Gold vs US dollar or Gold vs dollar index?
cohodk
Posts: 19,129 ✭✭✭✭✭
Sorry, I overestimated the cognitive reasoning ability of some board members.
Excuses are tools of the ignorant
Knowledge is the enemy of fear
0
Comments
"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
Knowledge is the enemy of fear
<< <i>Ok, so the Capt's thread the other day and a subsequent comment about pigs got me to thinking about something Roadrunner always says about the dollar index. Basically he thinks that in this "race to the bottom", the dollar index could remain high even if all currencies dropped. Of course this makes sense because if you reduce the numerator and denominator by the same amount then the ratio will remain the same. But what his is really saying is that other assets will increase because of the implied inflation due to the value of the currencies in which assets are based.
So where am I going with this? Not sure myself, haha haha. We like to price the value of gold in terms of dollars, but what if we priced gold in terms of the dollar index. After all, it is the currencies of all nations that get converted into gold so doesnt if make sense to price gold in terms of all currencies. The dollar index is the closest we have to such an index so why not use that? So what information could be gained? ..... >>
The dollar index is not close to a world currency index. It's priced 57% in Eurodollars. I would call it a western world fiat index. And then you have Swiss Francs, British pounds, Swedish Korona. What also should be in there are Yuan, Aussie/NZ dollars, Russian Rubles, Indian Rupee's, Brazil Real's, etc. USDollar index a world currency index? Hardly. It's basically pricing gold against the western fiat currencies with the Yen and Cando being the old men out. Why 57% Eurodollars. Why not 57% in those other currencies not yet included and back down all the rest to 43%?
All I have stated in the past is that currencies are all dropping in purchasing power over time. The rate of descent may change a bit, some might even rise. But the long term trend is to cheapen them. I can see the USDX stay inside a range of 60-120 while it loses 50% or more of its purchasing power. Commodity prices are what tend to keep things honest. Then again, you have the JPM's with $4 TRILL in commodity derivatives trying to distort their pricing.
If you want to compare gold against other currencies, then use Gold vs. UDN. That's a better reflection of the world than gold vs. USD. Isn't the USDollar just the USDX?
Knowledge is the enemy of fear
"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 am finding it comical how you guys place so much emphasis on gold as being a reserve currency, yet when I post an idea supporting you and even graphically showing something positive about gold you belittle it. Wow, just wow. >>
You should look at your own posts over the past 1-2 years. And like derryb, my comments were exactly what I thought. Look at UDN not USDX or $USD. I might be wrong. But, it's what I think.
What happened to the safe haven of the USDollar? Bet that caught a few off guard. The "expected" run to 100+ to 120 might be completely off the table now. GSR is flying solo w/o the dollar as it's usual co-pilot. Interesting.
I'm not the one placing so much emphasis as gold being an alternative/reserve type currency....it's the central banks....and the populations China, India, Russia, etc. As long as these people thing it's important, maybe we should too. The IMF wants more transparency from China before considering it for SDR status. At the same time, there is zero transparency for western gold positioning and transactions. And the CB's hold $3-$4 TRILL in gold reserves. Why so? Those transactions are about the most secretive of anything out there...including otc derivatives. We know more about otc derivatives positioning than we do about gold. And know we don't even know about gold otc derivatives.
The talking heads on MSNBC are saying gold is not a safe haven here as stock markets are whacked. Huh? It's held up fine in the mid-$1160's. And they didn't say boo about the dollar falling off the cliff (ie the previous safe haven). And now we know part of the "why" as to gold getting artificially whacked on July 19th-20th.
<< <i>Sorry, I overestimated the cognitive reasoning ability of some board members. >>
Apparently, just your own. If you really wanted to compare Gold against USDX currencies, then a chart of Gold vs. the inverse of the dollar (or Gold vs. UDN) would have been the appropriate choice. But, since you know everything we can only surmise that it was just a test. Now back to our regularly scheduled crash programming.
Knowledge is the enemy of fear
<< <i>Clearly, you don't understand how to compare gold in other currencies. A gross conceptual error. You even took down your charts so it wasn't so obvious. Nice revision by the master.
Actually the chart was a very positive for gold but you are so blinded by fear and loathing that you couldn't see it. I was actually supporting you and a reason to own gold. Again your projectionism has rendered rational thought impossible.
Youve stated before that you don't understand charts or economics so I wouldn't have expected you to get this right away, but I was hoping for a little more open mindedness. I guess it's true about old dogs.
Knowledge is the enemy of fear
<< <i>not belittling you. just saying unless you are trading real estate for gold you have to value gold in dollars. >>
That's s completely separate topic from what I was attempting, but I appreciate the willingness. I really thought roadrunner would have liked the chart and concept. Oh well. Not my loss.
Knowledge is the enemy of fear
Cohodk make sense to me. Always has. Then again, the market is similar to most women I've dated or married. Up one day, down the next.
I see things with a skeptic's vision. Gold is fine by me. She wanted the bucks so she could buy things to make her look pretty. Gold was looking good before she got ugly.
<< <i>....Youve stated before that you don't understand charts or economics so I wouldn't have expected you to get this right away, but I was hoping for a little more open mindedness. I guess it's true about old dogs. >>
Wrong. You don't read very well. I've stated there is no science of economics, it's just voodoo, sociology or psychology. And if you don't have a science, there certainly can't be anything to understand.
I understand charts just fine. Tell us how your charts couldn't figure out the PM 10 year bull market. Talk about an old dog who couldn't learn a new trick. Every year was a "top"....you got that wrong how many times? Your gold forecast took 6 years to come true. At least that was better than Larry Edelson's 3 years.....lol.
You don't expect much of anyone. We know that.
MOO