The US$/Gold in Foreign Currencies
Trader Scott’s Market Blog
November 28, 2016
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For years we’ve been hearing about the US$ collapse. There are blogs and books specifically devoted to this theory, and that’s all it is – a theory. Sort of like the theory of a stock market bubble and crash which I have vehemently disagreed with since 2009. And, of course, there have been fortunes made by the scam artists scaring so many decent hard-working folks into buying their product to “protect” themselves from these mythical crashes. It’s disgusting. Since getting bullish on the $ many years ago, people have given me every concocted notion about why the $ will crash and I listened and politely (hopefully) disagreed. It doesn’t mean there will be a perpetual bull market in the $. Its’ days are numbered, but like everything in markets, it’s about timing. The bull market is still on, but a pause is close. This is the basic $ chart I’ve been using for a while. Since “breaking out” (I don’t approach markets this way) above around 100.5, my belief is the 102+ area would be the first bigger resistance area. A spike in this area would likely be a short term top. A strong $ will keep a lid on gold advances, but that lid will loosen next year. It’s the main reason why for years my mantra has been to have patience with gold. It’s when the real banking troubles start to broaden (likely next year), when the $ and gold will rally together. We’ve seen glimpses of it over the last few years, but the confidence level in central bankers (CBs) was still sky high. That is changing, and it’s being reflected in the government bond markets (which are actually getting short term bullish now). The CBs days of total omniscience are also ending, which will cause a multitude of problems for their decades old ability to extend and pretend.
But what we need to continue watching is the performance of gold in foreign currencies relative to the US$, which has been my view for a few years. It’s the US$ which has been a detriment to a major push higher. But this relationship is not written in stone. Way too many believe it is true, however just a bit of research can show how that relationship can breakdown for significant periods of time. So I would recommend pulling up some charts of gold in foreign currencies and keep watch on them and here is a good place.
So this following exchange with someone is the problem, and why too many folks have gotten off focus about what a market is actually all about. I’ve been hearing this same type of argument for years. These are good people, but I’ve not been able to dissuade them from having a different approach to markets. And this is as the $ is at almost 15 year highs. I’ll keep trying:
Q: Scott, Please explain in next weeks blog how the Dollar can be losing purchasing power and yet soaring at the same time without the use of MAJIC ?
A: a)- Currencies are all relative to each other. b)- markets move based upon supply and demand period. There is tremendous demand for US$s.
Q:Currencies are not relative to each other they are manipulated by the Central Banks for appearances to the gullible citizenry ! Question about the answer to B. You failed to account for the Dollar supply issue in your answer , has the Dollar supply gone up or down during this Dollar rally ?
A;Has the $ gone up in price or not. All markets are manipulated, no argument there. I’m in this business to make money though. You’re not accounting for the total global supply of $s. You’re only looking at it from a US centric point of view.
Q:No, That was indeed my question has the total global supply of $s gone up or down as the purchasing power went down ? ‘I’m in this business to make money though’, no again you’re in the business of collecting Electronic Federal Reserve debt notes that masquerade as money !
A:Actually, the profits I have made on my long US$ position over the last several years has increased my own personal purchasing power. Do you understand the difference between markets and theories? I don’t care about the US$ collapse theories. You will get your wish one day, but be careful what you wish for.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
November 28, 2016 @ 4:18 am Q
Great Post Scott. As you know I’m the least able trader here but keen to learn from your blog and subscribers in order to hone my bigger picture. You know this post was music to my ears. Whilst I’ve worked out that day trading is outside my comfort zone and skill set and probably mindset; it really helps to know how a master and his disciples roll. As you, I and presumably all your regular followers know… All fiat currencies will fail. Period. I do think though dollar’s had its day but that’s not the point in trading terms I know. Still a lot of money to be made or lost betting on or against it. On my first day of ‘trading’ I effectively went short on the dollar. Mistake ;-) But that’s one way of learning. Another is following friendly experts like you. Yeah so many guys out there professing to know it all and charging a hefty sum for that. So we are very grateful for a guy who does know day trading and is happy to share the knowledge. Read something the other day about information being ubiquitous nowadays and knowledge being scarce. Everything you say confirms my own biases/knowledge that banking and economics needs a reset, metals are a good hedge as is BTC and the dollar is going to be either a domestic entity or will be replaced. Your most important chart in the world is a key obviously. I hope we see better economics and better geopolitics within our lifetimes but if we do there will be pain along the way. If we don’t there will be pain all along the way. Keep trading and blogging bro. Q Ps hi to Scott’s posse, glad to have shared cyber space with u all.
