With the Fed minutes released we got the volatility in gold today as expected. Gold has fallen $14 now from its high just a few days ago and now I have to say it looks weak again. Our clue that helps us more times than not is the dollar and I wanted to give you my thoughts today on where I think the dollar is now headed.
The following chart gives you a potential run that I think the dollar still has in it. I say this even more today than ever since Germany, the engine that runs all of Europe for the most part, has some major issues with their auto industry and this could lead to some real lousy economic data moving forward.
Because the Euro makes up the majority of the dollar, this is nothing but dollar bullish. When you throw in the problems in Japan and their debt issues and reduced production, you get a little over 70% of the dollar that has more issues than we do here in the U.S. Remember, it is “perception” that matters and the perception is that the U.S. is a safer bet to maintain one’s wealth. This is also why our treasuries are so strong even though they pay very little.
Gold right now is $1,141.30. A fall to my buy target is $900 but I have said it could go as low as $850. This is a 25.52% decrease.
The dollar right now is 95.27 and I think it will go to 120. This is a 95.27% increase.
Food for thought as we move forward through this deflationary credit contraction.
Addendum 10/9/2015
I’ve been following Richard Russell since 2002. He’s 92 now and is still writing his thoughts about the markets. Here is his latest.
The Russell scenario : economic statistics come out and they are shockingly deflationary. The Fed and central banks around the world are shocked by the deflationary statistics. As a result, the world of central banks opened their spigots in a desperate attempt to hold back deflation and produce 2% of core inflation. When the election comes, voters see that Trump is basically a big mouthed buffoon and the election goes to Hillary or some other democrat. Massive make work programs as per the 1930’s are put in place. With central banks around
the world spewing forth currencies, there is a good chance that hyperinflation will make its entrance.The stock market and the precious metals are already discounting my scenario. The market is having a follow through day after yesterday’s strong action. Industrials and Transports are up triple digits. With industrials above 17,000 again. Transports back above 8,000. The NYSE is up 102 and back above 10,000 again.
Be prepared for some shockingly negative economic figures ahead. The Fed raising short rates is a fantasy that will not happen. A more likely occurrence will be the return of quantitative easing. My best to all my beloved subscribers. We’re seeing history being made.
Related posts
About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.