Wednesday, August 30, 2017

Currencies and Precious Metals

- "No problem can be solved from the same level of consciousness that created it."
- Albert Einstein

The above quote is for the shills meeting in Jackson Hole, Wyoming. We should all know by now that governments manipulate their currency to either export or import. This of course, is only one layer of the onion that governments use. This piece does not examine protectionism, but the implications of the recent action in major currencies.
I told you a little ways back that the dollar is under attack. It has fallen from its high of 103.8 in January of this year to Friday's close of 92.6. It even touched a new yearly low of  92.2, only to find a new lower low on Tuesday at 91.5. Every time that the dollar has tried to bounce, the ball has no air. The volume of negative contracts has enough juice to not only test 88, but carry it through to 84. The dollar has broken its 50 and 200 - day moving average. If you have not realized this extensive move, you may now ask what does it mean? The answers only lead to more questions, however I stand by Sebastian's prediction that our exports will grow and Trump will look great. This does not mean America will be great again, but a replay of the Clinton administration. US citizens will get inflation, the same stagnant wages and more of our industries will be gutted by globalization. Even if Sebastian and I are wrong about the effects of a low dollar, we know for certain what it means elsewhere.
-"one man's ceiling is another man's floor..."
- Paul Simon
When its low tide on one side of the ocean, its high tide on the other side. Back in January of this year, the talk on the Euro was parity to the dollar. The euro hit 104. Now, at 1.192 and touching 120, the shills bark European stocks. The strength behind the move could carry it to 124. As stated for the dollar, if 88 is penetrated, then 84 is in play. The correlation can thrust the euro to the 128-131 range.
It too has risen against the dollar as it sits at 109 and it could go lower.
Where does this lead? Fortunately. I have a friendly doctor who is a world traveler. He gave me this answer.
Dr. Copper 
China is buying and that means prices will rise. Copper was $2.50 a pound in May. It closed last Friday at $3.06. This is a huge, huge move in a short period of time. The volume is strong and copper has surpassed its 50 and 200 - day moving average. It should run to $3.23.
Putting the currencies in a basket which by the way is what the IMF wants to do, but only an expression in my usage, the conclusion is simple= $Gold! 
The results of all the manipulations on currencies cannot manipulate gold. It is the only real money to win against the fiat moves. It has finally breached a new top last Friday and when I relate to you the machinations within the market, you will realize what Sebastian and I see.
On Friday about 30 - minutes before Yellen would speak in Jackson Hole, a whale sold 2- million contracts of gold. This huge short in the past would have ended the gold rally. It didn't. In fact, it was not only engulfed by gold, but gold rose to close up at $1297.9. This shows the conviction of the internals and strength behind the move. We see $1327 and a possible run to test the $1375 set back in July 2016. We also like silver and one reason close to my heart is that I can afford it. At present, silver is moving in a monster range. The volume is very strong to the upside and we see $17.88 in play. Not only that, but if things continue the way that they are trading, $18.28 looks doable.