The European bank stocks, like Unicredit, are a disaster. There will be more of them, along with Japanese banks. And coming up quickly we have a French election which is already causing jitters. These situations are a big problem for the Euro, and there are plenty of other global problems as discussed here. So even though the $ is a piece of crap, the others are worse. And these things, along with the technical situation in the $, will benefit the Dollar….for now. And the if the new adminisrtation thinks they can talk down the $, they’re dreaming. But in a post on January 15th my belief was they would try anyway: “Likewise, the President-elect will not be pleased at all with a ‘too strong’ $.” And sure enough two days later Trump told the esteemed WSJ that he was not pleased with a “too strong $”. It was obvious they were going to play this game, and the media and many “analysts” fell for it anyway and immediately called for “the top” in the US$.
The 103.80 high in the US$ Index was on January 3rd (and gold was nowhere near its’ low). And even though I’m still bullish on the $ and expect new highs, my post from January 2nd continued to stress my caution about the weird sudden bulishness on the $ which was due to..anyone…..anyone..Donald Trump:
“There is tremendous bullishness right now in the $ right as it’s sitting in a pretty big resistance zone. There is also alot of hope in the new Administration. There was alot of hope 16 years ago for the previous Republican Administration of George (Hanging Chad) Bush, but that didn’t stop the $ from putting in a major top. I would expect a similar situation early on with this President-elect. Gold will begin to “sniff out” a topping process in the $, and it will begin take pressure off of it. And there are situations coming up this year in Europe, where gold and the $ can rally together.”
Gold is already slowly starting to “sniff out” a top in the $, or better said presently, problems with the Euro. Gold bottomed in 1999, which was 24 months from the final top in the US$ in 2001. Gold and the $ will slowly, but surely sync up thru this year (it’s already happening a bit), with some reversals of that relationship at times. They will both benefit from the aforementioned problems. But also likely benefitting will be the US share market, after a knee jerk reaction, with capital rushing to the US. And while US Treasuries are very bearish long term, my belief is they will be the surprise beneficiary, as it’s actually the European bond market which will be hit first, with the capital rushing then to the US. What an absolute mess the geniuses at the central banks made with their super brilliant concoction, “negative interest rates”. Idiots.
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