Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

The Precious Metals Bears' Fear of Fridays
By: Dimitri Speck

The Lemmings are Heading Towards the Cliff...Again
By: Gary Savage

28 Reasons to Buy Physical Gold
By: BullionStar

Is This Gold Rally The Start Of Something Big?
By: Avi Gilburt

GoldSeek Radio Nugget: Peter Grandich and Chris Waltzek
By: radio.GoldSeek.com

GoldSeek Radio Nugget: Andy Schectman and Chris Waltzek
By: radio.GoldSeek.com

Keeping Your Cryptos Safe From Crooks
By: Avi Gilburt with Ryan Wilday

Buy Gold As Fed Shows Uncertainty And Concern Over Financial ‘Imbalances’
By: GoldCore

Gold Seeker Closing Report: Gold and Silver Gain About 1%
By: Chris Mullen, Gold Seeker Report

Northern Vertex Files Preliminary Economic Assessment Report for the Moss Gold Mine in NW Arizona
By: Northern Vertex Mining Corp.

 
Search

GoldSeek Web

 
Runaway Dollar Could Make Deflation Unstoppable

By: Rick Ackerman, Rick's Picks

 -- Published: Monday, 5 January 2015 | Print  | Disqus 

I don’t often feature technical analysis as the topic of the week. In this case, however, the Dollar Index is at a crucial threshold that deserves a drum-roll and our close attention.  Notice the two tightly spaced purple lines near the top of the chart. These are ‘Hidden Pivot’ rally targets of medium importance, albeit of slightly different degree, and if they were to be easily exceeded it would suggest that the steep 15% run-up since May could be just a warm-up. To be sure, one or two technical resistance points getting brushed aside does not a rip-roaring bull market make. However, given the clarity of these two targets in particular, it would be quite impressive if buyers were able to push past them without pulling back for at least a few days for a running start.  In any case, any progress above the higher target at 91.99 would put the 92.35 target of an even larger pattern in play, with similar implications. Which is to say, if the Dollar Index takes out that Hidden Pivot as well, and does so with ease, it would suggest that the bull is all but unstoppable.

A parabolic rally in the dollar would unleash pent-up deflationary forces in the financial sector that the Fed, even acting in concert with the central banks of Europe and Japan, would be powerless to stop. While the banksters have been able to manipulate short-term rates without much difficulty, there will be no holding the dollar back when global demand for greenbacks starts feeding on itself. Where else are you going to put your money? Lately, the dollar has been ratcheting higher because the U.S. economy is perceived as the strongest in the world. It is also regarded as the safest, and that is why the dollar’s strength could be expected to continue even if the global economy, including that of the U.S., plunges into crisis.

Bearish for Gold

Initially, a steep rally in the dollar would be bearish for gold and very bullish for U.S. stocks, Treasury Bonds and other financial assets. We’ve been able to take advantage of the rally thus far by legging into very low-risk call spreads in TLT, an Exchange Traded Fund that correlates with long-term Treasurys. Last week, for instance, subscribers were able to complete the second and final leg of the Jan 30 126-129 call spread 16 times at no cost. This means they stand to make as much as $4800 on a position that cannot lose no matter what.  I’ve also recommended using TLT to hedge long positions in gold, since any whiff of inflation strong enough to push bond prices lower would presumably have bullish implications for precious metals.

This is not what I expect, however, since financial-sector deflation seems to have reached critical mass with the dollar’s steep ascent since last spring.  Although most doomsdayers have been wrong, wrong, wrong in predicting the timing of the Big One, it has always seemed likely nevertheless that the U.S. dollar would be at ground zero. That’s because there are vastly more dollars swirling around in the financial ether – a quadrillion of them, by some estimates — than the puny central banks could ever hope to manage if forces of supply and demand were to take a mind of their own.  In the meantime, if you can think of anything that could conceivably slow the dollar’s ascent, your thoughts would be most welcome in this forum.  And for the record, I do not mean to suggest that hyperinflation is impossible or even unlikely somewhere down the road. But for now, deflation rules; indeed, its opposite is what the central banks of Japan nor Europe have been desperately praying for, with precious little success.


| Digg This Article
 -- Published: Monday, 5 January 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.