If the dollar index hits 88 by end of summer, what will be the price of PMs?
cohodk
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Any guess for both gold and silver?
Excuses are tools of the ignorant
Knowledge is the enemy of fear
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Silver..$18.75
<< <i>Any guess for both gold and silver? >>
It sure is tough to figure out a manipulated market, wouldn't you agree?
I knew it would happen.
<< <i>lol, the more dollars they create, the higher the dollar index goes? >>
And the printing press will continue to roll.
Producer prices post biggest drop in three years
At least the demand for ink and paper will increase
<< <i>lol, the more dollars they create, the higher the dollar index goes? >>
Ironic isn't it? The weakness in the Euro makes the USD look good. That should give of us a good idea about how bad things are for the Euro.
The problem with socialism is that sooner or later, you run out of other people's money.
Germany would sure like their gold back in-country. I also found it interesting that the per capita net worth in Germany of about $40K, which is supporting the Euro at all costs, compares unfavorably to the per capita net worth on Cyprus of around $275K.
Maybe there simply isn't any money left in Europe.
I knew it would happen.
<< <i>
<< <i>lol, the more dollars they create, the higher the dollar index goes? >>
Ironic isn't it? The weakness in the Euro makes the USD look good. That should give of us a good idea about how bad things are for the Euro. >>
Economic conditions in the US are far superior to those in Europe and will be for quite some time. The Euro will continue to weaken and the dollar index will go up. PMs will suffer until the dollar index hits about 95--on its way to 100. PMs will stabilize before the dollar index peaks and perhaps even begin to strengthen while the index goes higher. This will be your clue to "back up the truck".
IMHO, if the index hits 88 then gold will be under 1300 and silver under 20.
Knowledge is the enemy of fear
I knew it would happen.
<< <i>Sinclair doesn't think that the Euro will continue to weaken. European economic conditions might suck, but the currency isn't the same thing as the economy. Just as the stock market in the US isn't the economy. They might want everyone to think so, but it isn't true. >>
Have the U.S economy and the U.S. equity markets ever been as "dis-connected" as they are in 2013?
<< <i>Any guess for both gold and silver? >>
$1260 Au
$17-$18 Ag
<< <i>Economic conditions in the US are far superior to those in Europe and will be for quite some time. >>
If/when that does happen Sinclair's "Angels" will be back in business.
<< <i>
<< <i>Sinclair doesn't think that the Euro will continue to weaken. European economic conditions might suck, but the currency isn't the same thing as the economy. Just as the stock market in the US isn't the economy. They might want everyone to think so, but it isn't true. >>
Have the U.S economy and the U.S. equity markets ever been as "dis-connected" as they are in 2013?
You guys should plot a graph of the stock market vs the economy. You just might be surprised.
You also might want to go out and about town, not your town, but maybe 3 or 4 towns over. And do it during rush hour.
Knowledge is the enemy of fear
$16.18 Silver
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>I don't expect the dollar index to be above 75 by the end of summer. US exporting demands it. >>
That is quite a prediction. However, US exporters have absolutely no say in the dollar index.
FWIW--you may want to look at the dollar index from 1995 to 2000 and the relative economic performance of the US vs the world. Also look at US exports.
From what data is your prediction based?
Knowledge is the enemy of fear
Those that do have a say in the dollar index know that exporters create jobs, GDP and tax revenue. I suspect these three items to be high on the priority list when they push or pull on the index.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I don't think dollar index hits 88, but trades in range 78-85 for the foreseeable future
Liberty: Parent of Science & Industry
From a QE perspective, we may be starting to see the consequences of our actions....
Food for thought.
<< <i>...and quantitative easing has made our dollar stronger?
From a QE perspective, we may be starting to see the consequences of our actions....
Food for thought. >>
Deflation (so they say) is making the dollar stronger, and only because the FED is paying the banks interest to keep all that QE money in reserves and off the streets. QE is really about providing liquidity to the banks, not getting money to the public. In a crisis the banks are now well funded (so they say). Deflation is a result of credit contraction and less spending as belts get tightened.
