trading gold

Forex, Gold, The Fed, USD – Trades Next Week

Forex Kong 9 Comments

With all the talk of “collapsing emerging market” currecies, and the now “global move” towards risk aversion, we are starting to get a good idea as to how the Fed’s massive liquidity injections ( which spilled out of the U.S over the past 5 years ) have fueled spending / investment in these countries – and now the effect of that “hot money” being pulled back out.

As you’ve come to understand, huge amounts of freshly printed U.S Dollars invested “elsewhere” in search of better returns ( as if you can imagine..U.S banks / investors groups would rather invest in an “emerging economy” that their own “sinking” econmomy) are now pouring back into U.S holdings accounts in fear of much further downside risk.

The Fed’s commitment to tapering ( or at least until they freak and double QE) has triggered a rise in interest rates “planet wide” as many of these “emerging economies” now scramble like mad to adjust.

Keep you eyes on gold and silver for buying opportunities ( I like EXK as well ANV ), as well be prepared for some “serious letting of air” in U.S Equities as from a technical perspective we’ve not even made a dint yet, and the fundamental trade is pretty much clear as day.

Fed sticks to tapering – and planet goes down hard. Fed boots up QE ( and more ) band-aid gets put back on. I’m really curious to consider “how far they will actually let things slide” , as even another 1000 SP points doesn’t really look to scary on a weekly chart. Things could easily fall much further over the coming months.

Forex wise, we’ve finally come into the shift and volatility needed to pull “serious profits” in a very short time as these things always move “much further and faster” when moving to the downside.

A complacent buyer is one thing……..but a “freaked out seller” is another animal all together.

We gorillas stand to do very well in times of “correction”.

Exactly the same trade idea’s setting up for the following week, short of a couple days (perhaps late in the week for a breather / bounce ( and slightly lower USD ). We are clearly in a proven “up trend” in USD both technically and more inportantly fundamentally so…..I will continue to press until proven otherwise. Fed POMO running once on Monday and then “Double POMO” on the 5th then virtually NO POMO for nearly 2 full trading weeks! Let’s see how markets hold up…..or not.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

I’ve been updating / tinkering with my Face Book page as well if anyone is interested in “liking” or following etc…. Forex Kong on FaceBook

The USD Rally Engine: Fed Policy Driving Global Capital Flows

The mechanics behind this dollar strength run deeper than most traders realize. We’re witnessing the unwinding of the greatest carry trade in modern history – five years of zero-cost USD flowing into emerging markets, creating artificial growth bubbles that are now deflating rapidly. When the Fed signals even a hint of taper, those capital flows reverse with devastating speed.

This isn’t just about interest rate differentials anymore. It’s about survival. Emerging market central banks are hiking rates not to fight inflation, but to prevent complete capital flight collapse. Turkey, Brazil, South Africa – they’re all playing defense while the dollar plays offense.

Technical Momentum Confirms the Fundamental Shift

From a pure chart perspective, USD has broken through every major resistance level with conviction. The weekly candles show relentless buying pressure, and we haven’t seen any meaningful pullbacks worth trading yet. This is classic trend behavior – when fundamentals align this strongly, technical levels become launching pads rather than resistance.

The DXY is painting a picture of sustained strength, and until we see actual Fed policy reversal (not just dovish talk), this trend has room to run. Every bounce in risk assets becomes another opportunity to add to USD long positions.

Risk Asset Correlation Breakdown

Here’s what most traders are missing: the traditional risk-on/risk-off correlations are breaking down. We’re seeing moments where both USD strengthens AND equities rally, which historically didn’t happen. This suggests the dollar’s rise isn’t purely defensive – it’s becoming the preferred asset class regardless of risk appetite.

When correlations break, that’s when the biggest moves happen. The USD weakness calls from the mainstream will prove premature until we see actual policy shifts, not just speculation.

Positioning for the Next Phase

The Fed’s POMO schedule tells us everything we need to know about short-term liquidity. When those operations dry up, markets have to find their own footing without the training wheels. That’s typically when we see the most violent moves – both up and down.

Smart money is positioning for this liquidity vacuum. While retail traders chase every headline, professionals are building positions for the bigger structural move. The emerging market currency crisis is just getting started, and each new central bank intervention attempt creates fresh USD buying opportunities.

Gold and Silver: The Contrarian Setup

While everyone’s focused on currency moves, precious metals are setting up for their own reversal story. Rising real rates should theoretically hurt gold, but we’re reaching levels where physical buying kicks in globally. Central banks aren’t just buying USD – they’re diversifying into hard assets too.

The metal moves often happen when everyone’s looking elsewhere. Silver especially tends to bottom hard and fast, creating violent reversals that catch momentum traders off guard.

This whole cycle comes down to one simple reality: liquidity flows where it’s treated best. Right now, that’s USD-denominated assets. Until the Fed blinks – and they will eventually – this trend has more room to run than most expect. The key is positioning size appropriately and not getting shaken out by the inevitable noise along the way.

Markets don’t move in straight lines, but when the fundamental backdrop is this clear, fighting the trend is expensive. Stay nimble, but stay aligned with the primary flow until proven otherwise.

Markets Trade Sideways – You Know What To Do

Forex Kong 4 Comments

I thought I’d wait until after the close today – hoping that “perhaps” there might be something a little more interesting or exciting to chat about. Low and behold…..not.

Today being the 15th trading day with the SP 500 still flopping back n fourth – in range.

Gold putting in some “constructive” moves but certainly nothing to write home about, and the US Dollar’s upward move has “for now” run a little low on steam.

Japan’s Nikkei has also continued to trade in range, unable to get back over that magical 16,000.

What’s changed? What’s new? Absolutely nothing as price action continues to trade sideways day in and day out. There is absolutely nothing you can do about it, just accept it and do your best to remain calm, focused, and don’t get lulled to sleep.

Markets have a tendency to “jump up and punch you in the face” at the most “inopportune time” so…..keep those eyes peeled and maybe “just maybe” we’ll see some fireworks here soon.

The Calm Before the Currency Storm

This sideways grind isn’t just market noise — it’s the setup phase. While everyone’s getting frustrated with the lack of direction, smart money is positioning for what’s coming next. The longer markets compress in these tight ranges, the more explosive the eventual breakout becomes. And when it hits, the currency moves will be swift and unforgiving.

