Why is Gold down with inflation at 5%?
- Thread starter kmiklas
- Start date
The presenter seems very confused about cause and effect re multiple of his points. "when the dollar goes up everything else goes down" - Total nonsense. "when dollar goes up commodity prices go down" - also not necessarily true. And then he goes on saying "look, dollar went up, and this and this and this commodity price did not go down, but generally they go down" (I paraphrase).
Truth be told, relationships in financial asset prices and classes are not as simple as that guy makes it out to be. It's much more complex. If what he said held true at all then we should only trade the dollar and not a single commodity because they would all be perfectly correlated. They are not, and actually correlations are constantly shifting, making claimed relationship wrong and a very poor candidate to trade on such assumptions.
Truth be told, relationships in financial asset prices and classes are not as simple as that guy makes it out to be. It's much more complex. If what he said held true at all then we should only trade the dollar and not a single commodity because they would all be perfectly correlated. They are not, and actually correlations are constantly shifting, making claimed relationship wrong and a very poor candidate to trade on such assumptions.
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The key points I took away are:
1. When the dollar has a big move, watch out for other asset moves.
2. Volatility is contagious.
A minor key point I took was that DX was bottoming (double bottom) and expect a bounce from here.
When DX strong expect stocks to fall along with gold. (Which seems to be playing out).
My opinion, a USD rally will be weak and may not go far, as imo the fed wants a weak dollar and will pull levers to ensure that.
Another thing imo, the USD vs gold price correlation is fleeting, sometimes there, other times not.
When DX strong expect stocks to fall along with gold. (Which seems to be playing out).
My opinion, a USD rally will be weak and may not go far, as imo the fed wants a weak dollar and will pull levers to ensure that.
Another thing imo, the USD vs gold price correlation is fleeting, sometimes there, other times not.
I agreed with your post. My remark was meant for all those people who believe the FED will keep inflation under control.
So, did you trade it then?
See below: Almost 370 pips * 1 - 1/3 * 60 pips) = 350 pips in a little more than one week. I trade almost exclusively currencies on an algorithmic basis, on discretionary positions I usually trade 10mil notional. You do the math.
See below: Almost 370 pips * 1 - 1/3 * 60 pips) = 350 pips in a little more than one week. I trade almost exclusively currencies on an algorithmic basis, on discretionary positions I usually trade 10mil notional. You do the math.
Exchange rates are pretty random at times. What I would note is during the last recovery ( 2009-2011+ ) there was a huge commodity bull and Cdn$/US$ went from 0.68 to $1.06. Canada started raising interest rates long before the US did as a measure to drop the Cdn$.
In this recovery, the Cdn/US$ bottomed at almost exactly the same spot and has run up as high as 0.83 ( now 0.80 ). We might still get weakness in the US$ until such time as they raise rates. I see a lot of day traders think otherwise but more often then not they get it wrong.
Excellent point.The trouble with fundies and forex pairs ... is you have to be right on both sides of the equation. The U.S. vs EuroZone, the U.S. vs UK, the U.S. vs etc etc etc
Not to mention all the non-U.S. denominated other pairs.
When it comes to trading I've learned that price action is all that matters and common sense means nothing. The big picture stuff that talking heads on TV talk about is often irrelevant and detrimental to short-term traders like ourselves.
When it comes to gold I trade GDX and DUST, I'm currently long DUST
When it comes to gold I trade GDX and DUST, I'm currently long DUST
