Is it again Time to Buy the GB Pound against the US Dollar?
Follow-up No 7 July 4, 2005
Peter Zihlmann
The twenty-year picture
It is clear that past trends offer little insight into future trends. Trends differ in time scale, size and extent.
The RSI indicator is in neutral territory from where we may expect either a continuation or a sudden reversal. We do not know. What is sure is that you cannot go on spending what you do not earn and this simple fact does not favour the strong US Dollar.
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 25 Jun 2005 at 12:34:17 PM GMT is:
Image
The estimated population of the United States is 296,393,209, so each citizen's share of this debt is $26,377.75. The National Debt has continued to increase an average of $1.64 billion per day since September 30, 2004!
The long-term picture
The conclusion to be drawn from the above six-year chart can be readily perceived. An excess can prevail for some time, but sure enough it will be corrected.
We can also see that long-term trend-reversals often take months if not years.
Nevertheless, it seems to be the right course of action to buy GB Pounds if you take a medium-term view, three to six months. A day-trader may of course arrive at another conclusion.
The medium-term picture
The medium-term picture
Greed and fear are the main reasons why markets go to excesses and there are no fundamental arguments to explain these movements, at least in the short-term.
This medium-term chart suggests the market has been oversold and that we are at the beginning of a correction of some significance.
While we do not pretend to know whether this is a short-term correction or a general, long-term trend-reversal, we would certainly refrain from selling GB Pounds against US Dollars, and you would be well advised to go LONG.
The dollar may have its ups and downs within the long-term trend but we do not believe that the long-term down-trend of the US-dollar will be reversed quickly.
Our recommendations were valid at the time of writing, viz. at
and may no longer hold at the time of reading.
For any further information as to how we can assist you, please visit us at www.pzim.com or write to zihlmann@pzim.ch or phone +41 44 268 51 10.
Peter Zihlmann
www.pzim.com
www.timeless-gold.com
investment@pzim.com
forex@pzim.com
July 4, 2005
Disclosure: The author has not been paid to write this article, nor has he
received any other inducement to do so. The author is a shareholder in the
company and will benefit from any increase in the company's share price.
Disclaimer: The author's objective in writing this article is to invoke an
interest on the part of potential investors in this stock to the point where
they are encouraged to conduct their own further diligent research. Neither
the information, nor the opinions expressed should be construed as a
solicitation to buy or sell this stock. Investors are recommended to obtain
the advice of a qualified investment advisor before entering into any transactions
in the stock.
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