Gary and Chris talk the dollar, etc.
Gary “virtually guarantees” the US Dollar Index won’t get back over 100 any time soon; Chris adds a counter-intuitive view that the dollar could even fall in a new crisis/market correction.
Click download link to listen on this device: Download Show
I was hoping it was actually Friday 🙂
Very interesting call on the dollar Gary. I must be one of the naive traders that thought the dollar was going to pullback from the 100.39 level for a few weeks, then trade sideways a few weeks and then start a new climb up in May with a target at 110. I’ve listed several reasons fundamentally why I felt that may happen, but it sounds like technically I’m way off base. I guess my thesis was wrong.
I really do respect your opinion, and if you feel that strongly about the dollar not breaking 100 any time in the next few months, because it is too stretched above the 200 MA then, I’m going to take that into serious consideration.
Birdman, it sounds like Gary is in agreement with your double top concept in the dollar, and that Euro/Yen may surprise to the upside.
I’m going to refrain from posting for a while, because apparently I’m out of touch with these markets and my views are just noise getting in the way of the commentators, who are much more wise and have opinions more worthy of consideration.
Good luck in your investing everyone and may everyone have a prosperous Spring and Summer!
Shad, you always have great commentary. I appreciate it because it really helps keep the discussion moving.
Gary…great call. I agree where the dollar is concerned. It is going down from here although I am targeting a complete retracement back to 79 over the course of this year. It has made a very acceptable double top which was what I had been calling for since late March.
Because it behaved as a bubble chart though it should return to its mean.
On a similar note, WTI has made a similarly acceptable double bottom that is encouraging if one wants to get long oil right now ((in my opinion). Both these trades play off one another. Those who think we will see 30 dollar oil are pure dreamers. It’s already too late for that. We should instead anticipate a recovery in oil prices.
So what else does this tell us? Well we had best reconsider everything that would have been impacted by a rising dollar now that its become clear it is going down. That calls for a review of holdings that benefit from a strong dollar and consideration for trades that move on inflation expectations.
By the way, were you persuaded at all by the many charts I have been putting up these past weeks? No pressure to answer if you choose not too. Mostly I just want to know if they were useful to anyone here because I am not getting too much feedback.
I think I made a good case though. 🙂
Thanks Bird for the kind words. Yes your thoughts and charts had me questioning my thesis, and I always appreciate any thought or ideas from anyone on this blog.
In addition, after hearing the reasoning from Chris and Gary this morning on why the USD will not break 100 anytime this year, then I am consenting that my whole outlook for the next few months is off and I’m going back to the drawing board to develop a new plan for my 2nd quarter investing.
If the Euro/Yen will do better and dollar is going down, then I do agree with you from our discussions yesterday, (but on the Tuesday 14th Rick Ackerman thread), that the CRB is bottoming here and commodities should do well in this environment.
Seems to definitely be going in the opposite direction as of today, Shad!
Good stuff Shad. I am always going back to the drawing board. No shame in that at all because the key is flexibility and not allowing ourselves to be pinned down to an idea that may or may not work. This is all a learning experience right to the very end anyways. I mean, nobody has all the answers and its why the markets are almost more art than science. For me, I find that writing about the markets clears my head and helps me channel the ideas that work best. Its when I stop writing that I get plugged and make mistakes so I really value what others are talking about and suggesting. Helps keep me on track when I might be going off the road!
Nobody has all the answers? I thought that I did! Yah,right!
Agreed. Thanks.
PS. – I sent you a final thought about the Fed raising rates this Sept if there is to be a falling dollar scenario for the balance of 2015. That is a complete overhaul in my thinking for the last few years, but I believe the Fed will use this weaker dollar as the timing band to raise rates more than people are expecting in Sept (and yes, I can’t believe I’m saying that)
One could argue that an action of that type would be a solution. I have to stress that, I don’t believe that it would be a good solution. How about you?
…. on the Rick Ackerman Tues 14th thread.
On my way to check it out. Cheers.
Hey Al,
As for the Fed using the weaker dollar to raise rates more than most are expecting would be their version of a solution, and I am sure there would be many that would see that as good news that the economy is stabilizing. However, I also don’t see how they can raise the rates too much without blowing up the whole system due to their debt load. I just seem them waiting for the dollar to go lower and then announcing this long anticipated rate hike finally.
It will be interesting to see if that plays out and how the general markets and PMs would digest that news in a falling dollar scenario vs previously rising dollar scenario.
I think that the uninformed would view that as being a positive sign. Don’t you?
Don’t worry about the debt for even one minute, Shad.
As I have discussed many times here in the past weeks, higher interest rates mean that inflation is implicit if not guaranteed. That is why the dollar is going to drop…..that is why the Loonie will rise with the Euro and crude oil….and that is why commodities including gold must rise.
Each on their own schedule of course but the program is almost perfect on a cyclical and trend basis.
