Wednesday, April 6, 2016

Near-Term Dollar and Gold

- "If Liberty means anything at all, it means the right to tell people what they don't want to hear"
-  George Orwell

Using my hybrid approach to the market(fundamental & technical), I see two trends emerging in the dollar and gold. There are many aspects that can change the course to my conclusions from external, geopolitical surprise to here at home with the Federal Reserve among others. Having said that, the price movement and volumes behind those movements indicate the following.
Quick Recap
If you recall, the US dollar was selling in the low .70s from 2007 to 2012. During that period the Federal Reserve increased its balance sheet from $one trillion to over $five trillion. Now, common sense would say that the dollar should fall. In my unpublished work, The Evolution of Democracy: The Book of Multiple Ideas and Predictions, I stated that the dollar would fall to $.52 cents. How wrong can one be? Only time will tell on that one. Nevertheless, the dollar rose to a new range of $.75 to.80 cents. Then, in 2014, the dollar proved that it was the best dog amongst fleas. It touched one-dollar repeatedly and word spread that it would soon be on parity with the euro. Didn't happen, but again, time will tell on that one too. After repeated market tests, the strength in the dollar's surge
(number of up-contracts) is slowing. Outside influences like slower global economy and lower US exports are not suppose to effect those decisions. BS! Together, market forces are pushing the dollar lower. The first downtrend came in February of this year. The dollar broke to a new low. Since then, it broke resistance at $.98.5cents. In fact, the dollar lost 4.2% in the first quarter. Currently, it rests at $.94.62cents. The next level of resistance is $.92.5cents. Then, nothing until $.85cents. This is where I see the dollar going.
Gold Time!
On the flip-side of fiat money is gold. It is the leading asset of 2016. It has fought off the repeated attacks by the fiat institutions and it just had its best quarter since 1986. In my quick recap, I do not go back that far because gold had been in a downturn then, after its prior surge in 1980. This return to gold began in 2001. This is the point of reference for gold in my indicators.
The pundits put down any gold guidance in 2015 for the current year. Do they ever admit their errors? Don't waste your time listening to those shills, dear reader because the important aspect is this: Gold is up on high contract volume. It had over one million when it reached the recent high of $1287.80 and only 371k contract on its pullback to $1223.20 on Friday. By the way, that day is always the worst for gold because all the world markets are closed except the US and it allows the fiat people to attack the precious metals. Anyway, the charts and world demand point gold to $1392 and possibly $1423 in the near-term. Yea!
Other Aspects
In other news, the US employment figures came out last Friday. It said that 215,000 jobs were created, but a closer look reveals the real problem with the US economy.
*Retail jobs=48K
*Construction jobs=37K
*Healthcare jobs= 37K
*Food service jobs=25K
The above are low wage employment. After a few years in these fields workers will realize no wage increases and that they are older with no real outlook for quality work. They will find out the hard way that they are only existing and not living.
Now, no news print mentioned this crucial loss to our economy. The US lost these high-paying, quality jobs last month'
In addition, an article in the New York Times, by Neil Irwin who based his work on a report pointed out another serious flaw in US employment numbers. It stated that of all the jobs created under President Obama's administration, over 9-million were either temporary or contract employment. These jobs generally do not come with worker benefits like unemployment insurance. So, if they get laid off or do ot receive contract work, they won't be eligible for unemployment and they will not be counted on any unemployment rolls. They will just disappear. Bottom line: don't put too much faith in GDP to increase with the BEA's numbers.