USD Weakness Building Under the Surface

The Dollar’s recent pause isn’t strength — it’s exhaustion. After months of grinding higher, the fundamental drivers that pushed USD to these levels are starting to crack. Federal Reserve policy expectations have shifted, global central banks are finding their footing, and the interest rate differential that powered the Dollar’s rise is narrowing by the week.

Look at the technicals closely. Each bounce in DXY is getting weaker, each pullback deeper. This is textbook distribution, and when the USD weakness finally accelerates, it won’t be a gentle decline. It’ll be a waterfall that catches every tourist long Dollar completely off guard.

The smart play here isn’t chasing the current range — it’s preparing for the breakdown. EUR/USD, GBP/USD, and AUD/USD are all coiled springs waiting for the Dollar’s next leg lower. Position accordingly.

Gold’s Stealth Accumulation Phase

While Gold’s moves might look “constructive” but unspectacular, this is exactly how major bull markets build momentum. The metal isn’t broadcasting its intentions with wild swings — it’s quietly absorbing supply and building a foundation for the next major leg higher.

Central banks worldwide continue their relentless accumulation. Retail traders are bored, institutional flows are steady, and the geopolitical backdrop keeps getting more complex. This combination creates the perfect storm for Gold to eventually break out of this consolidation pattern with serious velocity.

The key level to watch is $2,100. Once Gold clears that resistance convincingly, we’re looking at a run toward $2,300 faster than most traders expect. Don’t let the current sideways action fool you — this is accumulation, not distribution.

Risk Assets Primed for Acceleration

The S&P 500’s range-bound behavior is frustrating day traders, but it’s setting up swing traders for serious profits. Fifteen days of consolidation after a strong move higher isn’t weakness — it’s digestion. The market is processing gains and building energy for the next impulse move.

What makes this setup particularly interesting is how it’s happening across multiple timeframes simultaneously. Weekly charts show consolidation, daily charts show tight ranges, and hourly charts are chopping around key levels. When this type of multi-timeframe compression resolves, the breakout tends to be both fast and sustained.

The rally potential here extends well beyond just US equities. When risk appetite returns in force, it’ll flow through currency pairs, commodities, and emerging markets with equal intensity. AUD, NZD, and CAD will all catch massive bids against safe-haven currencies.

Positioning for the Breakout

The biggest mistake traders make during these quiet periods is reducing position size or walking away entirely. This is exactly when you want to be most prepared, most focused, and most ready to act decisively when the setup triggers.

Japan’s Nikkei failing to reclaim 16,000 isn’t just a technical failure — it’s a sign that global risk appetite is still fragile. But fragility cuts both ways. When confidence returns, the snapback will be violent and profitable for those positioned correctly.

Set your alerts, know your levels, and keep your powder dry. The next few weeks will separate the prepared traders from the reactive ones. Markets don’t stay quiet forever, and when this range breaks, you’ll want to be on the right side of the move from the very first candle.

The calm won’t last much longer. Use it wisely.

Gary Savage – The Dumb Money Tracker

Forex Kong 40 Comments

Once again I have trouble containing myself.

Here’s the original post where I quite blatantly called Gary out to discuss his “incredible investment advice”. Specifically TO BUY LONG TERM PUTS ON QQQ AND SPY on December 22nd.

Calling Out Gary Savage – Shame On You Man

The crux of “my issue” with this was the suggestion of “buying long dated puts for 2016” with the expectation of “holding these puts” for “potencially massive gains”.

Now – only 3 weeks later “The Dumb Money Tracker” is suggesting – and I quote:

“””At this point I think one has to throw caution to the winds and just buy stocks. Knowing that the Fed is going to protect the market for the foreseeable future.”””

“””Don’t worry about momentum divergences or trend line breaks. All one needs to know is that the Fed is handing out free money and all you have to do to get your share is buy stocks.”””

3 WEEKS LATER! This……only 3 weeks later.

I can’t for the life of me imagine what “other gems” Gary offers for a “$1 trial subscription”.

You can do your best again man….should you choose to “pop in” and clarify – but to be honest I really don’t see the point.

Smart money?

How bout “No Money”.

The Real Cost of Following Flip-Flop Analysis

This Gary Savage situation isn’t just about one analyst getting it wrong — it’s a masterclass in why traders lose money following opinion merchants who change direction faster than wind socks. The guy went from “buy long-term puts for massive gains” to “throw caution to the wind and buy stocks” in three weeks. That’s not analysis; that’s financial whiplash.

When Conviction Becomes Comedy

Real traders know that markets don’t pivot on a dime without fundamental shifts. The Fed didn’t suddenly become market saviors overnight, and economic conditions didn’t magically reverse in 21 days. What changed was Gary’s ability to stick to his original thesis when the heat got turned up. This is exactly the kind of flip-flopping that destroys trading accounts and confidence simultaneously.

The options market doesn’t forgive this kind of indecision. Those long-dated puts he recommended? They’re bleeding theta every single day while subscribers scramble to figure out whether they should hold or fold. Meanwhile, the same voice telling them to hold for “massive gains” is now screaming the opposite message. It’s amateur hour dressed up as professional analysis.

The Fed Put Mythology

Let’s address this “Fed protection” fantasy that Gary suddenly discovered. The Federal Reserve isn’t running a charity for equity investors, despite what the financial media wants you to believe. Their mandate involves employment and price stability, not ensuring your SPY calls print money. This whole “Fed put” narrative is dangerous thinking that creates exactly the kind of complacency that leads to massive drawdowns when reality hits.

Professional traders understand that central bank policy creates conditions, not guarantees. The idea that you can ignore technical analysis, momentum, and trend breaks because the Fed has your back is precisely how smart money separates retail traders from their capital. Tech stocks don’t rally just because someone at the Fed hints at accommodation — they rally on earnings, innovation, and genuine demand.

The Real Smart Money Play

While Gary’s subscribers are getting motion sickness from his directional changes, actual smart money is playing a completely different game. They’re not betting on Fed salvation or buying puts for apocalyptic scenarios. They’re trading currencies, commodities, and global flows that most retail analysts completely ignore.

