Mr Vet, thank you for showing me that piece and also your observation about the USD.
Firstly, let me dispute with one of the charts in the Barron's article, namely the CRB Index in Euros. The article describes a significant breakout but, on my chart (Stockcharts.com), although I see it, it is of a far smaller magnitude and definitely does not exceed the previous high.
online.wsj.com
stockcharts.com[w,a]dalaynay[dj][pd200,2][ilb14!la12,26,9]
Secondly, the author carries over his reasoning (based on the above chart) into interest rates and bond prices and concludes that the outlook for bonds is unattractive. Notwithstanding his gloomy forecast, US Treasuries continue to rise and appear to be moving towards their all-time high:
stockcharts.com[l,a]dalaynay[de][pd150,2][ilb14!la12,26,9]
I have a feeling that I have already posted these charts showing upward reversal patterns on US Treasuries in Euros and Swiss Francs so please forgive me if I have. Anyway, in the charts below them one can see the same pattern in Yen and Australian dollars.
stockcharts.com[w,a]dalaynay[dj][pd200,2][ilb14!la12,26,9]
stockcharts.com[w,a]dallynay[dm][pd200,2]
stockcharts.com[w,a]dallynay[dm][pd200,2]
stockcharts.com[w,a]dallynay[dm][pd200,2]
In fact, one can see it in all the major currencies and it indicates, as I mentioned, that interest rates are not rising even though the USD is strengthening. Furthermore, the reversal in all currencies is beginning to take on the appearance of a significant move. If this is true and a new bull market in bonds develops (in foreign currencies), one could then expect the upward move in the USD to continue as foreigners buy more and more US "paper".
> it seems that the rise in the US dollar may have hit a speed bump
What is happening to the USD is getting difficult to describe in English! Perhaps it's better in Irish --- a long-term bear trend, a medium term reversal and short-term weakness. Easiest to see what's happening on the chart:
stockcharts.com[l,a]dalaynay[de][pd50,2][ilb14!la12,26,9]
> If it wasn't for serious BOJ intervention on the Yen/USD rate the USD would have had a much worse day than it did.
Yes, the BOJ has made it quite clear that they are going to sell Yen and buy dollars --- and they have made a fortune by doing so. In fact, they wrong-footed all the currency speculators who were short the USD.
For gold share investors, however, I do notice what could be good news namely the strengthening of the two main US gold share indices against the gold price:
stockcharts.com[l,a]dalaynay[de][pd50,2][ilb14!la12,26,9]
stockcharts.com[l,a]dalaynay[de][pd50,2][ilb14!la12,26,9]
Unfortunately, this doesn't mean a resumption of the bull trend in the gold shares, merely a revaluation of the price of the shares against the gold price. |
