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Following because of USD holdings and USD denominated assets - including assets negatively correlated to the USD - like gold.
USD held as a hedge against weaker local currency and against gold positions.
Whatever your personal belief on Elliot Wave, I am not imagining a very clear 5 waves down (labelled (i) to (v), since the march 2020 high. There are 5 sub-waves evident in each of the three down portions and none of the EW guidelines, tendencies, retracements, extensions, or rules are broken for an impulse move (i.e. wave 2 tends to be deeper and reached a 50% retracement, wave 4 is normally a shallower more correction and hit the 0.382 retracement level almost exactly). Long story short, this an impulse move that meets all normal characteristics, so I am charting out what that could mean for price if it continues to follow stereotypical EW tendencies - a 3 wave correction.
Overall, I see the relative valuation of the USD vs the DXY currency basket as heading downwards as in my, possibly overly pessimistic view, the USD loses both it's safe-haven and global reserve status. However, my bearish view is primarily based on the chart. I will post a longer-term chart next. Remember all fiat currencies are losing value over time, some are just losing value more quickly. I hope everyone who hasn't already considered a physical precious metals position (no not a gold or silver ETF position Millenials) will do so, even just as a hedge. Some major hedge funds have positions sizes of around 10% of assets in gold - maybe they know a thing or two.
Actually, I will permit myself a digression here. You cannot ask for physical delivery from a precious metals ETF unless you have a significant position and I would think that in the event of a bullion / monetary crisis that option may no longer be available. So any gains are just paper gains. The Custodian of the world's largest gold ETF was in the news last week as one of the major banks involved in the suspicious activity report (SAR) scandal (while they were already on probation for previous wrong-doing) - which I expect to result in major litigation and fines. But wait, that is not all! They just popped up in my news feed again today as an alleged facilitator of transactions between Huawei and US sanctioned Iran. Wow, they seem like a really safe, super ethically sound bunch to hold gold on my behalf :P Imagine if they are being similarly ethically sound and forthcoming about the level of their physical gold holdings versus their issued gold ETF shares - well if it was ever discovered that these two things were divergent, not only would gold ETF holders miss out on the massive price appreciation of physical gold that results, but you may also not be able to withdraw ETF funds. Ok, rant over. But seriously, if you do buy gold or silver to hedge against currency deflation / coming inflation, consider secure, reputable, insured non-bank vaults that give you images of your allocated holdings that is in a safe, politically stable, bullion friendly jurisdiction - like bullionstar.com and not a bullion ETF. Ok, I feel better now.
Another really good reason I am following the DXY as strengthening of the USD will mean a pull-back and possible good buy zone for precious metals - which I see as going higher after correcting recently for no good fundamental reason. A bounce in the USD is allowing me to load up on silver which is again worth more than 80:1 (by weight) vs gold.
I hope all that made sense. Protect those funds and good luck.
Following because of USD holdings and USD denominated assets - including assets negatively correlated to the USD - like gold.
USD held as a hedge against weaker local currency and against gold positions.
Whatever your personal belief on Elliot Wave, I am not imagining a very clear 5 waves down (labelled (i) to (v), since the march 2020 high. There are 5 sub-waves evident in each of the three down portions and none of the EW guidelines, tendencies, retracements, extensions, or rules are broken for an impulse move (i.e. wave 2 tends to be deeper and reached a 50% retracement, wave 4 is normally a shallower more correction and hit the 0.382 retracement level almost exactly). Long story short, this an impulse move that meets all normal characteristics, so I am charting out what that could mean for price if it continues to follow stereotypical EW tendencies - a 3 wave correction.
Overall, I see the relative valuation of the USD vs the DXY currency basket as heading downwards as in my, possibly overly pessimistic view, the USD loses both it's safe-haven and global reserve status. However, my bearish view is primarily based on the chart. I will post a longer-term chart next. Remember all fiat currencies are losing value over time, some are just losing value more quickly. I hope everyone who hasn't already considered a physical precious metals position (no not a gold or silver ETF position Millenials) will do so, even just as a hedge. Some major hedge funds have positions sizes of around 10% of assets in gold - maybe they know a thing or two.
Actually, I will permit myself a digression here. You cannot ask for physical delivery from a precious metals ETF unless you have a significant position and I would think that in the event of a bullion / monetary crisis that option may no longer be available. So any gains are just paper gains. The Custodian of the world's largest gold ETF was in the news last week as one of the major banks involved in the suspicious activity report (SAR) scandal (while they were already on probation for previous wrong-doing) - which I expect to result in major litigation and fines. But wait, that is not all! They just popped up in my news feed again today as an alleged facilitator of transactions between Huawei and US sanctioned Iran. Wow, they seem like a really safe, super ethically sound bunch to hold gold on my behalf :P Imagine if they are being similarly ethically sound and forthcoming about the level of their physical gold holdings versus their issued gold ETF shares - well if it was ever discovered that these two things were divergent, not only would gold ETF holders miss out on the massive price appreciation of physical gold that results, but you may also not be able to withdraw ETF funds. Ok, rant over. But seriously, if you do buy gold or silver to hedge against currency deflation / coming inflation, consider secure, reputable, insured non-bank vaults that give you images of your allocated holdings that is in a safe, politically stable, bullion friendly jurisdiction - like bullionstar.com and not a bullion ETF. Ok, I feel better now.
Another really good reason I am following the DXY as strengthening of the USD will mean a pull-back and possible good buy zone for precious metals - which I see as going higher after correcting recently for no good fundamental reason. A bounce in the USD is allowing me to load up on silver which is again worth more than 80:1 (by weight) vs gold.
I hope all that made sense. Protect those funds and good luck.
Comment:
Tracking along with my outlook pretty closely so far
Order cancelled