Friday, December 31, 2010

Strong Dollar/Strong Yuan Gold Play

That is right, no longer will I use the terms weak dollar and strong dollar to describe how it is that the currencie is panning gold.  It was not a precise enough statement.  I am going to run down exactly how the dollar is panning gold.  I hope I was not confusing anyone with my thoughts on how gold will rise on a 'strong dollar' and also a 'weak' one.  After noticing that it is the Yuan that has driven dollar weakness this week, I will now be saying gold is rising and will rise on the back of a strong dollar and a strong yuan.  The same win win situation for gold lovers, just a different lexicon.

The oscillation between the currencies has and will continue to "pan" gold.  The yuan strength will leave gold  primed for breakouts, and then on dollar strength the metal will surge to new highs.  The gold trade was set up on inherent dollar weakness.  Once the Eurozone collapsed and the risk was taken off of the Euro was when this trade really got moving.  Then the Yuan took over the policy upon the flash crash.  Was the series of events last spring coincidental?  Were they purposeful?  No matter the questions, the answer is gold.

What a day, huh?  Gold reaffirmed its status as champion and crushed all comers on the back of a....wait for it....strong Yuan (I can't get enough of this win win situation).  Once again, shall we review?  The Yuan has been crushing the dollar and gold settles in nicely on this.  Then when global fear jumps out, the dollar gains and gold runs alongside.  The trade will continue until the gold is all panned out of the dollar.

No comments:

Post a Comment