Standing on Its Own as the World’s Reserve Currency
In 1944, delegates from 44 Allied countries met in Bretton Wood, New Hampshire, to come up with a system to manage foreign exchange that would not put any country at a disadvantage. It was decided that the world’s currencies couldn’t be linked to gold, but they could be linked to the U.S. dollar, which was linked to gold.
The arrangement, which came to be known as the Bretton Woods Agreement, established that the central banks would maintain fixed exchange rates between their currencies and the dollar. In turn, the United States would redeem U.S. dollars for gold on demand. Countries had some degree of control over the currencies in situations wherein their currency values became too weak or too strong relative to the dollar. They could buy or sell their currency to regulate the money supply.
As a result of the Bretton Woods Agreement, the U.S dollar was officially crowned the world’s reserve currency and was backed by the world’s largest gold reserves. Instead of gold reserves, other countries accumulated reserves of U.S. dollars. Needing a place to store their dollars, countries began buying U.S. Treasury securities, which they considered to be a safe store of money.
So where is the Dollar today?
With the Global Pandemic - Dynamics have changed, but will they stay that way? Or will business go back to normal for the Dollar???
In Elliott wave terms - we have plotted the DXY using software from Advanced Get - the monthly currently has two variable settings as per below;
Version 2;
This intersection is quite interesting for DXY (the Dollar) as a whole, the moon cried of the crypto arena. Gold not behaving as expected in current conditions, Oil dripping (excuse the pun)below zero this year for the first time ever... So are we seeing a transition overall, or expected to go back to normal?
Weekly Elliot wave - inside the monthly This coupled with the current Schematic structure.
We also have a couple of key areas just above to keep an eye on.
What's your take on Dollar? will crypto/Bitcoin affect it? Will SPX keep on going, or will we see a sizable pullback this year?
BITCOIN & CRYPTO We should see a decent pullback from these highs before a continuation up. What effect will this have on DXY?
GOLD Will we see an increase here in Gold or is the digital gold taking over silently?
DOW JONES Again sink or swim at this interchange? It's worth comparing some of these when making an assessment of the currency markets.
SPX - US500 With charts like this, we are more likely to moon with SPX or DJI than we are with BTC.
I would be keen to hear from traders who focus on Gold, SPX, DJI or/and Bitcoin. I don't think the alt coins are in contention for the title (yet). Feel free to add your own charts in the comments below; any global gauges? indicators or tools you like when trading these instruments?
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Thanks Mayfair. New gang on neighbourhood definitely must know some new tricks or it won't get a name at all (as such, crypto will continue to over perform gold and other established gangs). Problem is how many members will not make it on the middle term...probably many, sometimes (for A or B) even the leader can fall.
Call me old school, but my allocation in metals (Au, Ag and Pt) is x6 that of crypto...and will rebalance if it gets closer. Long term the technology is here to stay (but in what form?) and I'm quite comfortable holding something that central banks hold (plus many other reasons). Thanks again for ur posts, premium.
Mayfair_Ventures
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@jgaldon, !00% For sure, it's here to stay and as you say - it's now in what form. Buying dips and sitting on hands is the best practice here. Nothing goes 90 degrees up forever. It's actually healthy to see pullbacks.
MiketheN00B
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Moon is overrated anyway.
Mayfair_Ventures
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@MiketheN00B, I heard Lamborghini are set to take on space X in an acquisition, purely to help BTC land on the moon.
UnknownUnicorn4127247
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Good perspective🔥
Mayfair_Ventures
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@Mehdisouriiii, Appreciate the comment.
Mayfair_Ventures
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- Dollar has something up it's sleeve and I think the Bulls will be pretty angry, with Dollar Crosses pretty soon.
Call me old school, but my allocation in metals (Au, Ag and Pt) is x6 that of crypto...and will rebalance if it gets closer. Long term the technology is here to stay (but in what form?) and I'm quite comfortable holding something that central banks hold (plus many other reasons). Thanks again for ur posts, premium.