Dollar index strength is only a reflection of how the dollar is doing compared to the euro, yen and a couple of other currencies. Euro carries approx. 50% of the weight. Bad euro equals good dollar index. Dollar index does however have an impact on how much gold a dollar will buy. For now, higher index equals lower gold price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The dollar has run up into a combination 6 month - 12 month -1 yr- 2yr resistance line. If one ties in the recent 84 high all the way back to the May 2011 - 3 yr
bottom, you'll see that this line touches the last 3 highs and several previous lows and swing points. In essence the dollar has spent the last 8 months moving up to
regain this line 3 different times. I guess I view those past 8 months as sort of dollar bearish since it was trying to regain that 2 yr trend line and hasn't been able to.
If this 3rd attempt fails, then what? The dollar has been routinely cycling for 6-8 weeks at a time. It looks like this past 6 weeks completed another cycle. It should
take 1-3 weeks to consolidate the recent gains. It's current 9 week pattern is a 5 point expanding wedge which is volatile and unstable. These can break in either direction
but typically I see them break lower. The fact that it occurred into 6-12 month rising resistance as well as into 3-7-10 yr downward trend lines would suggest a breakout down
makes sense for now. It's one massive triangle awaiting a monster breakout. But, first we deal with this 9 week wedge pattern. The hourly dollar chart looks to me to have
formed a left shoulder and double head. To continue that thought a move to 83 to form a right shoulder would be next.
The dollar has been putting in 3 yr bottoms (34-40 months) since 1995 despite any FED manipulation. The last one was May 2011. So we should assume that it will bottom
again within 3 yrs. That means that by summer 2014 the dollar has to put in a significant bottom similar to 1995, 98, 01, 04, 08, 11. Whatever the dollar does this summer has
to fit into a fairly deep bottom into summer 2014. If that multi-year triangle pattern continues the dollar could cycle down to around 75 by summer 2014 to make a higher low.
GSR and the dollar have been basically moving up and down together since May 2011. In the short term the GSR looks to be following a pattern similar to May-August 2012 right
before metals broke out for a couple of months. See chart below. GSr is entering into tight Boll Bands. The stoch-rsi has already shown a triple-head which seems to correspond to
price peaks. It has since been driven all the way down with a bounce back into mid-range...then a return towards the bottom. It does look like May-August 2012 action. And more
like early Aug or late May of that period. The upper bollinger band has turned downward which has halted GSR for the time being. If you look back you won't see too many instances
of busting up through a dropping daily upper BB. The GSR (liquidity flows) will give us a clue as to where the dollar might go. Right now GSR is acting like it peaked at 62.5. If the
May 2013 GSR candle wants to behave like the September 2008 candle it better get in gear as it has already wasted 3 weeks of this month going nowhere. Sept 2008 was a moon shot
going from 61 to 74 with hardly a pause. I'm having some doubts now if the 2003-2008 GSR pattern is really repeating in 2008-2013. Maybe it does end up repeating. But not with
the ferocity that the Lehman banking crisis brought to the GSR in Sept-Oct 2008.
Anything from 75 to 100 in the dollar wouldn't surprise me over the next year or so. The factors above will help shape which outcome prevails. When GSR flew in 2008 it wasn't with
the same world wide QE and money printing that we are seeing today. That was a unique event centered around the NY banks. The problem has now gone world wide. If the USDX
gets to 88 this summer though, I'd expect $1200's gold and $18-$20 silver. All the QE money from Sept has gone right into the stock market and bypassed PMs. I have to think that an
unwind of the long stocks -short PMs trade would boost PMs. The exception would be a deleveraging event similar to Aug-Oct 2008 where the dollar screams up. For now the dollar looks
capped around 84-86 by those three multi-year down trend lines.
GSR chart
Dollar chart from Trader Dan
I'd draw the 2 yr trend line a little lower than shown here to get 6 contact points rather than the 3 shown.
