The Fed, Gold, Stocks and USD – Explained

The most reasonable explanation for the continued U.S dollar strength ( making a fool of good ol Kong here ) is two-fold in my view.

1. The massive amounts of liquidity provided by the Bank of Japan is most certainly spilling out  – and into U.S equities. In order to make those equity purchases – your foreign currencies need to be exchanged for US dollars ( through which ever institutions / brokerages these stock purchases are made) so as “hot money” looks to take advantage of the continued pumping of U.S equities by the FED and his “banksters”, USD goes along for the ride.

I have been considering a time when both USD and U.S equities would fall together ( and had assumed that time was now ), and now am even more certain of this market dynamic – as we clearly see the two continue to rise together.

How far it can go now is anyone’s guess as the upward break in USD coupled with the complete detachment of U.S stock prices from reality – have both blown right past/through any prior levels I had in mind. Chart patterns and lines of support and resistance have absolutely zero value in a market as rigged as this.

2.The Fed’s continued manipulation of the Gold and Silver markets ( in order to drive prices lower, and mask the massive dilution / devaluation of US dollars via 85 billion in printing per month) and artificially low-interest rates (providing “savers and retired folk” zero on their money) coupled with the massive bond purchasing program has achieved its goal in essentially “snuffing out” any other viable investment opportunity – other than the U.S stock market.

If the Fed was to stop buying U.S government debt or allow the price of Gold to accurately reflect the massive devaluation of the dollar – the entire thing would collapse within days.

Check out this chart of U.S Macro Data ( at it’s worst in 8 months ) compared to the S&P 500.

US_Macro_Data

US_Macro_Data

The higher this parabolic rise goes – the faster / harder it will fall, giving the Fed exactly what it wants……justification to print even more money.

One seriously needs to question – whose interests does the Fed truly serve?

Certainly not those of the American people.

 

4 Responses

  1. fuzzybid May 19, 2013 / 8:55 pm

    I dont think you far off kong check this money.cnn.com/data/fear-and-greed/?iid=H_INV_QL
    It would only be really intresting if the usd follows it this time normally stocks down usd up so this is intresting.
    But the correlation was weird lately when the coms came down and eur and gbp whe saw yen falling and when the jpy gained strenght whe saw some usd weakness that was in the past different they moved in sync

    Also i am looking to buy some yen this week usdjpy @ huge level on the weekly charts zoomed out and when people might digest this piece from the econ minister i expect more comments to come might give the yen some decent correction e.nikkei.com/e/fr/tnks/Nni20130519D19JF427.htm

  2. Derek May 20, 2013 / 6:18 pm

    Maybe that change in direction began today, Kong.

    Que piensas?

    • Forex Kong May 21, 2013 / 7:08 am

      Yo creo que……

      He he he…….as per usual here these days – USD still pushing my analysis to the test – both technically as well as fundamentally. The original breach of my “said level of resistance” certainly opened up the possibility of USD moving higher BUT – it’s now just taunting me as it again hovers at this level ( within a penny or two ).

      So – we’ve already made a pretty clear correlation that USD and U.S equities are moving in tandem, and I guess the question still remains……

      How much higher before a turn? Man – as per all my posting / charts / macro data analysis…this market topped out back in March – so anything happening here/now is no man’s land really.

      I’d love to tell you “yes of course! – today is the day!” but assume markets will trade flat moving into Thursday, and perhaps then …yes then! We’ll get even more shit data out of the U.S ( which is gauranteed ) and this thing thing will get back on the rails.

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