A simple correlation – the price of commodities and the U.S Dollar.
Gold being priced in USD obviously.
As the “value” of The U.S dollar rises – Gold price goes down. When the value of USD falls….one would expect the inverse in gold. Gold moves higher as USD falls. All good?
So you should find it interesting then, that over the past few days ( since giving the green light to buy gold ) The U.S Dollar has remained strong. Suggesting to myself at least…..that “even with a relatively strong dollar” the price of gold and silver related stocks have not only remained buoyant, but have made some pretty sold gains over the past few days.
I bought IMG at 4.68 a couple days ago – Now sitting at 5.29 – All the while USD has continued to move higher.
So what gives Kong? How can the value of the U.S Dollar keep rising AS WELL as Gold and related names?
Answer: An intermediate bottom in Gold.
I’m not talking about a nice little dip to buy, or a quick little stock tip to make you a couple extra bucks for beer….I’m talking about a large scale “fundamental shift in money flow” where the big boys are already well in position. Fully prepared for the U.S Dollar to fall – just that couple of steps ahead of you as…….you still see relative strength in USD even while the big money keeps scooping up Gold.
These large-scale “intermediate turns” don’t play out in a single day.
This will be short-lived, and here is why:
The Euro only further confirms the move currently in play as……it’s now very VERY close to bottoming as well.
Currencies don’t lie. You can’t have EUR and USD going up at the same time!
So the trade at hand is as follows. Long Gold / Silver and the miners NOW…….and short USD ( long EUR ) here in coming days…once this turn shows itself to the masses.
These “big turns” take weeks and even months for the big boys to build positions, so you don’t always see typical correlations playing out “minute to minute”. It’s my firm belief that the entire year of 2016 has essentially had the big money distributing stock to retail investors….while they quietly and patiently unload USD and scoop up Gold.
Make no mistake. It’s “Dollar Short Time” again here soon, with large gains planned in EUR longs, and a solid investment in Gold.
You think it’s backwards. You don’t think it makes sense but…….haven’t you been reading / lurking here long enough to know better by now? Once you throw currencies into your watch lists, and basket of tools to draw from…you can see things much clearer.
Big moves coming post election.