Nothing else makes sense. We will see the debt inflated away from this point onward and we are looking at a devaluation in the range of 35%. And that is the ONLY alternative to what we have known thus far which was keeping rates low and capping the interest accumulation.
So get ready for inflation. and not the good inflation sorry to say. When rates rise, inflation will make a strong comeback in the prices of our daily living expenses even as it deflates our assets. The charts prove this to be the case.
I would be really curious as to what you did before you moved overseas! Had to be something in finance.
Chris – Good points on the cheaper carry-trade currencies being the Euro & Yen, and not the dollar like in 2008. I could see that boosting the Euro & Yen some, which would surprise many, and may push the dollar lower.
I stand corrected and see why the dollar will not climb higher in May/June as I was expecting. Thanks, I’d rather be philosophically wrong and adjust my trading actions accordingly than lose money.
Thanks for getting my thoughts back on track Chris & Gary.
That is a great attitude Shad. Philosophically wrong usually does not cost money!
Agreed. Just a wounded pride, but not a wounded pocketbook. That works for me!
old age
Its all I have left!
Dont worry Chris – I lose weeks not days!…ha!…:)
kinda agree with you Gary, the metals market is entirely criminal and its being killed off.
Eventualy it could die as people catch on. Whats being done is just another example of how criminal we are in the west imo.
I wonder how much money there will be to take goldshare prices up even if/when it does turn.
I guess there will always be gamblers tho.
If the goldbugs are correct in that most gold has moved to China then why would the US banks, who allegedly manipulate the price, ever want gold to rise in price again?
A higher gold price would benefit the Chinese more than the US surely?
I am pretty convinced Bob UK that the “manipulations” simply represent a road to short term profits.
How about you?
I think it will be played up and down foor the benefits of the big banks Al – they go long, then they go short, repeat.
I think this will continue for the rest of the year.
Hi Bob, China as you know holds at least a trillion dollars in treasuries. China knows its holdings will one day lose value. How about we give China time to buy lots of gold so they can hedge its dollars when that time comes. Make China happy and things will go smoothly. I think that’s the reason. When China has its gold, gold will probably be allowed to rise.
bb, I still maintain that if all depends on what a person’s motive is for buying gold, silver, etc.
Is this the time to load up in gold?! This is the most defeated I have heard Gary thus far. Listening to the negative prediction on the dollar and all-time highs in all conventional markets, isn’t it time to buy into a non-correlating asset such as gold?
Listen to what Doc had to say. By the way, I may be somewhat “impaired” right now but I do agree with him. This is certainly not investment advice.
Noticed how dollar bounced off support last Thursday too. What a coincidence. Think I’ll stop trading gold for awhile too. This might be their new way of dealing with bad job numbers, whether they be job reports, or claims, just have the dollar bounced off support on those days, and short the hell out of gold stocks. By the way, does anyone know what a Greek default would do to the price of oil?
Virgin olive oil or Crude?
Funny you mention that Bob but I am paying almost double the prices of 18 months ago for Olive oil out here where I live. No explanations offered. Did the olive crop crash in Greece or something because that’s quite a serious hike.
There has been a glut of olive oil from the major European producers for over a decade now – the EU olive oil lake.
Each year they have tried too talk up the price in various ways – in recent years it has been talk of some blight that has been affecting the trees. Only this week the Italians were showing TV footgage of blighted olive trees being hacked down.
It is all FUD though as there is a glut of olive oil to rival crude. They just want higher prices but between the Greeks, Spanish, Italisn, Turkish, Portugeuse, North African and Middle Eastern producers there is more than enough to go around.
You really shouldn’t be paying more – especially with the USD so strong compared to the Euro. Methinks you need to try a different brand or a different merchant.
I am paying in an African currency. Maybe that’s the problem and its hidden inflation. Either that or the importers are just screwing us by jacking up prices. I pay more for chicken, eggs, cheese and milk here in East Africa than I paid back in Canada. This is a poor country by any standard. Kind of nuts when you consider the workers wages are so incredibly low.
Which coutry is that?
the one we fuel our cars with
Close enough.
Nobody certainly knows for sure, Jane. I personally don’t think that it would have an affect.
Thanks Big Al, by the way hope you’re feeling much better.
Many thanks Jane, each day is a bit better. Really tired today though.
The dollar will have to trade below the 50 day around 96 for a few days to confirm this rally is actually over for a while. I got a small trading position in gdx near the bottom today to take advantage of a possible rally to 21.
Thanks Paul. Good point.
Endgame approaching.
‘Greece plans to raid coffers as creditors dash hopes of resolving cash crisis’
For the third time in 100 years the story of Europe is… Germany.
Yes it certainly is Bob UK!
Be interesting to see just how the meeting in Washington today turns out.
I think that is it now Al – default could be very close.
The Greeks will have talked endlessly to the EU lot, gone to Moscow and gone to Washington. After which they can hold their hands up and say “We tried our best!”.
