We discussed the link between the Japanese YEN and gold prices about 2 years ago.

cohodk

In this thread.



Roadrunner asked, "Cohodk, considering the constant strengthening of the Yen over the past 10 yrs seemed to be an aid to the gold bull market, what does it mean now
that the Yen appears to have started a new trend where it weakens against the dollar?"


Cohodk responded, "1300/20"

I know that sounds like arrogant horn tooting, but the evidence was clear (at least to me). All the stories about India and China buying, about Russia and Iran not using dollars to trade oil, about the seemingly endless conspiracy and manipulation theories, about the ending of London spot pricing and development of Shanghai Gold Exchange, did not stop the inevitable from happening.









The top chart shows the price of gold in term of YEN. Very stable for the better part of 2 years and about the same as level as 4 years ago. Price and TIME is nearing the bottom of the uptrend channel.


The bottom chart shows the value of the YEN vs the dollar for the last 30+ years. The steep (parabolic) uptrend was broken 2 years ago as we discussed and now the longer term (15 yr) uptrend is breaking. The YEN is going to drop at least another 20%.

I predict there will be quite a move in the gold/yen chart. What will the gold/dollar chart look like?

derryb

a weakening yen should drive up the yen price of gold.

Gold will drop against the dollar because the weak yen (along with the faltering euro) will drastically strengthen the dollar index. A strong dollar is obviously what the FED wants, but the question remains, how much of US exports (and its associated US jobs) is the FED willing to sacrifice.

Creating demand for US debt has obviously taken priority over jobs, one of the FEDs previously stated primary objectives. I personally believe the strong dollar mandate is a direct result of reduced petrodollar demand worldwide. Making the dollar the worldwide asset of choice will return some of that demand for US paper. The fact that US paper demand is apparently more important to the FED than its mandate on employment tells me the declining petrodollar situation is a threat that is being take very seriously by US economic (and balance sheet) planners. Now that the FED has reduced its role in buying US debt, it surely is being used to play a big part in driving others to it. The FED has a good, recent track record of driving money where it wants it to go.

cohodk

A strong dollar is obviously what the FED wants

A year ago you wrote just the opposite.

I never seen evidence of reduced demand for US debt and no one has provided me such evidence even though I have asked hundreds of times.

I bet the foreign holders of US debt are very happy with the rise in the dollar as it makes their holdings much more valuable. I bet Russia is kicking itself for selling US debt. There is absolutely no global decline in demand for US debt or dollars.

How many times must we recant the falsehoods mentioned in the OP?

And yes, gold in YEN terms will increase and I expect this upward price movement to commence imminently. All the treads about "saving" dollars. We should have "saved" yen. All prices revert to norms, the Japanese are about to experience this first hand. Sorry Higayashima.

derryb

<< <i>I never seen evidence of reduced demand for US debt and no one has provided me such evidence even though I have asked hundreds of times.

I bet the foreign holders of US debt are very happy with the rise in the dollar as it makes their holdings much more valuable. I bet Russia is kicking itself for selling US debt. There is absolutely no global decline in demand for US debt or dollars. >>


You just provided one piece of evidence with your Russia comment. Others, including China, have reduced their purchases.



<< <i>All the treads about "saving" dollars. We should have "saved" yen. All prices revert to norms, the Japanese are about to experience this first hand. >>


Disagree, yen are about to become less valuable. That is why it will take more of them to buy that ounce of gold.

cohodk

<< <i>

<< <i>I never seen evidence of reduced demand for US debt and no one has provided me such evidence even though I have asked hundreds of times.

I bet the foreign holders of US debt are very happy with the rise in the dollar as it makes their holdings much more valuable. I bet Russia is kicking itself for selling US debt. There is absolutely no global decline in demand for US debt or dollars. >>


You just provided one piece of evidence with your Russia comment. Others, including China, have reduced their purchases. >>




Nope I did not. Russia sold because it had to raise money to support its currency, not because it no longer wanted US debt. It sold it most liquid asset because it could (there are eager buyers), rather than fire selling other assets. This is the mistake most investors make--they sell their best performer and hold losers. Russia will face enormous challenges in the coming decade.

cohodk

Disagree, yen are about to become less valuable. That is why it will take more of them to buy that ounce of gold.

I meant saving as in converting them to PMs. As in "saving dollars from oblivion". I thought I was clear in my concern for Japanese citizens as prices revert to norms (ie, they gots lots of inflation to catch up on).