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TMFSinchiruna (98.05)

Crucial Point: Placing the "Dollar Rally" in Context. Gold has Broken Out to New All-Time Highs Against: The Aussie Dollar, Canadian Dollar, the Euro, and the British Pound

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October 10, 2008 – Comments (6)

The "rise" in the dollar has been merely a function of some of these currencies free-falling even faster for the time being. Gold has already broken beyond its March / all-time highs in each of these currencies... how long do you suppose before the USD catches up in the race towards the bottom and we break back out above the prior high of about $1,033?

You can barely make out the vertical spike at the right edge of the Aussie chart... gold is trading at AUD 1,306!

 

6 Comments – Post Your Own

#1) On October 10, 2008 at 5:31 AM, TMFSinchiruna (98.05) wrote:

For a little more detail on the dramatic Aussie dollar gold chart:

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#2) On October 10, 2008 at 6:52 AM, saunafool (97.73) wrote:

I started buying GLD for portfolio insurance of sorts 3-4 years ago. It's the only thing that has kept my portfolio from being absolutely brutalized.

I've never seen so much fear in the market as there is right now, and I think we are going to see a very high price for gold in the coming years. Eventually, I think it has to exceed the inflation-adjusted high of 1980, which was ($800 in 1980 dollars, $2500 or so in current dollars).

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#3) On October 10, 2008 at 9:38 AM, angusthermopylae (36.38) wrote:

That exact reasoning I came up with when i started reading about the "rallying dollar."   It's not that the dollar is fundamentally stronger, it's just that everyone else is getting weaker.

Of course, the question then becomes:  Weak compared to what?  Dont' get me wrong--I believe that it will be a long while before the reverberations clear out.  But if a stable new "low" is achieved across the board, it's still stable and workable.

Case in point:  Someone (was is you, sinch?) made a comment that "China can mandate growth."  That works great for them in the short run, but if their currency gets too strong, it'll crush their exports; no one will be able to buy products from the Chinese.

Personally, I believe the Chinese (in general) tend to take the looong view, and are on the horns of a dilemma:  Option A is to keep their currency strong, wield there financial power over other countries (it's reached a level of paranoia in US main street politics), and face the problems killing exports in 2-4 years.  Option B is to tread carefully, take a few short term hits, and keep their involvement in the financial status of other countries (debt) while maneuvering for slightly bigger bites of the pie all along.

Since I believe we're on the opposite end of that scenario, I've no doubt that everyone will push for a nominal "win" for the US.  However, I sincerely doubt that currency and debt maneuvers will turn out the way "we" want it unless we consider all sides, "friend" and "foe."

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#4) On October 11, 2008 at 3:10 AM, MGDG (98.21) wrote:

 With Gold priced in USD, it could be masking an uptrend for US investors. The Aussie Dollar has been hammered. The Yen has held up pretty well. Not really sure how long this trend will continue.

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#5) On October 16, 2008 at 1:00 PM, goldminingXpert (99.97) wrote:

yeah, this shows you that shorting the AUD or CAD was a great trade. We trade gold in dollars and the dollar is strong. It's like a triangle-- there is the dollar, the gold, and the AUD. If the dollar is going up, you want to bet against the AUD, not for gold. If the dollar sinks, then you want to be long gold and ignore the AUD. However, we have a strong dollar situation at the moment, so the correct play is in the FX market (or shorting something like coal stocks that is highly leveraged to the dollar.). At this point, I just covered my gold shorts today and am net neutral, we are a key juncture for the dollar, will we rally back to 90 or will we stall at 80? If the dollar rally ends, it will be a delicious time to buy silver. I've already green-thumbed SLV as it will surely rise (or fall less slowly) than the lame duck SPY.

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#6) On December 08, 2008 at 6:43 PM, capstan100 (< 20) wrote:

As a bet on the future Gold is quite useless - when people

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who is going to buy your gold?

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 This month they will have had added a

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Easy B

 

 

 

 

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