Home > General, Markets > Sorry, but we’ve run out of dollars

Sorry, but we’ve run out of dollars

December 18, 2009

Just a few weeks ago, the Dollar was tanking and gold was spiking. Now, speculators want to bet on a rising Dollar, but the vault is empty.

This morning Bloomberg News reports, “The Powershares DB US Dollar Index Fund suspended distribution of new share baskets after exhausting its capacity to create stock under a registration statement with the Securities and Exchange Commission.” The ticker symbol is UUP, and it moves with the Dollar Currency Index. That is, when the Dollar increases against the Euro and Yen, the UUP goes up in price.

Translation: Sorry folks, we’ve run out of dollars!

[Dislosure: Rocky recently bought a “slug” of UUP calls as a trade. If the UUP trades at a substantial premium to it’s net asset value because of this “shortage,” Rocky will gladly sell his UUP dollars to the hungry buyers for more than a Dollar. This is a temporary technical/arbitrage condition. Rest assured, the Federal Reserve’s printing press is still running 24/7.]

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  1. December 20, 2009 at 4:18 pm

    Fakename tiptoes hesitantly into this territory, where there be dragons. With their own language. But it is Fakename’s very basic observation that the non-existence of a thing is immaterial to trading, since one does not trade in things but only the possibility of things. We have faith that eventually things like dollars and spring wheat will exist, so, no worries.

  2. December 20, 2009 at 4:20 pm

    Feels a lot like religion to me.

  3. Sam
    December 21, 2009 at 6:13 pm

    Interesting…

  4. allocator
    December 21, 2009 at 10:03 pm

    Nice way to UUP the ante, Rocky. A “slug” of calls eh? It’s a good thing Rocky “NEVER” uses leverage. πŸ™‚

    “Sorry folks, we’ve run out of dollars!” Funny, that’s just what Bernie Madoff said.

    Cheers,
    George

  5. December 22, 2009 at 8:34 am

    George: A “slug” as in: “A small metal disk for use in a vending or gambling machine, especially one used illegally.” Source: http://www.thefreedictionary.com/slug

    No leverage!! Just a few percent of exposure as a little trade….

  6. Sam
    December 22, 2009 at 1:25 pm

    Interesting post. Thank you Rocky.

  7. December 22, 2009 at 5:57 pm

    Hey, Rocky! Check your email. I made a TV recommendation πŸ™‚
    Phyllis

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