This from Sovereign Society:

The hardcore dollar bears said we were crazy for even mentioning the idea that the dollar could rebound during all this economic turmoil.

How could the dollar possibly rally during the worst financial crisis in a generation? (That was a year ago before we knew how far and wide the credit crunch would reach.)

But the fact is, that’s exactly what’s happening now.

I’ll admit that the dollar didn’t rally right away. It took months. In fact, the dollar index didn’t bottom until the day after the Fed bailed out Bear Stearns.

But then, the dollar slowly started to creep higher. And since mid-year, the dollar has been on a tear against the world’s major currencies. In fact, the dollar has jumped 16% just since September.

Crisis Profiteering: Your Dollar Profits from Credit Crunch

And it looks like this dollar rally will continue.

In fact, the dollar is one of the few currencies we are long-term bullish on for 2009. We see the dollar rallying through at least the first half of 2009. As I said on Tuesday, the dollar will continue to fly high on a combination of…

• Its Safe Haven Status: Scared traders are running back to the world’s reserve currency as the credit crunch continues to sweep the markets.
• The Mad Dash for Cash: Stock investors are still dumping whatever is left of their portfolios and running back into cash (in this case, the U.S. dollar).
• Whoever Can Fix the Crisis Gets the $: For now at least, it seems Forex traders believe the U.S. is better equipped to deal with the credit crunch, so they’re pouring money into dollars.
• Crisis Feeds Low-Yielding Currencies: During recessions, Forex traders run for safety, so they trade in their high-yielding currencies for the safety of lower-yielding currencies. So the dollar, now yielding 1%, actually has an advantage right now.

Yes, You Can Invest in a Dollar Rally With Foreign Currencies

Now it may seem strange to play a dollar rally by investing in foreign currencies, but actually there are a couple key ways to profit off this massive dollar rally next year in the currency market.

You could call your stockbroker, and simply ask to short any number of currency ETFs, or even go long the few dollar ETFs they have available.

That’s an excellent way to play the dollar rally – particularly if you’re a longer-term investor. However, ETFs only offer conservative returns (15% to 20% – definitely not bad, assuming stocks continue to plummet).

But in my opinion, there is a bit more interesting way to play this dollar rally either in the options or exotics market. For one reason: Leverage. Leverage allows you to invest a smaller amount, but still shoot for the big gains – often double or triple-digit gains in just a matter of weeks.

Where to Find the Double or Triple-Digit Dollar Winners

The Philadelphia Stock Exchange (now known as the NASDAQ OMX) offers six different currency options that you can buy versus the U.S. dollar.

These currency options trade just like regular stock options, with regular calls and puts. They expire just like stock options, so you only hold them for a short period of time. Also, you only pay the premium for any one contract, so you never risk a penny more than your initial investment.

All World Currency Options are in dollar terms (so there’s no ugly conversion math to trade these). So for example, the British pound option contract tracks the price of the British pound in dollars.

The problem is, they do NOT offer an option on the dollar. So to take advantage of the dollar rally, you need to choose the currency that looks to drop the farthest against the dollar. Then you simply buy a put option on that particular currency.

It’s the same in the exotic Forex market. The exotic Forex market tracks the fast-moving emerging market currencies, so small moves can often lead to large gains. Also, the Forex market trades with both 10:1 or 100:1 leverage depending on what kind of “lot” size you use.

So to take advantage of this dollar rally, you would choose the emerging market that looks set to sink the fastest. Then simply pair that emerging market with the stronger dollar.

This year, our exotic subscribers have been doing just that. For instance, we paired the Hungarian forint with the U.S. dollar in July. We held this USD/HUF pair for a little over a week and made 361%, counting leverage.

Then we did it again. We paired the U.S. dollar with the Thai baht (USD/THB) and made another 334% for our subscribers. A couple larger plays on the Polish zloty and South African rand made 2,948% and 2,997%

Honestly, I’m not saying this to brag. I want to use it as an example of the potential of trading this small corner of the Forex market.

