What Investors Can Learn from Gold Priced in Yen?

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Posted by Arkadiusz Sieron

on Friday, 25 November 2016 08:13

Our Market Overview would be incomplete without remarks about gold priced in the Japanese yen. Chart 1 shows nominal gold prices denominated both in the U.S. dollar and the Japanese currency, while Chart 2 plots the indices of gold prices in these two currencies.

Chart 1: The price of gold in U.S. dollars (yellow line, right axis) and in Japanese yen (red line, left axis) from January 1979 to September 2016.


Chart 2: Indices of gold prices in the U.S. dollar (yellow line) and the Japanese yen (red line), January 1980=100.




Which Of These Markets Is Wrong?

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Posted by Steve Saville - The Speculative Investor

on Wednesday, 23 November 2016 09:44

The US$ oil price and the Canadian Dollar (C$) have tracked each other closely over the past 2 years. When divergences have happened they have always been eliminated within a couple of months, usually by the oil market falling into line with the currency market.

In a 25th May blog post I wrote that an interesting divergence had developed over the preceding few weeks between these markets, with the C$ having turned downward at the beginning of May and the oil price having continued to rise. This suggested that either the currency market was wrong or the oil market was wrong. As I stated at the time, my money was on the oil market being wrong. In other words, I expected the divergence to be eliminated via a decline in the oil price.

The oil price was $49 at the time. Over the ensuing two weeks it moved a little higher (to $51) and then dropped by 20% within the space of two months. The result was that by early-August the gap between the oil price and the C$ had been fully closed.

The oil price and the C$ then traded in line with each other for about 6 weeks before another divergence began to develop. Again it was the oil market showing more strength than was justified by the currency market, and by early-October it was again likely that there would be a gap-closing decline in the oil price.

As expected, there was a significant decline in the oil price from mid-October through to early-November. However, the following chart shows that the gap was only partially eliminated and that a rebound in the oil price over the past 1-2 weeks has potentially set the stage for another significant gap-closing move.

I won’t be surprised if the oil price trades a bit higher within the coming two weeks, but my guess is that it will drop to the $30s within the coming three months.

oil C 221116

...more from Steve: The prices of US government debt securities have been falling since early-July and plunged over the past two weeks. This prompts the question: Where did all the money that came out of the bond market go?




The Rising Dollar’s Impact on Emerging Markets

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Posted by Larry Edelson - Money & Markets

on Tuesday, 22 November 2016 07:54

The greenback has been on a tear as of late, rallying about 5.5% since the dollar index bottomed out just below 96 on election night.

In fact, the dollar index is up 10 days straight — the biggest surge since May 2015.

That puts the dollar at its best level in over 14 years.

Reasons: Simple …    

FIRST, is all the flight capital leaving other countries and regions of the world that are in far worse shape than the U.S. Europe is going down the drain. So is Japan. So is the Middle East.

Plus, the more China opens up its currency market, the more yuan leave as wealthy Chinese get the opportunity to diversify and invest … and their main target is the U.S. of A.

SECOND, is that the dollar is now pricing in an inevitable rate hike from our Federal Reserve.

And THIRD, is general optimism over President-elect Trump’s policy of strongly desiring to repatriate the nearly $3 trillion of U.S. corporate money sitting overseas. A tax holiday of some sort is in the offing for that huge stash of cash and repatriating it would be hugely bullish for the dollar and for the U.S equity markets.

So it’s no surprise that my AI models have forecasted this rise in the dollar for some time now. And those same models are telling me that this trend should continue.

In fact, this chart clearly shows that the dollar index could easily continue moving higher heading into next year …

112116 1458 TheRisingDo1

So, what does this all mean?




Huge Moves - Time to TipToe Short Term

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Posted by Michael Campbell & Victor Adair

on Monday, 21 November 2016 07:27

The Dollar & Bonds market reaction to Donald Trumps election has been massive and the movements dramatic. Its time to step carefully depending on your time frame. Victor on the likelihood of a Fed interest rate move and the huge ETF sales in the Gold.

...related Dr. Michael Berry: The Fed is Throwing Up Its Hands





Dollar charge pauses as bond bashing relents

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Posted by Marc Jones - Reuters

on Friday, 18 November 2016 04:15

Battered bonds and emerging market currencies enjoyed some respite on Thursday as the dollar took a breather from a post-U.S. election charge that has taken it to a 13-1/2 year high.

Screen Shot 2016-11-18 at 3.09.13 AM

The financial market looked set for a quiet start and Europe's main stock markets were shuffling sideways as the dip in global bond yields cooled bank stocks, which have been rising on hopes higher yields will led to better lending profits.

The dollar dropped a modest 0.1 % against other top world currencies after data showing the biggest increase in U.S. consumer prices in six months.

But the fact it hadn't quite clawed back yet marked a change of direction after eight days of back-to-back gains that have seen it jump almost 4 %.

"The momentum of the Trump rally (in bond yields and the dollar) has faded a bit so we are all trying to recover," said Rabobank strategist Philip Marey.

He said investors were mainly trying to get a handle on what U.S. President-elect Donald Trump is likely to do when he takes office in January, as well as position for what now looks almost certain to be a U.S. interest rate rise next month.

Trump was set for meeting with Japanese Prime Minister Shinzo Abe in New York while in her first comments since last week's election, Federal Reserve chief Janet Yellen said the case for a rate hike has strengthened.

"Such an increase could well become appropriate relatively soon," Yellen said in remarks due to be given to Washington politicians later.

Japanese yield cap 



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