Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (8982)	9/5/2014 12:19:22 AM
From: ayeyou	Read Replies (1) \| Respond to of 202707

Is a Devastating Stock Market Crash on the Way? theblaze.com

To: Goose94 who wrote (8982)	9/5/2014 8:35:31 AM
From: Goose94	Read Replies (1) \| Respond to of 202707

Gold US$1,273.00 up $12.00

To: Goose94 who wrote (8982)	9/8/2014 8:08:44 AM
From: Goose94	Read Replies (1) \| Respond to of 202707

Strength In The U.S. Dollar: A Gold Factor That Can't Be Ignored Strength in the U.S. dollar continues to weigh on the gold market. Since July 1, the U.S. dollar index has gained 5.26%, while the Comex December gold futures contract has slid 5.76%. The traditional inverse relationship between gold and the dollar is strong. There are a myriad of factors supporting the U.S. dollar right now, including generally improving U.S. macroeconomic fundamentals and expectations that the U.S. Federal Reserve will hike short-term interest rates in 2015. That will put the U.S. Federal Reserve on a monetary policy tightening path well ahead of both the European Central Bank and the Bank of Japan. It could be years before either the ECB or the BOJ sees enough underlying strength in their respective economies to begin rate hikes. What does this mean? The U.S. dollar is looking better on a comparative basis that either the euro or the yen. Capital flows are already turning back into the U.S. dollar as the market begins to price in the shift toward a tighter monetary policy. For now, most Fed watchers don't think the U.S. central bank will actually pull the trigger on a rate hike until summer 2015 or even the fall. But, the timing is data-dependent and could move forward or backward depending on overall employment and inflation readings. But, global money managers aim to stay one step ahead of the crowd. For several years now, the so-called "carry trade" has been popular and profitable in the currency crowd amid the extremely low levels of FX market volatility. Currency players could simply sell the dollar and buy a higher yielding currency, such as the Brazilian real. The Brazilian central bank has kept its official rate, known at the selic rate at 11%, in recent months. In a low-volatility environment, currency traders attempt to collect the "carry" or the difference between the lower funding currency (in this case the dollar at 0-0.25%) versus the higher-yielding currency. It's a strategy that's worked well in recent years, but with all eyes on the U.S. Federal Reserve, money managers are already beginning to pull back on these carry plays. In the second quarter of 2013, some traders may recall the "taper tantrum" which saw a huge bout of risk aversion that decimated a number of emerging market currencies on a short-term basis when then Federal Reserve Chairman Ben Bernanke spoke about tapering later in the year. Is another bout of tapering tantrum around the corner? What could the exit from FX emerging market or high-yielding carry plays mean for the U.S. dollar? The simple and short answer is it will strengthen the dollar as money managers buy back their dollars and sell the riskier higher yielding currencies, which could get hurt in a rising U.S. interest rate environment. And, taking that one step further, what could additional strength in the dollar mean for gold? Let's take a look at a monthly chart, seen in Figure 2 below. If the U.S. dollar index continues to move higher and breaks through to the 88.00/90.00 zone in the weeks ahead, it would likely weigh on gold prices. Gold could become vulnerable to a retest of long-term monthly chart support just under the $1,200 per ounce region —around $1,182. That is strong support that drew long-term physical buyers back into the gold market in June 2013 and again in December 2013. For now, the recent slippage in gold has been orderly. But, the dynamics of a broadly bullish longer-term dollar outlook will be a weight for the gold market in the weeks and months ahead, if it continues to unfold. As always, gold is driven by many different fundamental factors, but the level of the U.S. dollar is a strong driver that can't be ignored.