The dollar’s trajectory, emerging market dynamics, and commodity cycles don’t care about Gary’s weekly revelations. USD weakness creates opportunities across multiple asset classes that require actual analysis, not mood swings disguised as market insight.

Real conviction comes from understanding macro trends that unfold over months and years, not from panic reactions to three weeks of price action. The professionals building generational wealth aren’t subscribing to services that change their entire outlook based on short-term noise.

The Subscription Trap

Here’s what really bothers me about this whole charade — the $1 trial subscription model. It’s designed to hook traders during their most vulnerable moments, usually after they’ve taken losses and are desperately seeking someone else to blame or guide them. The low entry price creates the illusion of low risk, but the real cost comes from following contradictory advice that destroys both capital and confidence.

Professional trading requires consistency, discipline, and the ability to admit when you’re wrong without completely reversing your entire worldview. Gary’s three-week flip demonstrates none of these qualities. Instead, it shows exactly why successful traders develop their own analysis skills rather than outsourcing their decision-making to opinion merchants.

The market doesn’t care about your subscription service or your trial offers. It cares about supply and demand, capital flows, and economic reality. Those forces don’t reverse course because some analyst changed his mind after a few red days. They evolve based on fundamental shifts that take time to understand and even longer to play out.

Save your money. Develop your own analysis. And remember — if someone’s market outlook changes dramatically every few weeks, they’re not providing analysis; they’re providing entertainment.

China Gets The Gold – U.S Stays Afloat

Forex Kong 28 Comments

Not to shabby really. Two full weeks without a trade alert posted, and Monday the Nikkei closes down some -450 points. I hope you got the tweet. Of the 13 pairs suggested I think maybe “one” didn’t move directly into profit within the first few hours of trading.

A wonderful entry sure, but in this day and age you can’t just rely on that. Would it shock me to see the entire move 100% completely retraced  by tomorrow afternoon? Not in the slightest.

Interesting to see, that of the “safe havens” outlined in a post a few days ago – ALL managed yo move higher as risk aversion took center stage. The U.S Dollar, Bonds, Yen and Gold all moving higher as suggested ( I hope you’ve taken something away here –  a nice lil nugget found laying in the dirt.)

There’s been some talk that the “age-old correlation” between the price of gold and the value of the Australian Dollar has once again “found its way” as the Aussie continues to exhibit “some degree of strength” in a “risk off ” environment. Personally I’m not holding my breath as ( call me crazy but…) I’ve formulated some idea as “what the hell has been going on with Gold” and it doesn’t involve Australia.

Has anyone else considered that the Fed / U.S has actually been “allowing” China to buy gold on the cheap as a backroom / side deal  / means to convert / smooth out the waters as opposed to seeing China dump USD as well as future bond purchases?

Makes perfect sense to me. China says “moving away from USD as well no need for more US denominated debt”, U.S has a heart attack and swings a deal to actually “give” China whatever remaining gold is available for the lowest price possible?

The more I think about – the more sense it makes.

You won’t tolerate our “money printing any longer” so…..please don’t drop the hammer on us just yet – “here’s all our gold reserves as well”.

Manipulation ( short selling in the paper market ) essentially giving China the means to buy gold on the cheap as opposed to more U.S denominated debt no?

I’m positive this has absolutely nothing to do with the Australian Dollar and caution that people are at least “open to the idea”. Call me a wack job……fair enough.

We’ll take it day by day but as it stands, all “short AUD” entries look fine here as of this morning

Gold will be gold, and I’m quite certain the Aussie will continue to find itself on its own “downward trajectory”.

Reading Between The Lines: The Real Game Behind Currency Markets

This isn’t your grandfather’s forex market anymore. While retail traders chase breakouts and reversal patterns, the real money moves in backroom deals that reshape entire economies. The Nikkei drop was just the appetizer – the main course is still being prepared.

The Gold Manipulation Endgame

Let’s dig deeper into this China-US gold arrangement because it’s the key to understanding where currencies head next. Think about it logically: China holds over a trillion in US debt and has been quietly diversifying for years. The US can’t afford to see that dumped overnight – it would crater bond markets and send the dollar into freefall. So instead of fighting China’s pivot away from dollars, they’re facilitating it through gold transfers at artificially suppressed prices.

This explains why gold’s price action has been so disconnected from traditional fundamentals. Every time gold tries to rally, mysterious selling appears in the futures market. It’s not natural price discovery – it’s orchestrated wealth transfer. The US essentially trades its gold reserves for time, keeping China from pulling the trigger on a massive dollar dump. Meanwhile, dollar weakness continues creeping in through the backdoor.

Why The Aussie Can’t Catch A Break

The Australian Dollar’s supposed correlation with gold is dead in the water, and here’s why: Australia’s gold isn’t the gold that matters anymore. China isn’t buying Australian gold at premium prices when they’re getting US reserves at basement deals. The Aussie has lost its primary fundamental driver and is now just another commodity currency getting crushed by global slowdown fears.

Add in Australia’s exposure to Chinese property markets and slowing iron ore demand, and you’ve got a currency with no real floor. The Reserve Bank of Australia can talk tough all they want, but when your biggest trading partner is restructuring away from your core exports, rate differentials become meaningless. Short AUD positions aren’t just good trades – they’re inevitable.

The Safe Haven Hierarchy Shift

Traditional safe havens worked Monday, but that playbook is changing fast. The Yen caught a bid on risk-off flows, sure, but Japan’s own monetary policy mess means this strength is temporary. Bonds rallied as expected, but with inflation still lurking and central banks trapped between growth concerns and price pressures, fixed income isn’t the fortress it used to be.

Gold’s move higher wasn’t about safe haven demand – it was about the manipulation mechanisms breaking down temporarily. When real panic hits markets, the paper gold suppression gets overwhelmed by physical demand. But as I mentioned, don’t expect this to last. The powers that be have too much riding on keeping gold contained while this US-China transition plays out.

What Comes Next

Here’s where it gets interesting. The market thinks Monday’s action was about immediate risk factors – earnings concerns, economic data, whatever the headlines blamed. But the real story is structural. We’re watching the global monetary system reorganize in real time, and most traders are completely missing it.

The next phase isn’t going to be clean reversals back to risk-on euphoria. It’s going to be choppy, unpredictable action as different power centers jockey for position. China’s accumulation strategy continues regardless of short-term price swings. The US keeps printing and hoping the music doesn’t stop. And currencies get whipsawed in between.