November 28, 2016 @ 1:16 pm traderscott
That’s very kind Q. As you, with your years of medical education would know, markets are not brain surgery. Markets require no formal education, only understanding risk and probabilities. Everything else can be learned thru actively being involved. It’s just hard work and persistence to gain enough experience to survive. I’m just trying to survive. And yes, you have to figure out what you’re most comfortable doing in markets, so you can stick with it. I know guys who can’t imagine holding a position longer than overnight. That’s their comfort zone and thru years of hard work, they know what works best for them. But for the folks with the long term comfort level, it’s still way better to focus on the here and now and entering markets really well. That way you can have the staying power and profits to sit thru all of the gyrations as we slowly trudge our way to those long term probable outcomes.
November 28, 2016 @ 4:37 pm Q
Cool man am hearing ya…. U know I’m not going anywhere. Just probably will keep my silly questions and comments for your inbox. Guys have to say this here…. Sorry, but I haven’t seen, versus most other blogs which do, a donate button. So in lieu of there being one I would humbly suggest that if any of you think you’ve made money from Scott’s advice that you consider sending a PayPal donation to his email. Whilst day trading isn’t for me as a rule, I fully intend to follow the master and all your expert pupils too and may dabble from time to time. Getting to know Scott and his worldview reinforces that, as Scott says, I have found a ‘method’ and positions which make sense to me even if they may not work out :-( But maybe they will :-) I’m not stupid but hats off to all you traders. Scott is not just a brilliant day trader but a brilliant guy and has a wonderful world view. Nice to see how all u guys roll. Take care. Q
November 29, 2016 @ 11:38 am traderscott
That is more than kind Q. Thank you.
November 28, 2016 @ 6:28 pm mark
I see where you write about gold a lot but can you and/or your readers give me a few silver stocks to do some research on? I was always into gold stocks. Thanks. Mark
November 28, 2016 @ 6:44 pm traderscott
I like your approach Mark. First of all, FYI – SIL is a big ETF for silver miners. And I’ll give you a list – I am not recommending any of these. But, I do own one of these. SLW, AG, PAAS, EXK, and MUX has a lot of exposure to silver. These are the bigger silver miners. There are also juniors, but that’s out of my realm. Maybe someone else can help with that. There aren’t a lot of pure silver miners, relative to the gold miners.
November 28, 2016 @ 6:59 pm mark
Thank you Scott…I’ll start my DD. Funny…I owned SLW back in 09 and sold much too soon but I saw today it came back to the range where I bought it in early 2016.
November 28, 2016 @ 7:18 pm traderscott
So you ended up doing the right thing after all Mark. Markets require taking profits. Amazing how magical taking profits is.
November 28, 2016 @ 8:25 pm Jon
Scott, check out Adam Hamiltons recent post on goldseek.com. from last Friday. AG, PAAS, and FSM are the largest pure silver producers (SLW is a streamer so no upside for increased production). He gives a breakdown of all the miners held in SIL with AISC, earnings,and other data. Most of the SIL holdings are primary gold producers. Thanks again for your blog!
November 29, 2016 @ 11:23 am traderscott
Thanks Jon, I will link to it. Yes, there aren’t many pure silver producers.
June 10, 2017 @ 10:30 pm The US$ / Gold in Foreign Currencies
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