New leg beginning in USD bear market

[vand]

Nobody is talking about it, but the USD has fallen to new lows.

This is the start of what will eventually become the next crisis, which will crush paper assets and send PMs into the stratosphere.

 

[vand]

This chart is about as bearish as you can get:

 

- 3 year major topping H&S pattern
- Downward sloping
- Large left shoulder
- Tiny right shoulder

[KDave]

Definitely heading lower imo I was thinking the yuan might have something to do with the next leg down, oil futures being traded in yuan redeemable in gold.

Who cares. The down leg is coming regardless. 

US Interest rates will be forced up. The debt mountain costing more will cause deflation, deflation will lead to recession and more printing. Gold should do well out of it long term. Trump will be blamed. 

[ilovesilverireallydo]

There is an interesting piece by ZeroHedge https://www.zerohedge.com/news/2018-01-13/strange-case-falling-dollar-and-what-it-means-gold

[KDave]

China is troubling the dollar from all angles it seems, playing the long game as usual. The US has a massive expensive military which gives it power, but without an economic base to stand on it is not sustainable. China are hitting where the enemy is weakest. Its getting quite overt now, plenty of news and fake news alike about China selling more US treasuries than it buys, quite publicly announcing oil trades in Yuan - look what happened to Saddam and Gaddafi when they tried to do that. I hope China does not push its luck too much, regardless of who is in the whitehouse. I would say challenging the US like this with someone as unpredictable as Trump in the chair is probably a bad idea. 

[C12]

I'm looking at the EURUSD levels at around 1.26 where there is significant multi year downtrend resistance (and a weekly level of supply). If it takes out 1.26 decisively then we could see 1.37. 

[C12]

On 15/01/2018 at 12:40, KDave said:

Definitely heading lower imo I was thinking the yuan might have something to do with the next leg down, oil futures being traded in yuan redeemable in gold.

Who cares. The down leg is coming regardless. 

US Interest rates will be forced up. The debt mountain costing more will cause deflation, deflation will lead to recession and more printing. Gold should do well out of it long term. Trump will be blamed. 

Deflation will be a strong sign for the dollar (at least initially). Money will panic out of all assets and back into cash, much like 2008. The charts suggest we're not there yet. 

I think the central banks will have a much more difficult time printing their way out next time.. It will require some serious helicopters. 

[vand]

Very difficult to see what precise form the next monetary system will take, but it is blindingly obvious that the Petrodollar has long since passed its "Best Before" date and is increasingly no longer fit for purpose; hence why we are seeing more bilateral agreements that cut out their US altogether. 

I do not have great confidence in GBP either, hence why I stack PMs.

[KDave]

Gold will be part of it, it always has been just depends whether it's overt or not. Silver I have seen some compelling cases but I'm not convinced it works so well as money given its range of utility in industry. Because of this and sentiment, I am very bullish on silver. When deflation comes to pass everything will suffer, but when the printing begins silver will lead the way. 

[breaktwister]

On 15/01/2018 at 20:13, KDave said:

 I hope China does not push its luck too much, regardless of who is in the whitehouse. I would say challenging the US like this with someone as unpredictable as Trump in the chair is probably a bad idea. 

I disagree.  We need the other superpowers to step up to the plate and put the US in line.  A USA that thinks it do what it likes is the gravest threat to our planet.  Look at the devastation they have caused in the Middle East.   I think China's "rumour" that it was no longer interested in US Treasuries was a warning shot to the yanks that they can tank their economy and the USD at will.

[KDave]

You are not wrong to disagree, in principle at least. But a cornered Trump is at its most dangerous 

The dollar is number one because the economy is energy based, and liquid energy is primarily traded in the US national currency, which is enforced through its military might. I agree with the sentiment, but i prefer the long game, China pretending to be the innocent benefactor from US decline, rather than overtly challenging them. The US military capacity dwarfs the Chinese so throw in Trumps unpredictability and I am not sure its worth it. 