The 13 pairs that moved into profit Monday weren’t lucky picks – they reflected these deeper currents. When you understand the real game being played, the technical setups become obvious. Risk-off wasn’t about earnings or data. It was about the system creaking under the weight of unsustainable arrangements. And that creaking is just getting started.

Safe Havens – Who Gets The Lions Share?

Forex Kong 22 Comments

As a larger and more pronounced “correction in risk” draws near – we’ll likely get “on more” attempt at new highs – regardless of what’s already underway in currency markets.

It also looks pretty clear to me that this will line up “right on the money” with the ol standard correlation of weaker stocks = stronger dollar, or at least for the initial “zig” of the “soon to be created” series of lower highs and lower lows.

As per the last 6 – 8 months these “zigs n zags” will often see “inverse movement” on smaller time frames, as the “cross winds of influence” push and pull in a generally “confusing manner”.

Sounds like a bunch of hooey doesn’t it? Now try trading it.

To be honest – we really can’t say for certain how things will shake out when / if we do finally get our first “real and true” correction in risk, as it’s been so long, and so much has changed since last time.

For currency traders here’s a mind bender. Do not be surprised at all to see BOTH the Japanese Yen AS WELL the U.S Dollar rise TOGETHER. So if you see the currency pair USD/JPY moving lower – it means that JPY is rising MORE than USD – get it? I thought not.

Otherwise, as suggested by JSkogs ( reader / trader “profesionale”) consideration of where U.S Bonds will go, and of course Gold.

As all four of these assets ( JPY , USD , U.S Treasuries and Gold ) have all at one time or another represented “a play for safety” – it remains to be seen which will take the lions share, when indeed safety is sought.

I for one can’t see the U.S Bonds doing anything but “bouncing”, and am positive that the Japanese Yen will blow people’s faces off, if only for an incredible blast higher.

I’d “like to think” that any USD bounce will be short-lived ( and certainly not a macro change in trend ) and that Gold yes gold…….finally makes its turn.

It will be very interesting for those of us who’ve been trading markets prior to 2008 ( and I can only imagine for those who’ve been trading longer ) to see how this plays out.

I plan on it been equally profitable as well.

Thoughts welcome as always!

When Safe Havens Collide: The Coming Market Reset

Here’s what most traders don’t get about the coming correction — it’s not going to play by the old rules. The traditional “risk off” playbook where everything moves in nice, predictable patterns? That’s dead. We’re entering uncharted territory where multiple safe havens will compete for the same frightened money, and the results will be brutal for anyone still trading yesterday’s correlations.

The Yen Explosion Nobody Sees Coming

The Japanese Yen is sitting on the biggest powder keg in currency markets. While everyone’s obsessing over Fed policy and dollar strength, they’re missing the massive carry trade unwind that’s building like a tsunami. When this thing breaks, JPY isn’t just going to strengthen — it’s going to absolutely demolish every other currency in its path. We’re talking about years of accumulated leverage getting unwound in weeks, maybe days.

The beautiful part? Most retail traders still think of the Yen as that “boring” currency that barely moves. They have no idea what’s about to hit them. When USD/JPY starts its real descent — not these little 100-pip corrections we’ve been seeing — it’s going to create opportunities that don’t come around but once every few years. The smart money is already positioning, but the herd is still chasing yesterday’s trends.

Gold’s Final Awakening

Gold has been the ultimate head-fake for the last two years. Every time it looked ready to break out, something came along to knock it back down. But that’s exactly what makes this setup so perfect. The weak hands are gone, the momentum chasers have moved on to crypto and tech stocks, and now we’ve got a clean slate for the real move.

When the USD weakness finally accelerates and central banks realize their inflation fight isn’t over — it’s just getting started — gold is going to wake up like a bear coming out of hibernation. Hungry, angry, and ready to make up for lost time.

The institutional money that’s been sitting on the sidelines watching stocks run will need somewhere to park when reality hits. Bonds? Maybe for a minute. But when the debt ceiling drama starts up again and fiscal sanity becomes a distant memory, precious metals will be the only game in town.

The Treasury Trap

U.S. Treasuries will get their bounce — I’m not arguing that. When stocks start puking, the knee-jerk reaction will send money flooding into the “safety” of government debt. But here’s the thing: it’s a trap. The Treasury market is being propped up by the same financial engineering that got us into this mess in the first place.

The real question isn’t whether bonds will catch a bid during the initial panic. It’s what happens after. When investors realize that owning paper yielding 4% while real inflation runs at 8% is a guaranteed way to lose purchasing power, the rotation out of Treasuries and into real assets will be swift and merciless.

Trading the Chaos

The key to profiting from this mess is understanding that the correlations everyone relies on are about to break down completely. You might see gold and the dollar rise together. You might see bonds sell off while stocks crater. The metal moves that have been building in silence are about to explode into the mainstream.

Position sizing becomes everything in this environment. The moves are going to be violent in both directions, and the traders who survive will be the ones who can stomach the volatility without getting shaken out. We’re not talking about your typical 2% daily ranges anymore — we’re entering an era where currencies can gap 5% overnight and keep moving.

The smart play? Start building positions now while everyone’s still focused on the noise. The correction everyone’s calling for is already underway in the currency markets. By the time it shows up in your favorite stock index, the best opportunities will be long gone.

Gold And The U.S Dollar – Where To Next?

Forex Kong 6 Comments

A fantastic question from another valued reader.

PT asks?

“Some time back you spoke of what readers wished to hear. So I thought I’d question a true professional. As a forex novice, my query pertains to gold, silver, and its shares.Where do you see the DXY in the intermediary term (3-6 months)? I know your trades often only last hours, but what is your “change” or expectation for the dollar going forward?”

Kong says:

We’ve seen the decoupling of the traditional relationship / correlation of “lower dollar = higher
gold” right? Or have we?

Pull a 25 year chart of gold and see that this “massive correction” isn’t really that massive at all.
Compared to any other asset / chart you see on the 25 year for example….this is ( Elliot boys
chime in please ) some kind of “wave 4” maybe…..but not a change in trend!