<< <i>So why aren't the Europeans buying up gold and supporting the market? >>
The ones with money still left probably are (ie Rothschilds). Their physical buying is not enough yet to offset the furious selling of paper contracts in New York trading hours.
And fwiw they don't really want the price to recover until they have bought their fill. The price that large quantities of bullion trade for between sovereigns and very wealthy
families is far different than NY spot. Why should paper prices for your LCS AGE or gold Maple determine what 20 tonnes of LBMA approved gold sells for between market insiders?
20 tonnes in AGE's would not be buyable at $60 above spot....probably not even $160 above spot.
Liberty: Parent of Science & Industry
I was off on the timing but not the numbers.
Roadrunner, You mention several downtrend lines in the mid-80s. They would now be broken. Any analysis?
Knowledge is the enemy of fear
Liberty: Parent of Science & Industry
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>IMHO, if the index hits 88 then gold will be under 1300 and silver under 20.
I was off on the timing but not the numbers.
Roadrunner, You mention several downtrend lines in the mid-80s. They would now be broken. Any analysis? >>
Yeah, those shorter term trend lines were broken. Now the USD has strongly taken out the 28 year downtrend line as well (linear chart). Though if you plot that in a log format the dollar is just barely peaking out above that 26 yr downtrend. I also note that it's now up to the top of both the 4 yr and 6 yr rising parallel channels. The 4yr channel is the steeper of the two. Maybe all 3 of those is enough to send it into consolidation for a while? The COT commercial numbers are monstrous with a 90.5K net short futures position. The big banks have been loaded up since mid-September. I also feel that there's a 25 yr H&S pattern in play, though it may not play out. The current run to 95 seems symmetric to the run to 106 in 1990 (downward sloping neckline of that H&S pattern). And my point is that a retrace of that move in 1990 to 106 should do something similar from 95, even if just to wipe out weak longs (95 to 90? 95 to 86?). The dollar has been a beast. The 10 yr IH&S pattern (a "W") projects up to around 106. So a number of options. It seems overdue for a rest....even if just a short rest.
An obvious question to ask is what was gold at the last time the dollar was at this 95 level? Answer: $350/oz. That same dollar level showed up numerous times from 1988-1999....gold was in the $280-$430 range in that period....of which $350 is about the center of that range.
True that gold is up substantially since last time the dollar was at this level, but I think we could say the same of all asset classes. Damn dollar aint worth a buck anymore.
Knowledge is the enemy of fear
<< <i>True that gold is up substantially since last time the dollar was at this level, but I think we could say the same of all asset classes. Damn dollar aint worth a buck anymore.
CPI is up only 1.29X since the dollar was last 95 and gold $350/oz. So it looks like we'll have to contribute a lot of this divergence to specific asset class runs....or bogus CPI's....or US Debt/monetary stocks increases....or all 3.
(M2 is up 1.97X and national debt up 2.7X since mid-2003).
Why should any of them be corrolated? If CPI is up 3x, why should gold be up 3x? Why would one be "bogus" and another not?
Knowledge is the enemy of fear
<< <i>divergence to specific asset class runs....or bogus CPI's....or US Debt/monetary stocks increases....or all 3
Why should any of them be corrolated? If CPI is up 3x, why should gold be up 3x? Why would one be "bogus" and another not? >>
Gold is going to out-pace all of them over the longer run. Gold is up 3.5X since 2003, better than CPI, M2, or debt. That's what I would expect. CPI is "managed" or "massaged" as needed to be < M2 growth. I'm actually surprised that the govt reports the real M2 numbers. Then again, maybe they don't. They already got of rid of M3.
Outpace Govt stats or other asset classes? Since I cant really invest in stats im more interested in the latter.
Knowledge is the enemy of fear
What happens if the FED ratchets up a couple of quarter % clicks? The dollar pulls in all that European money that is getting neg rates?
I never thought this before but since I quit buying gold at $660 and got left on the dock as the boat sailed to $1900...
I think $1200 might be an intermediate floor.