The Golden Truth: U.S. Dollar Update aka Geithner Is Full Of Sh!t

Sunday, October 24, 2010

U.S. Dollar Update aka Geithner Is Full Of Sh!t

The USDX appears to have resumed it's descent tonight on the heels of the G20 meeting. In reference to my last post about the dollar, I said that from a "chart perspective" the dollar was oversold and could go through a corrective bounce that might take it back up to the 80-81 level. At the same time, I said that if it failed to trade back up to its resistance at 80 and rolled over again that it would be very bearish.

Here are updated weakly and daily daily charts of the spot dollar price as of this evening:

(click on charts to enlarge)

The charts are pretty much self-explanatory. I leave it to each reader to draw their own conclusions about where they think the dollar is headed next. I will say that it has become a source of extreme comedic relief watching Geithner prostitute his stupidity every time he's on the world stage pontificating about U.S. policy support of a strong currency.

It's clear from the action in gold and silver tonight that the gold hoarding countries of the world are laughing at him along with me, as the price of these monetary metals has shown solid resilience in the face of the attempted price takedown last week by the bullion banks. The big bullion accumulators do not really seem to care about the gold-bashing rhetoric flooding from the U.S. media. Given the rapid decline in sentiment indicators at the end of last week, it would appear gold and silver could continue their rapid ascent up the proverbial "wall of worry."

I'm not willing to go out on a limb and proclaim that the pullback in the bullion market is over. However, judging from the action in both the SPX and bullion futures tonight, it would appear that the U.S. financial and economic system is starting to assume "Weimar-esque" characteristics. Avete oro?

This is an excellent article which was linked in Friday's "Midas" report at http://www.lemetropolecafe.com/. I have never read this guy before, but it is an insightful commentary on the dynamic of the current bullion market: FinanceAndEconomics.org

6 comments:

stephan gregoryMonday, 25 October, 2010
Dear Dave,
I have been subscribing financial newsletters for almost 3 years, some of them reliable and others to be thrown in the dustbin.

Anyway, I must thank you and other exceptional blogs like Jesse's one for the excellent quality of the comments.

If I had followed only these free blogs I would have saved money for the subscriptions and I would have invested better my money.

Kind regards

Stephan
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Dave in DenverMonday, 25 October, 2010
Thanks for the feedback Stephan. I do appreciate it. It's funny because I just deleted one of those "teaser" freebies from one of those commentators who uses the teaser to sell his newsletter. I deleted without even opening it because it's a waste of time to read (it was The Sunshine Profits newsletter). He actually has some good chartwork, but the charts are only useful w/out his commentary and I can make my own charts lol.
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stephanMonday, 25 October, 2010
Dear Dave,

in general I subscribe to newsletters for minimum one year. I can't give a impartial opinion before one year. It costs but in this way I can decide better if the newsletter is worth the money I pay.

I have been subscribing to Institutional Advisors for some months. I find Bob Hoye serious and experienced as well as Ross Clark, even if it's very hard also for them to be right on a call ( timing and not only...). For exemple, they called too early the short play in stoxx, commodities, PM. Ia m sure Jesse is laughing...

I am also following Chris Vermeulen ( the Oil and Guy ) but 50% of his calls are wrong. Too young ? I don't know but.... he's very good at explaining what has just happened in the markets!!

Clive Maund a good chartist and advisor? I don't know. He was wright when he called bullish action in PM at the end of August but it's too easy, even for a non-professional like me. I am a chartered & certified accountant and I have been following finance for only 3-4 years.

What about The Sunshine Profit ? It was mentioned recently by Jim Sinclair but I did not subscribe.

I follow Jim Sinclair and Trader Dan. They really get excited when PM fly !! Jim is very experienced. I also like Monty Guild.

I have been reading the Aden Forecast newsletter for 4 months: they make a good analysis from a global point of view and they are gold friends. They have been wright since this summer about US stoxx, but not because the economy improved, of course !

What about Marc Faber ? I like his Gloom Boom Doom Report. I think he's very experienced and help you to undestand better the current period.

Top for Harry Schultz.
Unlikely he has decided to stop writing at the end of 2010. I also like Richard Russell a lot.

As far as silver is concerned, I recently subscribed to Dave Morgan. We'll see.

I also like Peter Cooper at Arabian Money and Pierre Leconte at Forum Monetaire de Geneve ( free )

I occasionally read Jim Willie, Bob Chapman, Rick Ackerman, Howard Katz ( cum granu salis ,) Darryl Schoon, Warren Beaven, and others ( the list is too long...), all from Gold Seek.

Please, I would be very glad if you had an advise or opinion about my " financial education and training ".

Anyway I confirm you that your site and Jesse's one are at the top of the list

Thank you in advance
Stephan
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AnonymousMonday, 25 October, 2010
The dollar index does not mean much

It is a weighted exchange rate of G7. It contains NO weighting for currencies of BRIC or other dynamic economies.

From the historical data of the past 20 years, the index is not a good inverse indicator of gold.

JJ from WSB
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Dave in DenverMonday, 25 October, 2010
Agree JJ. It's excessively overweighted toward the euro despite the fact that China is by far our largest trading partner.
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AnonymousMonday, 25 October, 2010
Sorry this is a bit late but here goes-

Turbo Tax Timmy said the following- the U.S. needed to "work hard to preserve confidence in the strong dollar."
Notate what he said, Preserve Confidence,
Not preserve buying power of the US Dollar,
Not preserve the US Dollar as a strong dollar,
just preserve confidence, as in preserve the CON as long as possible.

Or another way to look at it-

Yes sir, we need a strong dollar, a weak dollar will crumble into dust if we fold, spindle or treat it rough, we need a strong tough dollar that can be used to sop up spills, wipe down countertops and not come apart in out hands, one that can clean the car and-

-What’s that? We need a strong Buying power for the US Dollar? Gee, that is a new one on me, is such a thing possible?
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Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.