Great point, Bob UK
Greece will stay in the Euro. No question in my mind. A resolution will send the Euro on a tear higher…..just as would be the situation if Greece was expelled. You see it really does not matter which way it goes just so long as the bloody uncertainty comes to an end.
Now that, I happen to agree with, Bird.
Cheers Al. In the back of our minds we all know that if Greece actually leaves it will be because of a failure on the part of the Troika and not the Syriza party. Seems to me they are already beaten and prostrate and have done everything short of begging forgiveness.
Chirs (Temple)/Gary, on your premise that Euro and Yen have been the source of carry trade and they should go up due to liquidity requirement…. would not you say the same thing for gold?… It’s artificial but do you also think it’s also one of the source of carry trade since 2011?
I am not aware of gold being used as such. It trades miniscule amounts in comparison to all the fiat currencies. Whatever gold does or doesn’t do would be as a reaction to other movements. Back in 2008, gold plunged for a while as the cheap dollar carry trades were all unwound; some of those cheap/leveraged dollars had been used to buy gold, along with most everything else.
While many Europeans have bought gold as a means to safeguard their savings in the environment of a plunging euro, I don’t think any snap back in the euro higher would have nearly the same negative effect on gold this time around. Large investors, I do not believe, have leveraged cheap euros into gold as they did cheap dollars into gold the last go round.
This is one reason why I think the next major financial upheaval for the markets could end up net positive for gold.
Thank you!
Pretty sure they are there to mine Silver and Gold. No worries.
Oh you bet Peter R.
I have to believe that if, in fact, ISIS was that close the U.S. Marines would be all over them.
Call me crazy!
Oil is hitting heavy resistance now and I decided to take another huge gain in XOP now over 56 like I did last week as in the past my big gains vanish quickly when I get too greedy. XOP is very overbought nearing 70 on the RSI.
I did think that the Saudis increasing production last month would have done more damage to the oil price today. Apparently not.
I heard a really great presentation at our Men’s Breakfast Club meeting this morning regardin energy. The former head of the BP refinery just down the road was our speaker. Wow, what an interesting lady. You should hear her political views! She would fit right in with all of us!
don’t get me wrong, I think this will just be a corrective move in the dollar and it still has one more leg higher later this year before the bull market is over, but it’s going to take a while before it can breakout above 100 again.
Gotcha. So then in the Fall or Winter the USD could make another run of it where it does breach the 100.39 and head for the 110 + zone? I got the impression you were indicating that top wouldn’t come until 2016 for some reason and not the end of 2015.
OK, then we don’t really agree at all Gary. The dollar is going right back down from whence it started this run. Its just a chart thing. Nothing against your call but I think you will be wrong on this trade if you expect a bounce back above these levels.
That is totally out of the question and I would not give it a moments consideration.
Let’s see, Bird!
Interesting thoughts on the US doolar gary! I was just cooking my tea and thinking that the dollar had gone up from 79/80 to 100/101, a roughly 21 point move (a Fibonacci number) and then correct points to give it a 38% Fibonacci correction to around 93, perhaps your 92 might be nearer.
This is what silver did in late 2010. It went from $18 to $31 and change, then retraced 38% to $26 and change and resumed its rally and topped out at over $49.
$CAD Bear market over:
Agreed!
Gold prices as an inverse correlation with the 10-year note should be rallying hard since 2014. Of course interest rates must fall below inflation and oil prices declined:
A platform for deranged views. A home for malcontents, extremists, fringe elements, conspiracy theorists and other bloggers from around the world. How Russia is trying to win the information war through tools like RT.com and shape the conversation while manipulating minds to its own side for support
Pretty interesting discussion……watch the Congressional Hearings.
Conspiracy Theorists, Bloggers Compared To ISIS During Congressional Hearing
http://www.zerohedge.com/news/2015-04-16/conspiracy-theorists-bloggers-compared-isis-during-congressional-hearing
Humorous, if it wasn’t so Orwellian…
Of course, Faux (i.e. – FOX) News, MSNBC and the federal government’s own propaganda machine would never do anything but tell us the unvarnished truth…
Kind of amusing. I got a chuckle about how that gal strung together so many disparaging anti-blogger words without stopping for a single breathe of fresh air. She must have rehearsed that for hours.
Imaging coming home to that lady as your spouse…..what a piece of work she must be in a heated discussion.
Yeah, and don’t even think about mentioning building Seven to her. No sex for a year and she might take your head off at the roots to boot.
Yes the established media outlets are definitely beacons of truth…..
Everything but the official version of stories are by default conspiracies. The government and media label anyone that doesn’t tote the company line a radical and dangerous. It is very Orwellian….. 1984 = 2016.
BTW…before anyone feels the need to point out the mistake…it’s Thursday, not Wednesday. Lost a day amid this hectic week!