Gold_Bull_Market_Fine_Forex_Kong

Gold_Bull_Market_Fine_Forex_Kong

I have no change in expectation for the dollar ( as I expect it to essentially go to zero ) but will
be wary / watchful for correction “just like we see in all asset classes” when the time comes.

Knowing full well “nothing moves in a straight line for long” sure…..the buck will “buck us bears”
at some point…..as the correction in gold has equally “bucked the bulls”. This shit happens every
day, in one asset or another…..one chart or another.

What most people fail to understand is that “every single pivot / zig and zag” doesn’t play out/correlate/  “on a dime”. An asset like gold ( with such a high value ) has been “on it’s own correction” based on the value / time / zigs / zags etc, while the US Dollar struggles within it’s own set of parameters.

There are points where “stars align”, but in general “intermarket analysis” is extremely difficult for a novice to effectively “time”.

If you ask me what I think. I think the U.S Dollar is going to zero and I think that gold is going to the moon. If you ask me “how long is that gonna take”?

I’ll tell you you’re trading to large, reduce your position size, don’t expect this to be easy and “don’t” pull your life savings with any expectations that you’ll “be even close” in timing it.

Near term – I’m looking for this last leg lower in the dollar – then an obvious bounce.

The Bigger Picture: Why Dollar Bears and Gold Bulls Need Patience

Market Cycles Don’t Care About Your Timeline

Here’s what separates the pros from the amateurs – understanding that markets operate on their own timeline, not yours. You want to know when the dollar hits zero and gold rockets to $3000? Wrong question. The right question is: “How do I position myself to profit from the inevitable while surviving the noise in between?”

Look at any major currency collapse in history. The British Pound didn’t lose its reserve status overnight. It took decades of decline, punctuated by sharp rallies that fooled everyone into thinking the trend had reversed. Same story with every fiat currency that’s ever existed. They all go to zero eventually, but the path is never straight, never predictable, and never kind to impatient traders.

The DXY sits around these levels because we’re in that messy middle phase. Not quite collapse, not quite recovery. Just grinding, soul-crushing sideways action that kills both bulls and bears who can’t adapt. This is where fortunes are made and lost – not on the big obvious moves everyone sees coming, but on reading the subtle shifts in momentum that most traders miss completely.

Central Bank Policy: The Real Driver Behind Currency Movements

While everyone obsesses over GDP numbers and employment data, the real action happens in central bank meeting rooms. The Fed’s trapped in a corner of their own making. Raise rates? They crash the economy and the overleveraged government. Cut rates? They accelerate dollar debasement and inflation. Print more money? Same result, different mechanism.

Meanwhile, central banks worldwide are quietly diversifying away from dollar reserves. China, Russia, and even traditional US allies are buying gold and establishing bilateral trade agreements that bypass the dollar entirely. This isn’t happening overnight – it’s a slow, methodical process that most traders ignore because it doesn’t create immediate price action.

The smart money isn’t trying to time the exact moment of dollar collapse. They’re positioning for the inevitable outcome while collecting profits from the volatility along the way. That means trading the swings in EUR/USD, GBP/USD, and yes, even buying dollar strength when the setup is right, knowing it’s temporary.

Gold’s True Relationship with Currency Debasement

Forget the textbook correlation between gold and the dollar. That’s surface-level analysis that misses the deeper structural forces at play. Gold isn’t just reacting to dollar strength or weakness – it’s responding to the gradual loss of confidence in fiat currency systems globally.

The real catalyst for gold’s next major leg higher won’t be a weak DXY reading or some inflation print. It’ll be the moment when institutional investors finally acknowledge that no major currency offers a reliable store of value anymore. When pension funds, sovereign wealth funds, and insurance companies start allocating serious percentages to gold – not 2-3%, but 15-20% – that’s when you’ll see price discovery that makes the 1970s look tame.

This shift is already happening, just slowly enough that most market participants haven’t noticed. Central bank gold purchases hit record levels last year, and they’re not buying to flip for a quick profit. They’re buying because they understand what’s coming better than the retail investors obsessing over daily price movements.

Positioning for the Long Game While Trading the Noise

Here’s the practical reality: you need two strategies running simultaneously. Your core position reflects your long-term view – dollar weakness, gold strength, inflation protection. But your trading capital exploits the short-term noise that creates opportunity every single day.

When the DXY bounces hard off support and everyone screams about dollar strength returning, that’s not a reason to abandon your thesis. That’s a gift – an opportunity to add to positions at better prices or profit from the counter-trend move before the larger forces reassert themselves.

The key is position sizing that lets you sleep at night. If you’re losing sleep over your trades, you’re trading too big and thinking too small. The dollar’s path to zero and gold’s path to the moon will be filled with gut-wrenching reversals that shake out weak hands. Don’t be weak hands.

Bottom line: stay convicted on the big picture, stay flexible on the execution, and remember that every major trend creates multiple opportunities to profit – if you’re patient enough to let them develop and disciplined enough to take them when they appear.

Calling Out Gary Savage – Shame On You Man

Forex Kong 58 Comments

Enough is enough.

I seriously cannot let this one slide as….I could care less what this joker has to say about it.You “the reader” can make up your own mind.

This clown just recommended buying “2016 QQQ / SPY  put options” suggesting, and I quote:

“I think 2016 puts on the QQQ or SPY are going to pay off many thousands of percent over the next two years”.

The next two years??? An options trade?? With a 2 year profit horizon?? That’s your advice / suggestion to readers??

Man….just like the last time Gary Savage suggested buying options ( and I suggested to both he and his readship that his options would go directly to ZERO! ) Here he goes again! Unreal!

Gary_Savage_Clown_Forex_Kong

Gary_Savage_Clown_Forex_Kong

What is wrong with you man? The comment section is wide open / ready and waiting for “Mr. Gold Profit” ( who I believe lost literally everything during 2013 no? ) to back it on up…..

Now you’re an options pro?

You tried currencies for a week er two as well……how’d that work out?

This is an open invitation Gary……you’ve got the floor.

Please enlighten us. An options buy with a 2 year profit horizon? Even better a “bearish options buy” (from the guy that doesn’t believe you can make money on the “downside”).

Bunk. Crap. Bullshit.

How many times a day do you climb the same f#%)/king rock Gary?

