Australia Caught Sandbagging Their Currency

Nice scoop on the Australian dollar from our favorite currency analyst, Everbank's Chuck Butler:

And under the heading of "dirty float"... The Reserve Bank of Australia (RBA) is reported to have sold the most A$'s in the month of May, since February 2004! Now, go back to May and recall the move in A$'s... The currency gained almost 10% in the month... So, the A$ would have gained even more if the RBA had not sold A$1.4 Billion A$'s in the month! I personally think the RBA was just trying to smooth out the trading the A$, which given this information would have been moving up the charts with a bullet in May!

I don't think the RBA would get involved if the move was a slow, general appreciation of the currency... So, I don't look for future intervention to keep the A$ from gaining the ground I believe it will gain rest of this year, as inflation fears grow stronger and stronger...

Chuck said it - these types of inverventions never last - at the end of the day, fundamentals always win out.

Based on this info, I went long the Aussie dollar once again yesterday morning (I had closed my position on Monday, on fear the US dollar was due to rally).

Those sandbaggin' sons of bitches won't get away with this!

Also let me make a quick plug for Chuck's company - they offer bank accounts and CD's denominated in foreign currencies. So if you're really hot to trot on the Aussie, you could open up a CD denominated in A$, and earn interest to boot, while the A$ appreciates - potentially a sweet dea. Here's the link to learn more.

Related reading: Australia Avoids a Recession...For Now

Corn Demand Projected to Outpace Supply This Year

The LA Times reports that corn supplies are tightening, with supply/demand projected to be "upside down" this year:

This year's harvest is expected to yield 11.9 billion bushels, down 155 million from last month's projection. The decline is due to soggy weather in such corn-producing states as Illinois, where farmers have delayed planting.

Total use of the corn crop is projected to be 12.5 billion bushels, which would outstrip this year's supply by 525 million bushels.

That means the corn surplus would be drawn down heavily, according to the USDA report, leaving about 1.1 billion bushels at the end of the year. That's 510 million bushels fewer than USDA analysts had expected.

Also, supplies are very low for...drumroll...soybeans! Lowest supply levels since 1983 according to the article...when demand was only half of what it is today, to boot.

Thanks to my friend Jonathan of Lederer Private Wealth Management for passing this piece along.

Marc Faber on American Economic Policy

Last week, Marc Faber wrote an article for The Daily Reckoning, where he critiqued America's economic policy...you can likely guess the general tone of it. I always find his commentary extremely insightful.

You've probably noticed that Faber is one of my favorite gurus. I'm almost finished reading Tomorrow's Gold, which he wrote back in 2002...it's excellent, and I'll post a review once I knock it off.

You can find his essay here:

• Faber on the Frame of Mind of American Economic Policymakers (Part 1)

• Faber on the Frame of Mind of American Economic Policymakers (Part 2)

Free Asian-Pacific Financial Forecast

The folks at Elliott Wave International informed me that they're offering up a free 10-page report forecasting the Asian-Pacific financial markets for free. You can request the report here.

They'll request a sign up for their free club before downloading the report...which you've probably noticed is usually par for the course from financial publishers. I subscribe to Elliott Wave myself, so can vouch personally for the quality of their stuff.

Here's a description of the report:

You’ll get price targets for each region's main market so you can spot opportunities missed by common mainstream sources. Your coverage includes:

• India's SENSEX
• Taiwan's TAIEX
• Korea's KOSPI
• Japan's NIKKEI 225
• China's Shanghai Composite
• Singapore's Straits Times Index
• Hong Kong's Hang Seng Index
• Australia's ASX All Ordinaries

More importantly, the detailed market analysis identifies upcoming rallies and potential bull market moves so you can be ready to take advantage of each region's emerging opportunities.

Why China May Soon Halt Commodity Purchases

Apparently, most of China's recent purchases on the commodity markets have been to build up stockpiles, rather than satisfy actual demand - according to The Daily Crux.

That means the huge Chinese buying is unlikely to continue, and that in turn means commodity prices may be unable to sustain their recent advance.

As for the stockpiling, at least 90 freighters stuffed with iron ore that are floating at China’s ports will have to wait as much as two weeks to unload their cargo because port storage facilities are full...

If this is the case...we sure could be in for a violent pullback in the near term.

Personally, I sold all of my soybean positions today - I was too scared to stay long, and I'm also too frightened to go short. So for now I'll bide time in cash - US dollars of all things!