Gold Declines on Concern Rising Dollar May Erode Metal Demand
October 28th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
References:
Dollar Rally Setting Up Near Term
Someone asked about introductory books on technical analysis:
That’s the book I used to learn the basics (long ago).
Then there’s:
This is newer and offers a more in-depth treatment of the subject.
Via: Bloomberg:
Gold fell for a fourth straight session, the longest slide since August, amid concern that the dollar will extend a rally, curbing demand for the precious metal as an alternative asset.
The dollar rose against a basket of six major currencies, adding to three consecutive advances since Oct. 21, when it touched a 14-month low. Gold, which often moves inversely to the greenback, has dropped 2.7 percent in the past four sessions.
Do you have any insights as to why the dollar is increasing in value at the current time? Unfortunately I’ve seen many reports telling me that it increasing in value (obvious, if you know how to check FX rates), but not why, which is the a) more interesting and b) seemingly harder to answer part of the equation.
I can think of dozens of plausible reasons – central bank manipulations, the fact that the Eurozone is still way more fucked than us, that this months dollar crash was simply overhyped and oversold and is finally bouncing to sustainable levels, better confidence in the US economy, or perhaps intervention by the Martians. Unfortunately I don’t really know how or where to look to figure out the answers to this – any hints or your thoughts on this (or other readers, of course – I know there are some smart cookies out there) would be appreciated.
I have absolutely no insights as to why the dollar is rallying. My Magic 8 Ball and squiggly lines offer no explanations.
I don’t bother with “why” because it’s not knowable, in my opinion and experience.
“The number of players and the number of different reasons for their participation in supply and demand is close to infinite. Thus, the technical analyst believes it is futile to analyze supply and demand except through the prices it creates.”
—Technical Analysis: The Complete Resource for Financial Market Technicians by Charles D. Kirkpatrick and Julie R. Dahlquist
A final trap to get anyone holding back.
Its all going back up, its going to be fine, invest, invest 🙂
Then snap 🙁
Trading (and I include the word “investing” within this criterion) is a probabilities game. The “why” in any given event or series of events, is only knowable after the event has already occurred, therefore, giving no value in predicting the opportunity to make profit. My $ .02: If I were be compelled to guess why the dollar is rallying, I would ask that you observe sentiment regarding it. Bloomberg 2 weeks ago stated that bearish sentiment re: the USD had hit > 95 %, and, further, that a carry trade was developing in the dollar. When the market sentiment reaches those levels, a correction is almost inevitable: who else is left to take the position? What better way to stuff the currency speculators than a good swift rise in the USD, forcing them to unwind their carry trades into an accelerating short squeeze ?
I love the smell of Goldman in the morning, that smell, that paper smell? It smells like … it smells like … money !
You are so funny Dagobaz – I love the smell of Goldman in the morning.
I thought years ago that I should have invested Mom’s money in the manufacturers of Poise pads (still don’t know who that is!) But hah, hah.
You are also correct I think eg. sentiment – the mighty dollar – I don’t even want to read the articles from those that cannot let go of the dollar.
I think the dollar has been so perverted, used, and abused since Nixon took it off the gold standard that there is nothing to talk about anymore. The dollar is over, done, kaput. Its crocodile tears anymore. We could of, should of, oughto of, etc. But the Federal Reserve- previously so constipated and now has to think that they might be audited? what a fart.
I hope the Fed Reserve is audited and all their manipulations are exposed. Why are they getting a free pass while all the wailings are going on re bonuses at banks?
The smell of Goldman in the morning – yep. The banks and investment houses have taken over our government and our Treasury and Bernanke and Geithner- who is the behind the scenes Master that they are struggling to please? Surely not Obama.