Steve Quayle News Alerts

Oct. 22, 2004

Many of you don't know I am a hedge fund trader specializing in currencies. I talk to people from around the world every day.

This came my way the other day from a contact in the biz and I thought you might be interested in it. The last time there was this much urgency to dump the U$D in that area of the world was a few months prior to 9-11.

This could mean something and it could mean nothing....but we take notice in my line of work.

Name Withheld

message:

Hey Name Withheld,

I just got another email from the guy I told you about before in Cz Repub. who owns 3 money changing houses and is an FX Spot trader as well . This is his broken email to me summarizing, the USD is flat out being dumped, still. It isn't making headlines for some "reason". He, as you may remember I told you, has a strong tie to a large bank ...banker said they are flooded with USD from people changing their accounts over to another currency...EUR, local money etc...anything to get out of USD. The Chinese he says there are dumping all their USD. We're not talking FX specs, we're talking mom and pop dumping what they thought a month ago was a solid hedge…the USD.

The person has sent me two other emails in two weeks saying the same thing..one of which you got already, evidently it is an ongoing thing to sell off USD. I didn't know the Chinese are heavy into East Bloc but evidently they are and dumping USD too. He says yards (Billions). afterall, (sic) he's the one changing it!

Take it for what it's worth but be real quick with that close button on your Euro shorts should the house of cards implode faster than we thought. It's already jumped the gun 2-3 weeks in my book. Here is the letter from East Bloc contact:

Dear XXXXX!

Thanks for ur advice..Iím too flat now just waiting..but if we dont go back to 1.2450 (Eur-Usd) in the next 48 h, that meaning my friend the crash is sooner then later...it seems something from the G7 to take the usd down. I wana to be honest with u I dont like the rush from big Chinese fish here they are selling the usd at this level and buying any thing CZK..PLN..SFR...EUR..everything. they start from the morning ..and Iím talking with a huge number as real money..they are changing their USD accounts and ..XXXXX Im talking about yards (Billions) my friend here in the East Bloc say the Chinese have a large biz..operation..our CB(Central Bank) today cant to hold the crash. it was the first time when the usd in XXX at 24,95. Good luck my friend thank you once again luck see u soon....

End

Now the panic on the East Bloc guy is this....he sees Chinese dumping billions of U$D a day through HIM, not caring about the rate. He has no option but to facilitate the transactions. So he is now LONG a huge amount of U$D in a market that has his Chinese customers freaked out so much they are totally ditching the U$D for anything else they can get liquidity for. This guy now has to go into the Interbank market and try to get rid of this huge U$D position, but needs to ditch it ASAP to avoid taking a huge loss on it. But there aren't many buyers looking to stock up on the U$D lately, so it starts to fall.

What can happen is if he and others stop buying the U$D due to the risk, it starts to fall and the Central Banks have to step in. last fall there was a brutal U$D selloff that lasted from Sept to Jan. The Bank Of Japan spent an incredible ammount (sic) of U$D (Trillions) trying to slow the fall. We made a huge ammount (sic) of $$$ off it too. The "fundamentals" don't say it should happen again this fall but it is looking that it might anyway due to the above activities perhaps.

In the FPT this could be a precursor to some kind of attack against American interests.

Name withheld