 

The Hard Truth About Long-Term Options Trading and Real Market Strategy

Why Two-Year Put Options Are Financial Suicide

Let me break this down for anyone still confused about why Gary’s latest brilliant suggestion is absolute garbage. When you buy put options with a two-year expiration, you’re not just betting against the market – you’re betting against time, volatility decay, and basic mathematical probability. The theta burn alone will eat your position alive faster than a piranha in a goldfish bowl. I’ve watched countless amateur traders torch their accounts chasing these extended-horizon options plays, thinking they’re some kind of market genius for “going long-term” with derivatives.

Here’s what actually happens: those 2016 QQQ puts Gary’s pumping will lose value every single day they don’t move significantly in-the-money. We’re talking about time decay that compounds daily, eating 2-5% of the option’s value per week in many cases. By the time SPY or QQQ actually correct meaningfully, those puts will be worth pennies on the dollar – if they’re worth anything at all. This isn’t speculation, it’s basic options mechanics that any first-year derivatives student understands.

Real Currency Markets Don’t Play These Games

This is exactly why I stick to forex. While Gary’s out there recommending financial instruments he clearly doesn’t understand, the currency markets are operating on legitimate supply and demand fundamentals. Take the current USD/JPY setup – we’ve got clear divergence between Fed policy and Bank of Japan intervention strategies. That’s a tradeable thesis with defined risk parameters and realistic profit targets.

When I’m long EUR/USD based on ECB monetary policy shifts, I’m not hoping for some miraculous “thousands of percent” return over two years. I’m targeting 200-400 pip moves over weeks or months, with proper position sizing and risk management. The difference? Currency moves are driven by real economic data, central bank policies, and capital flows – not the fantasy projections of failed gold bugs trying to reinvent themselves as options experts.

The Psychology of Failed Traders Chasing Home Runs

Here’s what really gets me about Gary’s approach: it reeks of desperation. When someone loses big in one market (gold in 2013), then briefly dabbles in currencies before flaming out, then pivots to recommending long-term bearish options plays, you’re watching a classic pattern of a trader who refuses to accept reality. Instead of learning proper risk management and developing consistent, profitable strategies, he’s chasing the next lottery ticket trade.

Professional traders don’t think in terms of “thousands of percent returns.” We think in terms of consistent monthly gains, proper position sizing relative to account equity, and sustainable edge over time. When I see GBP/USD showing clear rejection at major resistance levels, I don’t load up expecting a 2000-pip crash. I take a reasonable position targeting 150-200 pips with a defined stop loss. That’s how you stay in this business for decades instead of blowing up spectacularly every few years.

What Real Market Analysis Looks Like

Instead of recommending speculative options plays with ridiculous time horizons, let’s talk about what’s actually happening in markets right now. The dollar index is showing clear signs of exhaustion after its recent rally, creating opportunities in major currency pairs. AUD/USD is approaching key support levels that coincide with RBA policy expectations. These are trades with defined risk, realistic profit targets, and timeframes measured in weeks, not years.

Meanwhile, if you want to position bearishly on equity markets, there are far more intelligent approaches than buying puts two years out. Currency correlations with equity risk appetite create natural hedging opportunities. When SPY starts showing real weakness, pairs like USD/CAD and USD/AUD typically respond with predictable patterns. You can position accordingly with proper leverage and timing, rather than hoping your expensive options don’t decay to zero before your thesis plays out.

The bottom line is this: Gary’s latest recommendation exposes exactly why he’s bounced between markets like a pinball, never finding sustainable success anywhere. Real trading isn’t about swinging for the fences with exotic strategies you don’t understand. It’s about finding genuine edge, managing risk intelligently, and executing consistently over time. Something he’s never demonstrated in any market he’s touched.

Post Fed Scrum – Kudos To Readers Of Kong

Forex Kong 35 Comments

Talk about a twist.

Ben hand’s off the bag to Yellen “with” a proposed “tapering”, and seals his legacy as one of the smoothest Central Bankers ever to have walked the Earth – or at least in the public eye.

I wonder what he’s gonna do with the next 20 years of his life? as it will likely be “more interesting to follow” than these last five.

You’d have to have rocks tumbling around in your head if you think that 85 billion is “all” the Fed’s been throwing at markets per month. I imagine it’s more like 150 billion or more as….the bond market is just too large to consider 85 billions per month having much affect.

Post announcement TLT is still sliding, and the U.S Dollar can’t even break even so……the big boys positions remain the same. MY POSITION REMAINS THE SAME.

The “effect” has merely been “the idea” (in traders / investors minds) that “they will never let the market fall”. If it took a number of 85 billion per month or 850 billion for that matter – it doesn’t really matter as the numbers manifest solely as “tiny computer entries” within a small group of friends.

A big “congrats” goes out to our beloved “Deano” for not only hitting the “tapering” right on the money….but also for “serving it up” like a true gentleman. If Deano owned a restaurant – I would eat there often.

For me? Another day of trading, and another day FULL of opportunities. Nikkei popping to 16,000 and USD certainly “not” moving higher on the news………..

USD “not” moving higher on the taper news??…..Hmm………..that’s a bit odd don’t you think?

You’ve been practicing, following along….learning the correlations etc…

Would you not have thought USD would “skyrocket” on taper news?

Hazard a guess as to why not?

 

 

When The Expected Becomes Reality – Market Psychology Trumps Everything

The USD Non-Event Reveals Everything

Here’s the thing most retail traders completely miss – when everyone and their grandmother is positioned for the “obvious” move, the market has a nasty habit of doing exactly the opposite. The USD’s lackluster response to taper confirmation isn’t odd at all if you understand one fundamental principle: markets discount the future, not the present. Every institution worth their salt had already priced in tapering months ago. The smart money was buying USD weakness back in June when Bernanke first floated the idea, not waiting around for the official announcement like amateur hour.

This is classic “buy the rumor, sell the news” territory, but with a sophisticated twist. The big players aren’t just selling the news – they’re positioning for what comes AFTER the news. While retail traders scramble to chase USD strength that isn’t materializing, the professionals are already three moves ahead. They know something the crowd doesn’t: tapering was never about currency strength. It was about maintaining the illusion of policy normalization while keeping the monetary spigot wide open through other channels.

