US Dollar is being inflated to bail out the Eurozone debt

[hector]

Hypothesis: US Dollar (and maybe EUR) will commence inflation (faster than usual) to bail out the Eurozone debt. Perhaps lasting for around a year, maybe 2.

But I think the Fed will be able to avoid hyperinflation. The US economy is fundamentally stronger and sounder than the majority of the rest of the world. The banking cartel will sacrifice dollar strength in order to keep their other major currency, the Euro, from being destroyed by a catastrophic debt collapse coming later this year.

Anecdotal evidence for this, are the long-term downtrends in the banking stocks of England. We also have known for some time that Deutsche Bank is insolvent. Draghi's statements this week supports this theory. The Eurozone has clearly failed in its recovery from the 2008-2009 crises despite very accommodative monetary policy. This in contrast to the resurgent and resilient US economy.

It may be unwise to short the US stocks, if the inflation will run for some time. But it will probably be safer to short UK/Euro stocks, tempered by the fact that ECB may also commence inflation.

Needless to say it will be safe to hold onto precious metals and perhaps increasingly, cryptos. A rising gold price may be one mechanism the ECB uses to purchase debt given its large gold holdings.

Another play would be to short the Dollar index. It seems to be just beginning to tip over on the monthly. But if Draghi is signalling that he will simultaneously inflate the Euro, then that may be a limited play. Maybe long Cable only - people have been overly bearish on Sterling due to the Brexit fiasco but it will turn out to have been a storm in a teacup (we hope, haha). I do not believe that Sterling will be at all-time lows around the 31 October when we are due to leave the EU.

Thoughts? opinions? Is this a sound, plausible analysis? I'm aware of the perils of being an armchair economist and pontificating, but it's important to conjecture what may be a major macro factor coming into play.

[drbubb]

EUR in USD ... 5-yrs : Last: $1.137

[drbubb]

DXY/ Trade-wgt $/12mo : 2yr : DXY: $96.09 -0.54, EUR: $1.1396 +0.0026, GBP: $1.274, CAD: $0.755, AUD: $0.693, PHP: 51.46

GLD ... update / Last:

TPRFF (GCM is usd)/ Gran Columbia, update... has raced far ahead of GLD, GDX... & even more ahead of MUX

==

[drbubb]

Death of the Dollar! Lynette Zang and Stefan Molyneux

Currency Reset Coming?

Against Gold - "there is always demand for gold"

/ 2 /

Lynette Zang: CHOKE POINT – Oil Market Crash And Dangers Of The US Dollar

The Oil rally that started in early 2019 is over with spot oil off more that 20% from its recent high. The markets are looking at rising US shale production, diminishing demand because of the global slowdown and a deepening trade war that would dampen demand even further.

This is what that markets are looking at.

Are they missing the bigger picture or is this oil bear market being used to hide the middle east threats (plural) from the public?

Read more: WHAT REALLY HAPPENED | The History The US Government HOPES You Never Learn! https://www.whatreallyhappened.com/#ixzz5rieVy8D1

[hector]

Bit of a long winded video, only watched the first 10 minutes.

Generally it's on the right side (my side haha).

They assert that the market settled on gold as sound money. As far as I'm aware of history there was a competition between silver and gold, but since gold was rarer it was easier to concentrate in fewer hands becoming the ultimate store of value.

On the topic of rates, I think the US economy would be able to tolerate current levels and survive after the inevitable recession and bankruptcies. What I'm conjecturing is that they are going to loosen the dollar in order to cushion the debt problem in Europe, as the bankers have interests on both sides of the pond. In other words the American people get to shoulder some of the burden.

Euro rates are surely stuck in the gutter. However, the BoE MPC has made noises about raising rates two times over the next two years, so I don't expect rate cutting from them. Hence I see a more buoyant sterling to support the currency in the event of a No deal Brexit shock. This is where to look for opportunities when the inevitable recession and market crashes hit as people default.

[hector]

In mid February I wrote this:

No reason why stocks should end up lower over the year if USD depreciates relative to assets. In fact all fiat currencies are depreciating rapidly and that is why stock markets the world over are rising despite the fundamentals being crappy. I'd say we will probably be still around these levels (after a lot of ranging/whipsawing) at the end of the year.

Possibly in the UK stocks at least we will continue a general rise into July to reach the top of the monthly range and then come back down the rest of the year to either the middle or bottom of the range. (FTSE 6580 - 7770)

I am using the month of July as a mental milestone, particularly for the UK markets.

[hector]

Today DXY = 98.32

Dollar still seems suspiciously strong even though we have had rate cuts and flight to precious metals, bitcoin.

Could the Fed pull a fast one and contract liquidity just when people are looking the other way??

It's about time for a recession after all.

[hector]

The Fed is sharply increasing the amount of help it is providing to the financial system

The Fed now controls the timing for the next big crash - as soon as the temporary liquidity is pulled.

And if it becomes a permanent facility - watch out for the dollar crash.

[hector]

Feels like commodities have finished their corrections and are ready to start the next leg higher. Metals and crude are what I'm looking at. Not sure about cryptos but they are also a type of commodity.

At least expecting DXY to touch 97 first.

[hector]

Dollar getting real close to falling out of the channel. All hell might be breaking loose imminently.

I wonder if the FOMC will knock this out? EUR rate and UK election also this week.

[hector]

On 6/21/2019 at 10:18 PM, hector said:

Another play would be to short the Dollar index. It seems to be just beginning to tip over on the monthly. But if Draghi is signalling that he will simultaneously inflate the Euro, then that may be a limited play. Maybe long Cable only - people have been overly bearish on Sterling due to the Brexit fiasco but it will turn out to have been a storm in a teacup (we hope, haha). I do not believe that Sterling will be at all-time lows around the 31 October when we are due to leave the EU.

I was not brave enough to follow my own advice to long Cable. Nevertheless I have sterling deposits.

[drbubb]

Central banks worldwide buying up massive amounts of gold in a shift away from US dollar – Goldman Sachs

December 10, 2019

Gold prices will climb to $1,600 per ounce over the next year, Wall Street bank Goldman Sachs projects. It says that central banks are consuming a fifth of the global supply of the yellow metal.

“De-dollarization in central banks – demand from central banks for gold is biggest since the Nixon era, eating up 20 percent of global supply,” the head of global commodities research at Goldman, Jeff Currie, told Bloomberg. “I am going to like gold better than bonds because the bonds won’t reflect that de-dollarization.”

Citing “fear-driven demand” for the precious metal, Goldman analysts said last week that investors should diversify their long-term bond holdings with gold.

Folks, we may want to take a good hard look at this development; we have a lot of economic manure, hitting the ventilation system in the next couple of weeks, internationally, so please; if you can, do think about this as a way of protecting, please look at the possibility, even if you had not considered it before.

[hector]

On 12/9/2019 at 10:02 PM, hector said:

Dollar getting real close to falling out of the channel. All hell might be breaking loose imminently.

I wonder if the FOMC will knock this out? EUR rate and UK election also this week.

Result was down, with the decisive break on UK Election result.

Seems like GO for bearish USD bets, with no rate rises on horizon.