Commodity Trade Mantra

Posts Tagged ‘Dollar Strength’

Why is the Gold Market Sanguine about Rising US Interest Rates?

Why is the gold market being sanguine about rising U.S. interest rates? Rising U.S. inflation and a peak in U.S. dollar strength may mean that the traditional impact of a U.S. monetary tightening cycle may be less than usual. What the gold market is currently signalling is that while U.S. interest rate rises are still a bit of a headwind, they may not be enough to offset some compelling tailwinds.

While the World Binges on US Dollar, Gold Awaits the Purge

The best thing to do is continue carrying a piece of your assets in Gold and Silver to hedge when (not if) the USD falls. Gold will be easily north of $2,000 soon after the world is done converting its currency risk into USD. Then they will be left holding the bag as our Fed pulls the plug. and then you will be buying dips at $1800 and selling rallies at $2500.

The Limited Impact that Dollar Strength has on Gold Speaks Volumes

The dollar has hit a six-week high against the euro. The wider forex market, however, tells us that this latest move is mostly euro weakness over French election concerns rather than dollar strength. Into this uncertainty we are continuing to see a pick-up in demand for alternative investments such as gold and silver. We see a bigger upside to gold in the short term.

Silver Prices Hold Regardless of Dollar Strength - Dips will be Well Supported

The fact silver prices have managed to accelerate higher while the dollar has been strengthening is noteworthy. With base metals generally rallying too, it looks as though silver is attracting industrial buying. A show of dollar strength may act as a headwind, so we would not be surprised to see prices consolidate at lower numbers; but we expect dips will be well supported.

Higher Debt Will Accelerate Central Bank Gold Demand

The U.S. government is currently saddled with $19.9 trillion in public debt. The US dollar accounts for about 64 percent of central banks’ foreign exchange reserves. With the potential for higher U.S. budget deficits and debt risking dollar strength, central banks around the globe could be motivated to increase their gold holdings, says Credit Suisse.

Choking Inflation is last thing the Fed wants now - Good for Gold

The Fed will not raise rates for the fun of it. The Fed wants to keep inflation under control, but what the organization really wants is negative real rates. That’s where inflation is higher than nominal rates. It does the Fed no good to raise rates unless inflation is going up even faster. Yet that’s exactly when gold does its job of preserving wealth.

Time for Patiently Using Corrections & Patterns to Build Gold Positions

The correction is providing an opportunity to enter stocks that we thought got away. The question is precisely when to make those moves. If historic patterns around W-shaped corrections & reactions of gold to rate hikes persist, we could be looking at a strong start to 2017. This fall may be the time for patience & using patterns to position your portfolio for gold’s next leg up.

Star Performance in Silver yet bears Characteristics of a Bear Squeeze

The strength in silver in recent days indicates of an overall shortage & is an illustration of how the mixture of regulated futures, forwards & over-the-counter instruments creates analytical difficulties. CFTC’s CoT Reports indicate silver is very overbought, with hedge funds holding near-record net longs. Silver’s outperformance has the clear characteristics of a bear squeeze.

Did The Fed Intentionally Spark A Commodity Sell-off?

A theory: The Fed realized that QE wasn’t working, and never worked, thus another path was needed. But what alternative did they have, since rates were already ZERO? So maybe they changed course and took a strong dollar policy vs. a weak one to intentionally weaken the commodity sector and thus boost consumer spending.

Same Currency War, New Battle Phase

What is a currency war? They happen when there’s not enough growth in the world to go around for all the debt obligations. In other words, when growth is too low relative to debt burdens. They do this basically by cutting interest rates or intervening in markets. It is as an effort to cheapen the currency, get inflation & to display growth.

New Gold Rush Cometh With Global Bond Market On Edge Of “Cliff”

Should we see capital flight from US & global bond markets, gold should see gains on a par with those in the 2nd half of the 1970s. Experts said that gold’s bubble had burst when it fell from $200 to $100 from Dec 1974 to Aug 1976. But as interest rates rose, gold rose more than 8 times in 3 years & 4 months, to $850 in January 1980.

Gold Movements Have Me Spooked For Now

A 6,000-contract dump as markets opened in Europe was followed by a dump of 14,000 gold contracts, just before New York’s opening bell last Monday. Is somebody trying to get the gold price down? Either a big position wanted out, or somebody wanted to spook the market. And there’s nothing we can do about it either way.

Will there be an Epic (final) US Dollar Rally?

The overall down-trend of the US dollar is clear. But one must remember that counter-trends are typically far more powerful than many expect – and many counter-trends last far longer than expected as well. Let’s discuss the factors that could conceivably bring about the mother of all counter-rallies in the USD.

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