Cross Currency Dynamics Tell The Real Story

Look beyond USD/JPY for five seconds and examine what’s happening in the cross pairs. EUR/JPY is absolutely screaming higher, AUD/JPY refuses to die despite commodity weakness, and GBP/JPY is grinding steadily upward. This isn’t USD strength we’re seeing – this is JPY weakness on steroids, and it’s being orchestrated by the Bank of Japan’s relentless money printing that makes the Fed look conservative.

The Nikkei pushing 16,000 isn’t happening in a vacuum. It’s the direct result of capital flows seeking higher yields and equity exposure outside the increasingly expensive US markets. When you see Japanese equities rocketing while the USD treads water, you’re witnessing a massive capital rotation – not the kind that benefits the greenback. The carry trade mechanics are shifting, and the new game is about who can debase their currency most effectively while maintaining the appearance of stability.

The Real Numbers Behind The Curtain

That 85 billion figure? Child’s play compared to what’s actually flowing through the system. Between currency swaps, repo operations, and off-balance-sheet interventions, the true liquidity injection is massive. The Fed’s balance sheet tells one story, but the shadow banking system tells another. When TLT keeps sliding despite taper talk, you’re seeing evidence that real interest rates are being suppressed through mechanisms that don’t show up in the official QE numbers.

Professional traders understand this disconnect between official policy and actual market conditions. They’re not trading the announcement – they’re trading the reality of continued accommodation through alternative channels. The bond vigilantes have been neutered not by 85 billion in monthly purchases, but by a comprehensive system of market intervention that operates in the shadows. This is why yields can’t break significantly higher despite all the taper theatrics.

Positioning For What Actually Matters

Here’s where the rubber meets the road: if you’re still thinking in terms of traditional monetary policy impacts on currency pairs, you’re fighting yesterday’s war. The new paradigm is about relative debasement rates and capital flow management. The USD isn’t strengthening because the Fed is tapering – it’s maintaining value because every other major central bank is debasing even faster.

The smart play isn’t chasing USD strength against major pairs. It’s identifying which currencies are next in line for serious devaluation pressure. Watch for central banks that haven’t yet joined the race to the bottom, because they’re the ones with the furthest to fall. The emerging market currencies got hammered months ago when taper talk first surfaced. Now it’s time to look at which developed market currencies are most vulnerable to their own QE programs.

This market environment rewards patience and positioning over reactive trading. The big moves aren’t happening on announcement days anymore – they’re happening during the quiet periods when central banks implement policy through channels that don’t generate headlines. Keep your eyes on the cross rates, your ears tuned to inter-market relationships, and your positions aligned with the long-term monetary reality rather than the short-term policy theater.

Silver And Gold – Is Now The Time To Buy?

Forex Kong 17 Comments

The question has never really been “Kong – should I buy gold?” but more so “Kong – WHEN should I buy gold?”

The long-term fundamental case for owning gold and silver is as solid today, as it will be tomorrow – and as it’s always been. You can’t go wrong owning silver and gold  “if” – you’ve got a long enough profit horizon.

Up until now, gold and silver haven’t been a “trade” as the metals have “generally” fallen like mad, and sat consolidating in range for what feels like eternity. Silver is just a touch lower than the price a full 6 months ago. For the most part when any asset consolidates for this kind of “extended period” the move “out of this consolidation” is usually quite powerful. Very powerful.

In fact, in this case it’s very likely that the first move upward in both gold and silver will be so fast, and likely so large – that anyone who “wasn’t already in the trade” will be left chasing. Not to say that “you’ll miss the boat” as the PM’s (precious metals) have miles of upward potential – just that…..you may be looking to buy “EXK” for example at 7 dollars – as opposed to getting started, down here around 4 bucks.

We are very close to where I would suggest “starting to build positions”, and I feel that the “miners” will provide the largest “bang for your buck”.

Forex_Kong_EXK_Silver_Gold_Nov

Forex_Kong_EXK_Silver_Gold_Nov

It doesn’t matter which “silver miner” you look at as…the charts all look more or less exactly the same. I like EXK as a “trading vehicle” to make a play in the space – but a pile of others will also move in tandem when the PM’s move.

Check out “GPL” for a super low value play – currently trading at .76 cents!

The Dollar Debasement Trade: Why PM Miners Are Your Best Leverage Play

USD Index Breakdown Sets the Stage

The DXY has been painting a picture that screams “weakness ahead” for anyone paying attention. We’re looking at a currency that’s been propped up by nothing more than central bank jawboning and the illusion of relative strength. But here’s the thing – when you’re printing money faster than a Zimbabwean central banker, that strength is purely temporary. The Fed’s balance sheet expansion hasn’t stopped, it’s just slowed down temporarily. Every time they pause, every time they hint at “data dependency,” they’re just setting up the next wave of debasement. And when that wave hits, you want to be positioned in hard assets – specifically the miners that’ll give you 3-to-1 leverage on the underlying metals move.

Look at EUR/USD, GBP/USD, even AUD/USD – they’re all coiling up against the dollar like springs ready to explode higher. The dollar’s artificial strength is creating the exact setup we need for precious metals to absolutely rocket. When DXY breaks down through that 100 support level, and it will, gold and silver won’t just move – they’ll gap up so fast it’ll make your head spin. That’s why getting positioned in miners like EXK now, while they’re still cheap, is critical timing.

Real Interest Rates: The Hidden Driver Nobody’s Watching

Here’s what the mainstream financial media won’t tell you – real interest rates are still deeply negative, and they’re about to get worse. When you subtract actual inflation from nominal rates, you’re looking at negative 2-3% real yields. That’s free money for holding gold. Every month this persists, every month the Fed pretends inflation is “transitory” while it runs hot, you’re getting paid to own precious metals. The bond market knows this – just look at the yield curve flattening. When long-term rates can’t rise because the government can’t afford higher debt service costs, and short-term rates are artificially suppressed, gold becomes the only real store of value.

The miners amplify this dynamic perfectly. When gold moves from $1950 to $2200, EXK doesn’t move 13% – it moves 40-50%. That’s operational leverage working in your favor. These companies have fixed costs and variable revenues tied to metal prices. Small moves in the underlying create massive moves in the equity. And we’re not talking about small moves anymore – we’re talking about a structural shift that could take gold to $2500+ and silver back toward $35-40.

