metals forever move inversely to dollar?

konsole

For a while now the metals and the markets in general have moved inversely to the dollar. It was easy to estimate how much the markets are moving by just looking at the dollar index. It was basically the dollar index down 0.500 and the DOW up about 100 points and vice versa. It wasnt until just recently that the metals held up well against a rise in the dollar. Now with the markets having rallied huge since the low earlier this year and seemingly stalled out recently, along with the metals big rally recently and now their brutal drops the last few days, and then on top of that the dollars recent moderate rise, what hope do the metals have to rally for the next several months or so, and what can break the strong inverse relationship between the metals/markets and the dollar?

ProofCollection

<< <i>what can break the strong inverse relationship between the metals/markets and the dollar? >>



Fear, demand, and shortage of supply.

Except for fear, same as what drove the "shortage" of housing during the real estate boom.

roadrunner

While the dollar tends to be inversely correlated to gold there are no shortage of occurences where they moved together...sometimes for weeks or months. And the percentages also can change over time. Gold was tracking almost 1-1 inversely with the dollar for a large portion of this year. And then over the past 2 months it blew that way making large moves with minimal changes in the USDollar.

roadrunner

cohodk

PC, I think there was fear in real estate. Fear that your neighbor was going to make money flipping houses while you didnt. It turned into greed. There never was a shortage of houses, but there was a shortage of qualified buyers.

My answer to the OP's question, since I do not believe in "hope", I will say that if the dollar rallies, it will be very difficult for metals to advance. Gold may maintain its value, but industrial metals, especially copper, will suffer, perhaps extremely.

Compare a chart of copper to the dollar. You will see thats its price has nothing to do with "economic expansion in China". Its all the dollar, baby.

ProofCollection

There really was a shortage of housing... Our local supply reached less than 2 months. It didn't mean there were no homes to buy, but it was commonplace to have 15 buyers (qualified or not) vying for the same house.