And likewise, you can also find similar opportunities in the options market (we’ve recommended winning options worth 127%, 185%, even 300% during the worst of the credit crisis this year).

But honestly, these are just two strategies to play the dollar rally. There are plenty more.

Source: How to Play the Great Dollar Recession Rally of 2009

I notice that the price ratios between the time spans of differing gold lease rates have been remarkably well behaved lately, almost as if they were locked together in precise bands. I think that this is interesting as hell, although I have no idea what it means, if indeed it means anything, which it probably doesn’t, although I will say that those guys setting up spreads (to take advantage of volatility) in gold have gotten financially killed, which I figure in turn benefited the guys who are short all that gold, as that is who I figure is on the other side of the trade when you and I are trying to make a quick buck with some fancy day-trading of options and futures and, of course, the spreads, and they manage to clean us out pretty regularly, the lying, cheating, thieving bastards.

But being naturally suspicious and cynical, I obviously regard that this is just part of the plan on the part of 1.) The guys who are short gold, whose total short position is in the range of billions and trillions and quadrillions and zillions and gajillions of dollars for all I know, and the 2.) Central banks who foolishly lent out the nation’s gold, at diddly interest rates, as their part of the scheme, and now the Fed has essentially sold (although they call it “leased”) half of all our nation’s gold, which I seem to recall is the estimate of the Gold Anti-Trust Action committee, who are probably best qualified to know (other than the government or Fed, who know for sure, but both of which refuse to even talk about it!).

In fact, Bill Murphy of GATA says, “The Gold Cartel is running out of available central bank gold to meet surging demand for physical gold. It is the opinion of the GATA camp that the central banks only have half the gold they say they have in their vaults – not the commonly bandied about 30,000 tonne number, but less than 15,000 tonnes.”

He notes that there were many powerful people with many powerful friends who had many powerful reasons to keep the price of gold down, such as how “the gold price suppression scheme was the cornerstone of Secretary Treasury Robert Rubin’s ’strong dollar’ policy”, and “Treasury Secretary Paulson, a key member of the President’s Working Group on Financial Markets (popularly known as the Plunge Protection Team)” who chillingly said, “The United States will do what it takes to calm markets”, which they think will be demonstrated by the price of gold not rising, because ordinarily it would be shooting to the freaking moon in response to economic conditions like today, and people would be alarmed, and perhaps singing the latest hit song by the Rocking Mogambo Quintet (RMQ) that has the famous line, “Look at gold shoot to the moon! The Mogambo was right! We’re freaking doomed!”

Now, if you are like me, then you already suspect that all of these people are crooks and back-stabbing, traitorous thieves anyway, and all I want is just to make a lot of money so that I can move into a nice house in a gated community that has armed guards, a nice golf course and completely surrounded by sleazy strip clubs and pizza parlors where you can get any kind of pizza you ever heard of at discount prices.

Fortunately, everything except the cheaper prices is entirely possible as a result of all of this government meddling in the gold market (as they are advised to do so by former Fed chairman Paul Volcker, who had to eliminate the 15% inflation of the ’70s and who thinks that gold soaring to $850 an ounce “looked bad” and undermined his efforts to stop runaway inflation), and Mr. Murphy thinks that this means that “Fortunes have been made and there are more fortunes to come”, and that may people think that gold prices “will go up 3 to 5 times again from present levels.”

And as to the notion that the Fed has sold half of our nation’s gold, I think that is being generous as hell, as I see no reason why the Fed would stop at only half, sort of like when I am starving and I sit down with a whole delicious pizza in front of me, and my wife thinks I am just going to eat half and leave the other half for her, and then she acts all surprised when I see no reason to stop at half, either!

So, assuming they still have some gold to sell into the market to keep the price down, you may have an opportunity to buy more gold cheaply for a while longer yet! Whee!

And don’t get me started on how you can still buy silver so cheaply, as it will elicit another, yet bigger, squeal of glee from me along the lines of “Wheeeee!”, wherein you notice that I used a few extra letters to indicate much higher amounts of glee, which only proves how deadly serious I am!

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Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.