return: -10.2%

***"Cash out" mostly means taxes, but lately I've also been using it for living expenses, and also to finance a cool new time management software startup that is starting to lift off.

My Current Commodity Futures Positions - 9/14/08

A special Blogging the Commodity Bull Market shout out to my good friend Lance, who works at a prominent New York investment bank.

Lance (name altered to protect the innocent) is a regular reader of our blog, though he is strictly forbidden from commenting whatsoever due to his professional ties.

Via a text message exchange we had today during the late NFL games, Lance provided me with some key insider info: "hope ur long oil pal! dump the dollar". Lance went on to recommned that I "buy the norwegian krona".

Though these text messages no doubt were sent after a beer or ten, we give a hearty salute to Lance. And armed with his information and insights, I have indeed covered my short British Pound position, preparing for the next flush of the dollar down the porcelain bowl.


A review of my trades from the week that was:

• Closed out my short British Pound position - twice - I closed out my two short BP positions last Sunday night when the dollar rally looked over. Then the dollar surprisingly bounced back, and I shorted the BP again - and then covered again tonight, after watching it pop up nearly 5 cents since Friday. Both the BP and the Dollar are flawed currencies circling the bowl - the question is, which will circle towards the bottom faster.
  

• Shorted Soybeans - Beans look like they may want to break down. My research is telling me that a good harvest will put plenty of beans on the market. I'll quickly exit if beans rally on bullish harvest news.

Other existing positions I've got:

• Long the Japanese Yen - So far, so good.
  

My wish list (waiting for an uptrend):

• Sugar
• Cotton
• Coffee
  
• Swiss Franc
• Natural Gas
  
• Silver

Open Positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
09/04/08	Long	1	DEC 08	Japanese Yen	0.9340	0.9455	$1,437.50
09/09/08	Short	1	NOV 08	Mini Soybeans	1168 1/4	1189	($207.50)
Net Profit/Loss On Open Positions:							$1,230.00

Account Balances
Current Cash Balance	$54,504.37
Open Trade Equity	$1,230.00
Total Equity	$55,734.37
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$55,734.37

Cashed out: $20,000.00
Total value: $75,734.37

Weekly return: -7.2%
YTD return: -1.1%

***"Cash out" mostly means taxes, but lately I've also been using it to pay down my credit cards a bit. Why credit card debt? I'm financing a startup and trying to outpace my CC interest rate in the futures markets - kids, don't try this at home.

My Current Commodity Futures Positions - 9/7/08

Now THAT'S the way you trade!

Two solid weeks in a row - I'm feeling good about things, back in control, following trends like I should be.

A review of my trades from the week that was:

• Closed out my Coffee long position - I closed this out on Thursday just north of the 143 mark, because - well - coffee just didn't feel right. I bought in anticipating a possible breakout - didn't get it - and figured best to close out my position. Much to my immediate chagrin, coffee rallied up above 146 soon after I closed the position. But was down 4.10 yesterday. Coffee is so volatile it's unbelievable. This is truly a "close your eyes and buy" bull market, and I just don't have the stomach or capital for this right now.
  

• Also closed out my Silver long position - Really, I had to come to grips with the fact that I didn't time the bottom properly, that I was dumb for trying, and that I should wait for an uptrend before having a long position in Silver.

• Went long the Japanese Yen -As we discussed earlier in the week, the Yen has held up remarkably well in the face of this dollar rally. We finally got the breakout to the upside I was looking for on Thursday.
  

Other existing positions I've got:

• Short the British Pound - This trade continues to look good - the British Pound has been down basically every single day against the dollar for at least the last month. I'm happy that I closed my eyes and added another short contract last week.
  

My wish list (waiting for an uptrend):

• Sugar
• Cotton
• Coffee
  
• Swiss Franc
• Silver

Open Positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
08/29/08	Short	1	SEP 08	British Pound	1.8190	1.7654	$3,350.00
08/12/08	Short	1	SEP 08	British Pound	1.9042	1.7654	$8,675.00
09/04/08	Long	1	DEC 08	Japanese Yen	0.9340	0.9339	($12.50)
Net Profit/Loss On Open Positions:							$12,012.50

Account Balances
Current Cash Balance	$50,069.73
Open Trade Equity	$12,012.50
Total Equity	$62,082.23
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$62,082.23

Cashed out: $18,000.00
Total value: $80,082.23

Weekly return: 7.4%
YTD return: 5.0%

***"Cash out" mostly means taxes, but lately I've also been using it to pay down my credit cards a bit. Why credit card debt? I'm financing a startup and trying to outpace my CC interest rate in the futures markets - kids, don't try this at home.

My Current Commodity Futures Positions - 8/31/08

A contemplation on my trades from the week that was:

• Shorted the British Pound (again) - Roll over, Sterling! The trend is my friend, the trend is my friend, the trend...bad economic data keeps on coming from the UK. This move was long overdue.
  

• Went long Coffee - I absolutely DON'T like the way coffee is acting since I took this long position, but I'm in for the long haul - hopefully.

Other existing positions I've got:

• Silver Futures - Same old story - I expect silver and gold to rally strong towards the end of the year.
  

My wish list (waiting for an uptrend):

• Sugar
• Cotton
  
• Swiss Franc
• Japanese Yen
• More silver
• More cowbell

Open Positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
08/29/08	Short	1	SEP 08	British Pound	1.8190	1.8213	($143.75)
08/12/08	Short	1	SEP 08	British Pound	1.9042	1.8213	$5,181.25
08/26/08	Long	1	DEC 08	Coffee 'C'	146.55	146.60	$18.75
08/21/08	Long	1	DEC 08	Mini Silver	1390.1	1369.0	($211.00)
Net Profit/Loss On Open Positions:							$4,845.25

Account Balances
Current Cash Balance	$52,962.94
Open Trade Equity	$4,845.25
Total Equity	$57,808.19
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$57,808.19

Cashed out: $18,000.00
Total value: $74,518.00

Weekly return: 2.3%
YTD return: -1.0%

***"Cash out" mostly means taxes, but lately I've also been using it to pay down my credit cards a bit. Why credit card debt? I'm financing a startup and trying to outpace my CC interest rate in the futures markets - kids, don't try this at home.

Roll Over, British Pound! Going Short Two Contracts

A jolly good day to you, dear reader chap. This morning, over tea and biscuits, I posed the following query to myself:

Q: What's better than one short British Pound contract?

A: Well that's easy, my good man - the answer is TWO short British Pound contracts.

Check out this chart - is this dog waking up anytime soon?

Look, George Soros made $1 Billion shorting the British Pound in his most famous trade - I've got some catching up to do!

Further reading:

• FX Street: How Much Lower Can the Sterling Slide?
• "The news for sterling has gone from bad to worse," said Ian Stannard, a currencies strategist at BNP Paribas in London. He said that the pound could test resistance at $1.8180 area "before a corrective rebound develops," as sterling catches up with the dollar's recent move lower.