The gold rally will find it difficult given that dollar for the first time in 18 months is breaking out.
Read this analysis here posted for premium subscr earlier
Source: Dollar: The King is back to take his Kingdom
Ever see what happens when the other guy on the teeter totter hits the bottom... and then gets off? Yeah, the guy on top drops like a rock.. this is the EUR/USD combo.
Cue the presses, deflation is coming!
The trade is "anything but the Euro" right now. Gold moving with the dollar.
Here is what I dont understand. With the dollar rising per say, holding dollars in bonds that are paying 1.91% over 10 years makes zero sense to me as inflation, even government reported inflation is moving at almost 3% annual. Why would anyone park their money in bonds at these rates when silver and gold really would only need to move at 2% annual to make it a better deal. Which we all know pm's are moving more like 20% annual. Why would anyone hold dollars for more than what they need to live on?
It is all relative. If the dollar goes up relative to the Euro, is the dollar a good buy? But, if PMs raise higher/faster then the dollar, which would you want to be holding? The dollar-Euro trade is a choice between two ugly step-sisters. Which one has less warts? Yes, are cousins across the pond might be running to the dollar, but I don't think that makes it a good buy. It is just the dollar might be perceived as a sounder currencies then the Euro, (at the moment). Nothing, and I mean nothing, for the dollar has improved. A new higher debt limit, more deficits, weak economy, poor fiscal policy, poor monetary policy. What has changed to make the dollar more attractive? And, that the price of dollars getting bid up, does not make them more attractive. Just means there are some pretty stupid people fleeing Europe.