Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Sunday, March 03, 2013

U.S. Dollar Going Higher, Gold Going Lower?

UUP is a 2x levered bullish U.S. dollar ETF.  Below is its weekly chart, suggesting a major upside break-out is underway. 

We've been extremely bullish the USD in this blog for years, contrary to all popular (read: mistaken) sentiment.  We flipped it several times for enormous gains, again per this blog, most recently purchasing it (and still holding) at the exact low of May 05 2011. 

Here's a chart of the U.S. dollar.  An actual break-out has not yet happened, however we're certain it will.

Of course this is more bad news for gold and silver (we've been correctly bearish for a long time, again against all popular sentiment), and most commodities. 

As can be seen in the chart above, the U.S. dollar bottomed in 2008.  The chart presents an empirical problem for the "dollar is doomed" crowd, armchair economists and Nobel laureates alike. 

Is the dollar only up vs. other currencies, rather than "real money" and commodities? 

Crude Oil topped mid-2008 and is way down since then, dropping as much as 75% since "peak oil" made higher oil prices that'd supposedly cripple global commerce and movement an "absolute certainty".

Natural Gas is way down from mid-2008, dropping as much as 84% as of 2012.

Heating Oil?  Essentially mirrored crude oil.

Perhaps this is just particular to the energy sector?

Gold is down 17% from its 2011 high.

Silver is down 42% since its 2011 high. 

Platinum down as much as 66% from its 2008 high.

Copper down as much as 35% from its 2011 high.

With insurance like that against Federal Reserve money "printing", who needs an understanding of human nature, herd mentality and history?

Yes we're cherry-picking dates to some degree to make a point, however five years is a very long time for energy to not only fail to make new highs but to instead drop very materially and lag equities significantly despite all the doomsday "wisdom" and "certainty" regarding the dollar's "imminent demise". 

So too for metals, two years is a very long time and we believe the next two years will feel like an eternity for those who continue to slag the dollar and accumulate gold and silver in a misguided attempt to "buy the dips".

Cash is once again clearly king.  Should the market finally plunge awhile, as seems imminent, that fact will become clear to a great many more people. 

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