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Weaker US$ Could Send Gold & Gold Stocks to Higher Targets

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Posted by Jordan Roy-Byrne - The Daily Gold

on Wednesday, 01 February 2017 23:20

Gold has underperformed both in nominal and real terms. Last week it formed a bearish reversal in nominal terms and against foreign currencies. However, the good news for bulls is the US Dollar Index lost support at 100, due to the Trump administration’s tough talk against Germany (and the Euro). Couple that with no movement from the Fed and the greenback should continue its decline, thereby juicing the current rebound in Gold and especially gold stocks.

Take a look at the daily candle charts in the image below. We plot the US Dollar index, the Dollar/Yen cross and the 10-year Treasury yield. The US Dollar index has a potential measured downside target of 97 which happens to coincide with a confluence of moving average support. Dollar/Yen has not broken its corrective lows yet but if it does it would strengthen the odds the US Dollar index falls to 97. Meanwhile, the 10-year yield has some more room to fall if its correction were to continue. In short, lower levels on all these charts is short-term bullish for precious metals.   

Feb12017usdyields

US$, US$/Yen, 10-Year Yield

The daily candle chart below shows GDXJ and GDX. The 200-day moving average has held GDXJ but it has a great chance to continue its rally up to $40-$41. GDX could reach $25-$26. 



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Currency

Bitcoin Investing: How to Safely Own “Digital Gold”

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Posted by Investors Alley

on Wednesday, 01 February 2017 05:14

bitcEndorsed by a large portion of the investing community now, bitcoin has emerged as a legitimate alternative to gold for hedging your portfolio. If you have never heard of bitcoin, use this article to find out if it’s a viable investment for your portfolio. 

Here’s a quick quiz for readers: what was the top performing currency in 2016?

The answer – surprising to many – is the digital currency Bitcoin, which was created in 2009.

It more than doubled its value last year, rising 126%. Its nearest rival was the Brazilian real, which rose by a mere 21%.

Bitcoin – often called digital gold – is currently priced at about $920. It opened this year with a bang, surpassing the $1,000 level for the only the second time ever. It hit its all-time high in December 2013 at $1,156.06.

2016 was the second year in a row that the return of Bitcoin topped that of all other asset classes – stocks, bonds, currencies, and commodities.

What is behind the rise to prominence of this cryptocurrency?

....continue reading HERE

 

....also:

SWOT Analysis: The Dollar’s Future and What That Means for Gold



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Currency

SWOT Analysis: The Dollar’s Future and What That Means for Gold

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Posted by Frank Holmes - US Global Investors

on Tuesday, 31 January 2017 07:03

Strengths

  • The best performing precious metal for the week was platinum, up 0.74 percent.  Silver also clocked a positive gain of 0.28 percent.  Economic growth in the U.S. slowed more than forecast last quarter on the biggest trade drag in six years, reports Bloomberg. Net exports subtracted 1.7 percentage points from expansion in the October – December period, as dollar strength likely was a drag on growth.  Should the new Trump administration push for a weaker dollar, this could lend support to gold.
  • China purchased a net 47 tons of bullion in November, according to data from the Hong Kong Census and Statistics Department and compiled by Bloomberg.  Additionally, shipments of gold from Switzerland to China surged more than fivefold to 158 tons in December, Bloomberg continues, the highest since at least January 2014. Appetite for gold is soaring ahead of the Lunar New Year.
  • According to Bloomberg, the four ETFs backed by gold that have attracted the most money this year are all based in Western Europe. Xetra-Gold, listed in Frankfurt, tops the list by bringing in around $544 million last week. Europeans are turning to the gold on fears that Trump’s “America first” rhetoric will impede global economic growth.

