Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Dollar Bottom and Higher Interest Rates are Negative for Gold and Silver

Commodities / Gold and Silver 2010 Dec 17, 2010 - 04:30 AM GMT

By: Ned_W_Schmidt

Commodities

Best Financial Markets Analysis ArticleWhile this is not the last thought we will have this year, it is the last thoughts on Gold we will send to you in 2010. With a new year in about to about two weeks, perhaps it is time to clear our heads. We will soon be given a fresh calendar on which to record the unfolding of events. Out heads should be also ready to receive that newness for yesterday will not be repeated.


Thus far 2010 has unfolded about at the center of, rather than the fringe of, the thinking that had existed a year ago. U.S. dollar did not vaporize. $Gold is still well below $10,000. Silver is still well below the $100 fantasy of the delusional. The Euro is still with us, and will be with us at the end of 2011, and 2013, and 2050. Bets to the contrary are foolish.

US Dollar Chart

As the above chart portrays, the U.S. dollar appears to have put in an important bottom. That bottom roughly coincided with the U.S. election which essentially ended the reign of financial terror by the Obama Regime. While financial sanity has yet to develop in the spending habits of the U.S. government, tendency for trend to become more negative has been halted, for the time. Removal of the minions of the current U.S. regime was the first tiny step toward resolving the insolvency of the U.S. Such is enough reason for at least an intermediate bottom in the U.S. dollar.

U.S. electorate has moved to remove many of the more dangerous of the financially irresponsible in U.S. Congress, though many still remain. Message from voters in an election representing the greatest political structural break since 1932 should be heeded. To presume that this shift in the political structure will tolerate a Federal Reserve running amok for the third time in a decade may be naive. Bernanke's gang of Keynesian ideologues and their policies of repetitive asset bubbles are not likely to be tolerated. We suspect that by this time next year Bernanke will be pursuing other opportunities.

That all said, the U.S. dollar, as shown in the above chart, is correcting an over bought condition. As that is accomplished, the basis for a further advance in the dollar's value will be created. We note in that graph the similarities to the previous bottoming process that led to a substantial rally. In such an environment, $Gold is not likely to advance as many emotional forecasts might suggest.

10 Year US Treasury Rates

Part of the reason for this view is the above chart of 10 year U.S. Treasury rates. In it we can observe that the markets have determined the policies of the Bernanke Gang are unacceptable. These rates have risen in an unprecedented fashion. With the Federal Reserve monetizing the Obama Deficit, the price of bonds should be rising and interest rates falling. Rather, as interest rates on these bonds are rising, we know that bond prices are falling. Markets are often more powerful than governments.

This interest rate action is supportive of the U.S. dollar's value. By definition then, higher rates are also a negative for value of $Gold. When market conditions are negative for the value of $Gold and the media is filled with fantasy forecasts, watching rather than buying is the prudent course of action. Those forecasting unrealistic prices for $Gold and $100 Silver will not cover your losses.

That all said, in every market are opportunities for someone. One of those building opportunities is with Canadian $Gold. Over valued Loonie is depressing the price of CN$Gold. Given the level of risk building in the Canadian economy and the extremely over valued Loonie, Canadian-based investors may want to begin again to average into the Gold market.

Risk in the Canadian economy is high, and we may be observing a mini-Ireland being created. For this we read from bloomberg.com, 14 December,

"Canada's top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years."

"Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47." [Emphasis added.]

In any event, we wish you all the best in the new year. Remember, history is guidebook, not a plug and play software template.

By Ned W Schmidt CFA, CEBS

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS as part of a joyous mission to save investors from the financial abyss of paper assets. He is publisher of The Value View Gold Report, monthly, and Trading Thoughts, about weekly. To receive these reports, go to www.valueviewgoldreport.com

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in