[breaktwister]

From a purely economic perspective though, who in their right mind would buy or hold US Treasuries?  They are touted as a safe asset as the US has never defaulted but there will be a time when that debt mountain becomes unsustainable and the US will simply say "sorry, not gonna pay".   So China saying that they will no longer buy US debt is simply a rational economic decision.

[KDave]

Absolubetly. Perhaps we could instead look at events like this; China is the France in the bretton woods. All of it could be seen as the natural end game point for this version of the primary currency and rather than provocation. This is perhaps more likely as history shows, when countries stop playing as China is threatening, the system changes. The trouble is people have been talking about this as imminent for years. We know it's inevitable, it's not different this time and the best we can do is hedge for the event.

[HawkHybrid]

2 hours ago, KDave said:

but when the printing begins silver will lead the way. 

 

I don't agree. us inflation was up last year 2.2% versus fed target

of 2%. gold was up., but silver was flat. I think gold leads the way

and silver is a gauge of confidence in the current trend.

 

HH

[KDave]

Last year sure, people pouring money into metals in the event, I think silver will out perform like last time. 

[HawkHybrid]

I think silver will signal the overconfidence in pms similar

to last time when it out performs gold significantly. this

could be well past the halfway point for the bull market

and if this is true then also far from the beginning of the

printing.

 

HH

[vand]

5 minutes ago, HawkHybrid said:

I think silver will signal the overconfidence in pms similar

to last time when it out performs gold significantly. this

could be well past the halfway point for the bull market

and if this is true then also far from the beginning of the

printing.

 

HH

I think you are right. Silver is like a call on gold. When PMs starts to rise, silver will at first lag, but then gradually catch up then outperform during the bull phase, and ultimately massively outperform during the frothy bubbly stage. 

 

[vand]

No bounce yet.. bleeding to new lows and threatening to print with a 89.x handle.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=DXY&insttype=Index

 

The encouraging thing is that nobody is talking about it! It's a stealth move and that bodes well for it continuing. 

[aztecstargazer]

I don't know what you are talking about. If you keep up on FOREX news articles, you see bearish sentiment toward the US dollar almost daily. There is a solid trend of USD depreciation against the EUR and GBP. 

[vand]

Now firmly into 89.x territory.

15 hours ago, aztecstargazer said:

I don't know what you are talking about. If you keep up on FOREX news articles, you see bearish sentiment toward the US dollar almost daily. There is a solid trend of USD depreciation against the EUR and GBP. 

But nobody on main street is talking about it. Everyone is far more interested in cryptos and the new stockmarket ATHs to be worrying about a weakening USD.

[Pipers]

USD has defaulted before against gold. 

The big wigs are at Davos so we will have to wait and see what happens.

 

[HawkHybrid]

4 hours ago, vand said:

Now firmly into 89.x territory.

But nobody on main street is talking about it. Everyone is far more interested in cryptos and the new stockmarket ATHs to be worrying about a weakening USD.

 

peter schiff is talking about the weakening dollar but it

doesn't look like many are listening. mainstream media

only cares about viewing numbers. for an unpopular

subject like the weakening dollar, if mainstream media

talks about it then it's probably near the end of it's current

move.

 

HH

[vand]

5 hours ago, HawkHybrid said:

 

peter schiff is talking about the weakening dollar but it

doesn't look like many are listening. mainstream media

only cares about viewing numbers. for an unpopular

subject like the weakening dollar, if mainstream media

talks about it then it's probably near the end of it's current

move.

 

HH

 

Or they spin it to say "a low currency is good for the economy" just as they said "a higher currency is good the economy" on the way up.

Because you can absolutely have it both ways in their world, where up is down, black is white, and more debt is the solution to too much debt.

[vand]

88.59 now on the DXY. This sucker is going down hard!

[vand]

DXY's 6 month rally looks done now. Chart looks ready to roll over into the next downleg, which should act as rocket fuel for the PM sector.