Dollar Vs Yen: Good News For Gold Stewart Thomson
Dec 13, 2016
- Gold stocks and silver continue to exhibit substantial strength in the face of the decline in the price of gold. Is that strength hinting that a substantial rally will follow a Fed rate hike?
- For some further insight into the matter, please click here now. Double-click to enlarge this key dollar versus yen daily bars chart.
- The dollar has arrived at the major resistance zone of 116 – 125. The yen is the fiat world’s top risk-off currency, and gold is the ultimate risk-off asset.
- So, it’s very important for gold bugs to watch the price action of the dollar versus the yen. For a closer look at the action, please click here now. Double-click to enlarge this 10 minute bars chart.
- At about 3:30AM on Monday morning, the dollar reached 116, and sold off from a small head and shoulders top formation.
- To view the price action for gold in that same 3:30AM timeframe, please click here now. As the dollar recoiled against the yen, gold began to surge against the dollar.
- Whether 116 marks some kind of final high for the dollar is unknown, but there’s no question that just as gold was vulnerable in the $1320 area going into the US election, the US dollar is now equally vulnerable, going into the Fed meeting tomorrow.
- Please click here now. Double-click to enlarge this daily bars gold chart.
- There’s a bull wedge pattern in play. Both technically and fundamentally, there are some great similarities between the current timeframe and last year, in terms of a potential rate hike and a gold price rally that follows.
- Unfortunately, there are also some important differences. There are rumours that Chinese capital controls are coming, and the government is restricting gold imports.
- That restriction is raising the gold price in China, but to raise the global price Chinese citizen demand must be allowed to be fulfilled.
- Janet Yellen has clearly stated that she seeks a “high pressure economy”, which is an economy where inflation is allowed to run higher.
- If she forcefully reiterates that view this week, the dollar could fall hard against the yen, and against gold.
- Also, banks are incentivized by rate hikes to make more loans, and a rise in loan activity is needed to increase velocity of the money supply.
- Regardless, my suggestion to gold bugs is to cheer for a post Fed meeting rally in gold, but be open to the idea that nothing too exciting happens until Trump gets inaugurated in January.
- Trump’s protectionist agenda is highly inflationary, and his tax cuts would help move money away from government, where it has no real velocity.
- In the private economy and fractional reserve banking system, it would get substantial velocity.
- For more good news on inflation, please click here now. While the fiat call-in in India may be responsible for a lot of the latest surge in oil demand, there’s no question that oil demand in India is growing at a very rapid rate.
- On the supply side, Iran and Russia appear to be ready to put a ceiling on supply. Against the background of inflationary rate hikes and “Trumpflation”, oil is extremely well-supported now, and poised to move higher.
- Please click here now. Double-click to enlarge. Technically, oil also looks superb. There’s a bull flag in play. Oil appears set to burst upside from a sizable rectangle formation, with my target being the $63 area!
- Please click here now. Double-click to enlarge this GDX chart. As noted, gold stocks are showing phenomenal resiliency over the past month, in the face of what is roughly an $80 an ounce decline in the price of bullion!
- GDX is essentially unchanged in price, while gold gets hammered. In a deflationary environment centred on system risk, gold bullion dramatically outperforms gold stocks. In an inflationary setting, which appears to now be imminent, gold stocks absolutely destroy bullion, in terms of upside performance. GDX could trade as low as $18 before a major rally starts, but it’s starting to look like $20 is the floor.
- It’s quite possible, even likely, that Janet Yellen does not want to upset her new boss, Donald Trump. Trump wants inflation, and he likely knows the only “solution” to US government debt is serious inflation that helps debtors and damages creditors.
- Janet Yellen is likely to help Trump get that job done. Mainstream analysts are seriously underestimating the amount of inflationary pressure that Janet Yellen is willing to tolerate once Donald “The Golden Trumpster” Trump becomes America’s most powerful man, on inauguration day!
Dec 13, 2016
email for questions: email@example.com
email to request the free reports: firstname.lastname@example.org
|Tuesday 12th Dec 2017
Special Offer for 321Gold readers: Send an email to email@example.com and I'll send you my free “New Golden Kids On The Block!” report. I highlight key “under the radar” junior gold and silver stocks that seem ready to stage 50% - 100% rallies during Chinese New Year. Potentially large profits can then be booked before they swoon in February. I include key buy and sell action points for each stock.
Updates Subscription Service: Note we are privacy oriented. We accept cheques.
And credit cards thru PayPal only on our website. For your protection
we don't see your credit card information. Only PayPal
|Subscribe via major credit cards
- or make checks payable to: "Stewart Thomson" Mail
to: Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario
L6H 2M8 / Canada
is a retired Merrill Lynch broker. Stewart writes the Graceland
Updates daily between 4am-7am. They are sent out around 8am. The
newsletter is attractively priced and the format is a unique numbered
point form; giving clarity to each point and saving valuable
Thomson is no longer an investment advisor. The information provided
by Stewart and Graceland Updates is for general information purposes
only. Before taking any action on any investment, it is imperative
that you consult with multiple properly licensed, experienced
and qualifed investment advisors and get numerous opinions before
taking any action. Your minimum risk on any investment in the
world is 100% loss of all your money. You may be taking
or preparing to take leveraged positions in investments and not
know it, exposing yourself to unlimited risks. This is highly
concerning if you are an investor in any derivatives products.
There is an approx $700 trillion OTC Derivatives Iceberg with
a tiny portion written off officially. The bottom line: