Tag Archives: US dollar

WTF Just Happened? Gold, The Dollar And Interest Rates

What’s going on with gold, the dollar and interest rates – especially gold?  All of the variables that fundamentally support much higher gold prices are lined up perfectly.  Why isn’t gold moving higher?  The popular narrative in the mainstream financial media would leave one to believe that the dollar is soaring.  Eric and Dave put a big dent in that notion.  Additionally, in a long-term historical context, the recent rise in interest rates is tiny, yet marginally higher interest are already wreaking havoc on the economy (retail, auto and home sales).   What’s going to happen to the economy when the 10-yr Treasury hits 4%, which is still well below its long-run historical norm? (click on image to enlarge)

Eric Dubin and Dave Kranzler dig into these topics in the next episode of WTF Just Happened (WTF Just Happened is a produced in association with Wall St. For Main Street – Eric Dubin may be reached at  Facebook.com/EricDubin):

Visit these links to learn more about the Investment Research Dynamic’s Mining Stock Journal and Short Seller’s Journal.  I recommended Almadex Minerals at 28 cents in April 2016 – it closed Friday at $1.13.  I recommended shorting Hovnanian at $2.88 in January  – it closed at $1.89 on Friday and has been as low as $1.70.

Putin To CIS Countries: Get Rid Of The Dollar

Putin has drafted a bill that would eliminate the use of the U.S. dollar and the euro from trade between and among CIS countries. The CIS countries are: Russia, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova Tajikistan and Uzbekistan.

This is yet another step in eliminating the reserve currency status of the dollar. I’m sure the U.S. won’t take this move by Putin and lightly and I expect to see an escalation in the U.S. media’s anti-Russia propaganda and perhaps renewed escalation in the United States’ meddling in Ukraine.

You can read the entire news release here: RT Business

Between China’s move to start unloading it’s $1.2 trillion hoard of Treasuries and Russia’s overt antagonism toward the dollar, it’s pretty clear that the world’s transition away from a U.S.-centric system is picking up speed.

The biggest risk in my mind is not the societal fallout from the inevitable financial that will accompany the removal of the dollar from global financial system, it’s the destruction to humanity that will occur when the neocon-controlled U.S. Government takes military action to defend the dollar and the power that comes with being the sole-issuer of the world’s reserve currency.

Gold Vs. The U.S. Dollar: The Big Lie

Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one.  – Alan Greenspan, “Gold and Economic Freedom,” 1966

I don’t know if the Plunge Protection Team will be able to stabilize and bounce the market today.  I suspect they will get it done sometime in the next 24-48 hours – there’s real blood money at stake here.   By this I mean there’s still a lot of middle class wealth that has not been wiped off the table and into the pockets of the elitists.  Hell, Hillary Clinton is still standing – for now.

But at some point our system will collapse.  EVERYONE in this country has been living off the benefits of The Big Lie for too long.  It’s not just the upper .1% who have benefited, even the welfare programs have been levitated by the U.S. Government’s ability to bamboozle the rest of the world into buying our debt and accepting our currency.

When the rest of the world flinched at taking down more debt, the Fed printed trillions to buy U.S. Treasuries directly, and lent $100’s of millions to the Bank of Japan and the ECB to enable them indirectly to continue propping up the Big Lie.

But today gives us  a glimpse of The Truth.  Beneath the headlines of plunging stock markets, and not being reported by the U.S. financial muppets, is a stunning 1.5% plunge overnight in the U.S. dollar:

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At the same time, the world’s oldest currency – the Wall Street Journal’s “Pet Rock” – has performed as the ultimate flight to safety today:

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While the “Einsteins” out there offered only the obvious explanations for China’s move to devalue the yuan, I have maintained all along that it was first and foremost a means of tossing a “grenade” at the massively unprecedented U.S. dollar bubble. It only took a about 3% move to accomplish this.

Meanwhile, here’s what’s really happening in China:

Shanghai gold withdrawals for the week ending Aug 14th have been reported at 65.013 tonnes (previous week 56.015 tonnes). This brings the year to date total to 1,585 tonnes, 161 tonnes more than in the record 2013 year at the same time.  – John Brimlow’s “Gold Jottings”

The Fed kept insisting that it would raise rates in September. For anyone willing to look honestly at the underlying economic evidence, it was obvious – OBVIOUS – that the Fed would never raise rates. It was nothing but Orwellian smoke. Keep repeating a lie until almost everyone wants to believe it.

