US Dollar looks Exhausted to Rise on Fear, Bearish Rising Wedge Reversal is in the making?

US Dollar looks Exhausted to Rise on Fear, Bearish Rising Wedge Reversal is in the making? Last Thursday when Dow DIA H&S reversal was violated and waterfall started, US Dollar broke out Up of Double Top Reversal, but failed to make a definite High confirmed by Buy crossover in PPO. Hell broke lose after Mr. Paulson opened his mouth again. Jim Paplava has interesting theory that this is his intention: to drive lemmings into Treasuries in order to secure financing for all bailouts.
"The Federal Reserve’s balance sheet has ballooned from $900 billion to more than $1.8 trillion. That’s 13% of GDP. The Treasury Department has telegraphed its intention to float $550 billion of debt in the fourth quarter and estimates it will have to float another $368 billion in the first quarter of 2009. Our national debt will then be close to 49% of GDP."

Nothing is certain apart from uncertainty nowadays, but US Dollar looks very exhausted on its chart. It has push up from Double Top formation refusing to Sell off on markets continued turmoil and Fear, but now is in a potential Rising Wedge formation with PPO still in a down trend pointing to lower resolution. Again TA only works for those who are making money and never does for those who can not.

If CitiCorp C will not be bail out this weekend in one form or another waterfall in markets could bring Fear back and US Dollar will Break Up. But formation is very favorable for the best outcome for Treasury: Market up DOW DIA in a Bullish Engulfing candles pattern, Fear down VIX came into Double Top stronger reversal pattern, US Dollar is weaker resolving downwards from rising Wedge. Inflation is welcome back, deflation Monster is going out of the picture. Last Friday Gold action could point to this resolution. Gold market is too small to accommodate all money running out of Treasuries when prices will go down from recent Top with almost Zero interest on up to 1 year papers. Manageable debasing of US Dollar will be in the picture back, wrong perception of Deflationary scenario in the Treasuries market will allow to sell US Corp. more Debt at lower prices then was imaginable before, but all this Flood will make this Bubble the biggest to fall so far. Gold will go higher recent highs and Silver will be in a parabolic move again.

GDX, SSRI, SLW, ABX, RGLD, AUY, TNR.v, CZX.v, OK.v, MAI.v, SST.v, BVG.v

Global Bailout: it is going to be a flood of money printed.

We need to find a bottleneck where to profit from these liquidity avalanche: Gold will appreciate against all FIAT currencies.

"Sept. 21 (Bloomberg) -- Treasury Secretary Henry Paulson said he's confident several countries will take steps comparable to the $700 billion plan he proposed to buy bad mortgage-related securities to address the global financial crisis."

Taxpayers are on the line: Cost of WallStreet Bailouts.

US Dollar is a FIAT currency (IOU in effect) and backed only by a perceived value of AAA rating of US Treasuries. For maintaining this highest investment rating is crucial Treasury's ability to manage US Corp. cash flow (current account deficit) and solvency of this corporation at any given time: ability to run budget deficit without rising questions of its creditors, which could decide that they do not like to finance this company any more or that they need higher interest (Yield) payed to reflect higher risk. Taxpayers are the source of revenue, they are paying taxes, they include people and corporations. Payables are US Budget expenses (including undisclosed military ones) and its interest payments on debt outstanding. Difference is a Budget Deficit which is financed by additional borrowing by means of selling new Treasuries.

After recent nationalisations US Corp took on its books some "assets" which nobody wanted and disposition of some of them could even bring all system to a hold, so it will be difficult to assume that Wall Street is so stupid and Treasury is so bright that Taxpayers will get any additional value in a near term to help them to hold the load of servicing rising US Debt and Budget Deficit.

What is the load of Wall Street bailing out and taxpayers liabilities now?

1. Bear Sterns - 29 billion.

2. Economic stimulus - 150 billion.

3. Fannie Mae and Freddie Mac - potentially 250 billion (5.4 trillion of mortgage debt is owned or guaranteed by the government now (5% total loss of portfolio).

4. AIG - 85 billion.

5. Wall Street Bailout - 700 billion.

All these money will be taxpayers liability in any case, but you need them now, so you have to sell more Treasuries now. More goods to sell, less buyers - price is going down, yield is going up. Additional interest payments are added to taxpayer burden. With short term rates determined by FED low and Markets rates determined by Treasuries markets rising we are in a Negative Real Rate zone. Value of your investments in deposits or Treasuries is eroded. Government effectively is reflating its economy, printing more money to make its obligations worth less and to repay them in a debased currency. Gold as ultimate store of value is showing the real rate of inflation against all FIAT currencies.

How long can you continue this game: until buyers are willing to pay their "hard currency" for US dollar nominated assets.

Treasury Bubble will be last to burst, but this bust will be of epic proportions and will put US Dollar in a waterfall mode again.

Gold: Short Selling by the Treasury appointed banks can not hide its shine in a Global Bailout.

You can manipulate markets only to a certain extend, now we know from the press that the world was on the doorstep to "meltdown of financial system" last week. Gold has finally decoupled from all baseless financial assets and FIAT currencies and showed a bold vote of confidence breaking out of down trend in one day gain of 85USD. Inflation in the form of extending money supply will flood the system, death clots will be taken out of veins main financial system and will allow to prevent total collapse. But while financials will be holding its domino together finding the way to unwind global derivative mess, Hard assets and Gold and Silver particularly will flourish in the Global Race for security, which is not associated any more with fallen "Rome", its currency and crippled corrupted financial system. After last week events short selling covering rally will be used by professionals to sell into strength and rise liquidity, more money will be allocated to Gold as protection in global portfolios - we are entering a new Bull Leg in the Gold market with Universal recognition of its Store of Value and Wealth in Inflationary times.

US Dollar Bailout Victim chart.

US Dollar is feeling the heat, "rally" has hit the roadblock and all this painted unprecedented manipulation in the "free" markets could become Bearish Flag pattern on the way to new lows. First intervention fueld short covering in the USD, then flight from other markets contributed to temporary dollar strength, global margin call in the weakest currency USD last week was the last dollar strength reserve. Tectonic shift in the market just before the "financial system meltdown" has send Gold 85 dollars higher returning its shine of the Save Haven of last resort, where US Dollar and Treasuries so spectacularly failed last Friday.

Mother of Bailouts, US Dollar will not worth the paper it is printed on.

No details yet available, but one is for sure: US Government will buy bad debts on its books, more money will be created. Reflation, reflation, reflation. What is good: system will be saved and blood clots will be taken from the veins, for Gold, Silver and Commodities it is the best situation. Money supply will create rising inflation, credit will be available for developing mines and production. Confidence in US Dollar as a reserve currency of choice is out of the question and rising Gold at the moment of panic has shown its save haven status. Treasury yield will rise, buyers will demand more risk premium now, short term rates will be kept low: FED can not afford to raise them and I still confident that they will have to cut maybe in unison with other Central Banks. Negative Real Rates will provide fertile ground for our rising Gold, Silver and Commodities.