Global Currency Wars Accelerating

Every major central bank is in a race to debase faster than their competitors. The ECB is buying bonds, the BOJ is pegging yields, the PBOC is easing credit conditions – it’s a coordinated assault on fiat currencies worldwide. This isn’t just about the dollar anymore. When you’re looking at EUR/JPY, GBP/CAD, AUD/NZD – all these crosses are becoming increasingly volatile because no one trusts any paper currency to hold value long-term. That’s the perfect environment for precious metals to reassert themselves as the ultimate currency hedge.

The smart money is already positioning. Central banks bought over 650 tons of gold last year – the highest since 1971. They know what’s coming. China’s been accumulating, Russia’s been accumulating, even traditionally dollar-friendly nations are diversifying reserves. When institutions with trillion-dollar balance sheets are buying physical metal, you better believe the miners are going to follow.

Technical Setup Screaming “Coiled Spring”

From a pure chart perspective, we’re looking at textbook consolidation patterns across the entire mining sector. These aren’t just random sideways moves – they’re accumulation zones where smart money builds positions before explosive moves higher. The volume patterns, the support levels holding, the way these stocks refuse to break down despite broader market weakness – it all points to massive buying underneath current prices. When this consolidation breaks, and the technicals suggest it’s imminent, you’ll see gap-up opens that leave retail investors scrambling to chase at much higher prices.

GPL at 76 cents is practically giving shares away. EXK under $5 is a gift. These aren’t speculative plays – they’re value investments in a sector that’s about to experience a fundamental revaluation. The time to build positions is now, before the breakout makes these entry points nothing but a memory.

USD Strength – Gold, Stocks, Forex Direction

Forex Kong 15 Comments

The strength of the US Dollar has gathered steam over the past few days, with several trades “long USD” already paying well. I don’t imagine this to be your average “run of the mill” type move here – so I feel it worthy of further discussion / analysis.

The US Dollar will most certainly be moving lower in the “not so distant future”, but we trade what we’ve got in front of us so……

Forex_Kong_USD_Moving_Higher

Forex_Kong_USD_Moving_Higher

In looking to line up these “technicals” with some broader “intermarket analysis” we’ve got to consider that U.S equities have made some pretty huge gains since January of this year , as USD has more or less gone “up the mountain and back down the other side” – now at exactly the same level around 79.00.

With an impending correction “upward” in USD it would make sense to “finally see equities correct lower” ( if that’s at all possible considering the Fed’s POMO) and unfortunately for many – see gold and the precious metals correct lower as well.

Looking at forex markets it’s obvious the “opposite reaction” of a much stronger US Dollar will equate to a weaker EUR as well GBP and CHF. I would also expect the commodity currencies to correct lower as well, but considering that they’ve already fallen considerably – my focus would be on the Euro type pairs.

So that’s what I’m running with over the next few days – looking to “inch in” to many trades with a “risk off” vibe, and continued strength in the dreaded U.S Dollar.

Strategic Positioning for the USD Rally Phase

EUR/USD Technical Breakdown Points

The EUR/USD pair is setting up for what could be a significant technical breakdown, particularly if we see a decisive break below the 1.0500 support level. This isn’t just any support – it’s a psychological barrier that’s held firm through multiple testing phases over recent months. When the Dollar strength really kicks into high gear, EUR/USD typically sees accelerated selling pressure as European economic fundamentals continue to lag behind US data. The European Central Bank’s dovish stance compared to potential Federal Reserve hawkishness creates a perfect storm for Euro weakness. I’m watching for any bounce toward 1.0650-1.0700 as a prime shorting opportunity, with stops placed just above previous resistance turned support levels. The risk-reward setup here is textbook – limited upside potential against substantial downside momentum once this technical dam breaks.

Cable and Swiss Franc Vulnerability

GBP/USD presents an equally compelling short setup, especially given the UK’s ongoing economic challenges and the Bank of England’s increasingly cautious rhetoric. Cable has a tendency to amplify USD strength moves, often falling harder and faster than its European counterparts. The 1.2000 psychological level represents massive support, but in a true risk-off environment with Dollar strength, even this major level becomes vulnerable. I’m structuring GBP/USD shorts with wider stops given the pair’s volatility, but the potential rewards justify the approach. The Swiss Franc situation is particularly interesting because USD/CHF strength challenges the Franc’s traditional safe-haven status. When the Dollar is the preferred safe-haven asset, the Swiss National Bank often finds itself in an awkward position, unable to defend CHF strength without appearing to fight the broader risk-off sentiment that typically benefits Switzerland.

Commodity Currency Oversold Conditions

While I mentioned focusing on Euro-type pairs, the commodity currencies deserve deeper analysis because their current oversold conditions could present both opportunities and traps. AUD/USD and NZD/USD have indeed fallen considerably, but Dollar strength phases often push these pairs beyond what fundamental analysis would suggest as reasonable. The Australian Dollar faces the double whammy of China economic concerns and rising US yields, while the New Zealand Dollar contends with its own domestic economic softening. However, the oversold nature of these pairs means any short positions require tighter risk management. I’m looking for brief rallies in AUD/USD toward 0.6700-0.6750 as potential entry points for shorts, rather than chasing the current levels. The key is patience – let these pairs retrace slightly into better technical short zones rather than buying into the current momentum.

Risk Management in High-Volatility Environments

This type of Dollar strength environment demands disciplined position sizing and strategic entry timing. Rather than loading up on single large positions, I’m implementing a scaling approach – entering partial positions on initial signals and adding to winners as technical levels break. The “inch in” strategy I mentioned isn’t just conservative positioning; it’s recognition that currency moves of this magnitude often experience violent counter-trend rallies that can stop out poorly positioned trades. Stop losses need to account for increased volatility, but profit targets should reflect the potential magnitude of the move. I’m using a combination of technical stops and time-based exits, recognizing that Dollar strength phases, while powerful, tend to be shorter in duration than many traders expect. The intermarket relationships become crucial here – if US equities begin showing real weakness rather than minor corrections, it could signal the sustainability of this Dollar move. Gold’s behavior will be equally telling. A break below key support in precious metals would confirm the risk-off, Dollar-positive environment has genuine legs rather than being a temporary technical correction.