Two forms of money; one official but its only value is in ‘confidence’. The other is not really money, but its value is of something more than confidence. All confidence was lost in gold in 2013, so it had better have something more going for it. It is debt free as it is no one’s liability and it has been used as money for centuries.
Okay, blah blah blah… gold bug sighting above. What I wanted to actually do is show a chart of GLD & UUP looking pretty darned in line with each other over the last few months.
Whatever their differences, in the big ‘RISK ON’ environment cooked up by the Fed a couple of ‘risk off’ items have been fairly in unison outside the party. Today they are both above their 50 day MA’s.
Party on Garth.
At the risk of revealing my inner Prechter (I am a deflationist at heart because I believe the odds are better than even that the ultimate resolution of the era of Inflation onDemand will be deflationary), here is the monthly view of the US dollar, having negated the weekly H&S (not really visible on this monthly chart) by rising above the right shoulder.
US dollar, monthly chart
An email from an NFTRH subscriber prompted me to pull up the monthly view and the recent rise has not only negated the H&S, it has brought the larger monthly basing pattern out of 2005 to a more bullish looking state, with monthly MACD green and a shape that looks pretty good.
Prechter says a coming deflation would result in a recommendation of owning cash and gold. Not even US T-bills, heretofore considered the safest repository on the planet. That is because the debts of the Federal government would be so unmanageable as to call into question its ability to make good on its obligations.
I will question how long the stock market can benefit as the world’s reserve currency helps suck funds into US assets. But US stocks for the short-term are more positively than negatively correlated to USD as the dollar sucks capital into our markets.
The Fed is trying to devalue the USD but the reserve currency is acting as a haven. The whole developed world is supposedly at [currency] war. With all those parts in motion who on earth can make total sense out of what is going on?
Maybe we do not have to make sense of every aspect of everything that is in motion now. But we should watch the USD, the kingpin lot a very sorry lot. NFTRH is going to provide space for Uncle Buck in the analysis going forward. It failed to break down and has defied the ‘death of the dollar’ cult for so long now, there must be meaning in here.
Watch commodities and the ISM’s ‘prices paid’ trend; watch out for sink holes in Goldilocks’ path as she happily skips along; watch chest beating gold bears who think they know how to read long-term charts*; watch the silver CoT (but silver bulls might want a certain loud technical analyst to refrain from making huge proclamations about it… jeez, let it breathe, silver has lower to go first); watch to see if the stock market already took its ‘healthy’ correction or has further near term downside in order to make a solid base for a final drive to SPX high 1500′s.
* TA big papa, stockchart.com’s John Murphy is becoming bearish on gold; as in possible ‘end of bull market’ bearish. He certainly does know how to read charts and is not included in this dismissive comment.
Anyhow, watch this writer continue to manage risk as fully as needed to remain good to go for coming events; and they are coming my friends.
Uncle Buck has just about negated the right shoulder of his potential H&S. A rise above 81.50 puts a stake through its big fat head.
US dollar, Daily
I for one would dearly like to see the people playing magic tricks with interest rates soundly punished by the US dollar and its anti-market cohorts.
A different kind of Brent moves us along from this morning’s Cook-inspired fright fest. A subscriber requests a look at Brent Crude, S&P 500 and Uncle Buck. I am not really sure of what his objectives were, but the chart shows targets and correlations. So for people bitching about gas prices I would suggest you don’t root for Central Planning to keep trying to compromise the currency.
Brent Crude, S&P 500 and USD
So if this is a currency war, how does one know which currency will be the winner? So far gold is the loser, but gold’s an easy target. Hiding in plain sight, just sitting like a lump paying no dividend because it levers to no risk. It’s a barometer.
What if just maybe the USD does not go the way the gold “community” and a market full of greed heads (see S&P 500) foresee it? It’s a war and bullets are flying all over the place. The dollar can negate its H&S above 81.50. Anyway, here’s a kooky chart of SPX and USD over the decades.
It is either get this currency devalued (they’re trying like hell, ref: money supply) or get your kevlar helmets ready for 2013. The thing is, the currency war could actually work to the opposite effect to the devaluation that Central Planning seems to have in mind. Think interest rates and markets disobeying officialdom when it is most inconvenient for most people.
USD has been in negative correlation with the stock market since the effects of Greenspan’s age of Inflation onDemand started kicking in in 2003.
Meanwhile, here’s the Yen chart from NFTRH 221 a few weeks ago.
Okay Yen, you’re at target (and everybody hates you).
Yen Public Opinion courtesy sentimentrader.com
Everywhere an H&S. An inverted one in the euro that is actualized and targeting higher to 142 or so. A downright mammoth potential one on the HUI. A potentially forming one on the NDX. Not to be left out, here is the updated view of Uncle Buck’s potential H&S.
Interesting times indeed, when considering all the H&S bedfellows. Strange bedfellows in some cases.