I heard a radio promo yesterday for a mortgage broker who insisted that “rates are definitely going higher later this year so you better take out as big of a mortgage as you can now and buy your dream house.”

Rates may go higher this year, but if they they do it’s because the dollar is collapsing – or even vanishing – as the rest of the world other than the Bank of Japan and the ECB rush for the exists with their Treasury holdings.

The Big Lie is that gold is a Pet Rock and the U.S. dollar is the global flight-to-safety currency of the world. If that’s the case, then how come China seems to be cornering the market in Pet Rocks while dumping the dollar through that exit door at the back of the movie theater?

Gold Pops Again – Something Ominous Is Brewing

When the sharks start feeding on each other, you know the food supply is running out.  –  good friend of mine in NYC who wishes to remain anonymous

How many times per week do you scratch head at some Marketwatch or Bloomberg or CNBC news headline which connects a non-sequitur news item with the reason behind a market move?

A friend who was a young junk bond research analyst when I traded junk bonds at Bankers Trust in the 1990’s told me an interesting story recently.  He had just taken his first call from a reporter who was asking him why junk bonds were moving that day.  After he got off the phone he walked over to the head of research and asked how to handle the call next time.   She walked him over the Bloomberg and said:  “Here’s what you do.  Pull up the top headlines up on Bloomberg and – regardless of what the top 3 stories say – use those headlines as your answer to the reporter’s questions.  Then hang up.”

Two days in a row now gold has inexplicably popped up and the dollar has tanked.  Today, in fact, the dollar has gone off a cliff (click to enlarge):

USDXGOLD

Today at 8:55 the dollar dropped like it had a lead weight around its neck. Gold started moving higher much earlier than the dollar 2:00 a.m EST. Of course, Bloomberg News attributed the move in the dollar to the reports that Greece might be saved and the euro spiking higher. It also connected the move up in gold to the dollar plunge.

But when you look at the movements in both gold and the dollar, you can see that Bloomberg’s reasoning for gold moving higher is – well, for lack of a better term, an idiotic non-sequitur. New developments on “Grexit” have had no meaningful impact on the movement of gold during this whole Greek tragicomedy theatrical show. And as you can see from the graphs above, there was zero correlation between the movements of gold and the dollar overnight.

You’ll note the yellow circles I placed around some of the candlesticks in the graph on the right.  As you can see, those particular 10-minute bars have unusually long “wicks” to the upside and the downside.   Those “wick” denote both panic buying and selling, most likely (as in “100%”) triggered by Fed/bank and hedge fund computer programs.

Those particular candlesticks with long “wicks” reflect the fight going on between the official western sovereign forces trying to keep a lid on the price of gold and long side of the gold market.  The candlesticks reflect “unnatural” energy being exerted in the paper gold market.

I would further hazard to offer the view that the unmistakable volatility in paper gold trading reflects the dwindling supply of physical gold in western vaults that can be used to deliver into the fraudulently conveyed paper claims being issued on the Comex and the LBMA.

You might ask how I can make that assertion.  It’s simple.  Per this chart below from Nick Laird at www.goldchartsrus.com, you can see that India and China combined are importing an amount of gold that equals world mine production:

Chindia_gold_demand Minus scrap recycling, the balance of the gold being consumed by the rest of the world has to be coming from Central Bank vaults and from the GLD Trust – the latter of which has dis-hoarded about 60 tonnes of gold since February despite the fact that the price of gold has been rising.

 

The other point of evidence is the situation developing on the Comex.  Again, I’m not forecasting a short-squeeze this month in Comex gold. However, as of yesterday,  there’s still 5,088 open June contracts – that’s 508k ozs vs. 370k “registered” ozs as of last night.  There’s no reason for the bullion banks to delay delivery notices unless they are going to try and shake out the standing longs in order to avoid the pressure of coming up with enough gold to deliver.

I would thus suggest that unusual amount of gold volatility we are seeing yesterday and today – and the volatility does not crank up until after the Asian physical markets are closed and the London/NYC phony paper markets are in full swing – is the unequivocal signal the paper purveyors of gold are starting to feel a lot more pressure from the Asian demand for physical gold.  Indeed, the sharks are running out of food.