Weaknesses

  • The worst performing precious metal for the week was palladium, down 6.65 percent. The metal is headed for its worst weekly drop in more than a year. CPM Group reported they see palladium and platinum in surplus for the next few years and estimated there are 25 million ounces of palladium in stockpiles, most held by investors.
  • Physical gold demand fell in 2016 to its lowest level since 2009, reports Reuters, as increased prices weighed on appetite for the metal. GFMS, a research unit of Thomson Reuters, also notes that gold jewelry demand is at a 28-year low. Jewelry consumption is down 9.7 percent year-over-year at 551 metric tons in the fourth quarter.
  • As U.S. equities looked to extend a rally on Friday, gold retreated for what might be a fourth-straight day of losses.  However, real rates dropped a bit before the market open and gold eventually crawled into positive territory.  “Gold was due for a short-term pullback, after rallying almost non-stop since late December,” Jordan Eliseo of Australian Bullion Co. said. “Strength in equity markets, with the Dow topping 20,000 points, soft physical markets and a greater focus on rate hikes from the Fed has seen the metal sell off.”

Opportunities

  • UBS says the dollar has peaked and is likely to decline this year under President Trump, reports Bloomberg. The wealth management unit at UBS expects the currency’s future weakness to boost the price of base and precious metals. “We hold that view because we see real interest rates going deeper into negative territory.” Earlier in the week Steve Mnuchin also commented on the dollar, defying two decades of convention at the office of the U.S. Treasury Secretary by stating, “From time to time, an excessively strong dollar may have negative short-term implications on the economy.” In a similar note, Brown Brothers Harriman noted a recent St. Louis Fed study which showed how a strong dollar from 2014 to 2016 was associated with a drag on growth from net exporters.

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Bitcoin - What Next?

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Posted by Martin Armstrong - Armstrong Economics

on Friday, 27 January 2017 07:19

bitcoin-600x400The rally in bitcoin has come out of China, which has accounted for 98% of bitcoin trading in the past six months. China is also home to about two-thirds of the world’s bitcoin mining power. The Phase Transition spike in bitcoin is very alarming, for it flies right in the face of government attempts to eliminate currency. The Chinese have been buying bitcoin onshore, selling it offshore for another currency, and then moving the money to a bank account. This is how the Chinese individuals can take cash out of the country, circumventing all regulation.

The Chinese government has been strengthening requirements for citizens by converting their yuan. With Trump coming into office, China fears that lower values for the yuan will become a trade war even if the government is not actively trying to depreciate the yuan for trade. Conversions of yuan are already subject to a quota or currency controls in an effort to curb capital outflows.

Bitcoin has been the escape method for capital fleeing China. With the looming trade war on the horizon, the Chinese government will have absolutely NO CHOICE but to come in and regulate bitcoin as its citizens now account for 98% of all trading. From a regulatory perspective, the days of passive treatment of bitcoin may come to an end. Bitcoin has soared only because it has been the mechanism to obtain foreign exchange and take capital out of China. This could easily be considered an illegal operation, such as money laundering, to justify closing that window.

Of course, you have the zealots who preach bitcoin as the alternative to the dollar that they cannot shut down. All they need to do is declare bitcoins illegal and the PRESUMPTION of being in bitcoin is a PRESUMPTION of being a criminal. They are already using terms like “CASH IS FOR CRIMINALS” and if you have a few thousand in cash, they just confiscate it presuming you are criminal under Civil Asset Forfeiture without having to prove you committed a crime or charging you.

Keep in mind we are dancing with the devil. There are no rules — just ruthless self-interest. They will do whatever it takes to survive. They will not relinquish power willingly.



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Inflation Moving Higher Thanks to Dollar

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Posted by Martin Armstrong - Armstrong Economics

on Monday, 23 January 2017 07:08

InflationPrices in the US are picking up strongly and support the Fed’s arguments for raising interest rates further. The rate of inflation rose by 2.1% in December, according to the Ministry of Labor. This is the highest increase since two and a half years. Some are suggesting this is due to higher gasoline prices and rents in particular caused the buoyancy. After all, the November rate was still 1.7%. The Fed has been targeting two percent. The Fed raised the key interest rate in December to 0.5 to 0.75%, and took three further steps upward for 2017.

With With consumer confidence at record highs, that means....continue reading HERE

...also from Martin:

Trump Brings Consumer Confidence to 13 Year High



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