The gold and silver bull markets are ready to stampede on the upside as US dollar troubles become apparent.
US Dollar Troubles
January 13 (King World News) – Graddhy out of Sweden: Clear breakout on Gold daily, gapping the blue trend line (yesterday). Said for 4+ months that Aug 9th looks good as major low. Still does. Beautiful pattern with the respected green rounded bottom/arc.
Gold Gapped Higher Yesterday And
Appears Ready For Liftoff
Dollar, Gold, Silver
James Turk: The break of this uptrend is more evidence that a weak US dollar may be the big story for 2022. The dollar and national currencies are overvalued. In contrast gold & silver prices are undervalued so rising precious metal prices and higher inflation may also be big stories in 2022.
GOLD BULL CATALYST:
US Dollar Has Broken Below Major Trend Line!
US Dollar Troubles
Peter Boockvar: For technical perspective on the just recent dollar weakness where the DXY broke its 50 day moving average of 95.88, it is now approaching the 100 day of 94.65. I can’t specifically explain the all of a sudden downturn but I do believe that the main reason for the prior strength that really began in mid June coincided with the June FOMC meeting when the Powell said they are beginning the talk about taper. Thus, it really was just interest rate differentials and the hawkish Fed that led to the dollar strength mostly against the euro and yen. The yen also, I believe, was trading in line with oil prices as its weakness seemed to occur hand in hand as Japan imports most of its energy needs. The pound got its legs back after the BoE raised rates in mid December.
There has been more acknowledgement out of some ECB members that inflation could be more of a problem (ECB VP de Guindos today), implying a shift in policy and European stock markets have outperformed US stocks and thus possibly getting more flows. The Canadian dollar and Mexican peso have traded well vs the dollar since March 2020 and have also been helped by higher oil prices. The Australian dollar seems to trade with iron ore prices. Up until October, the Russian ruble traded great vs the US dollar helped by central bank rate hikes and higher oil prices until they got more aggressive with Ukraine. The Chinese yuan is near a 4 yr high vs the dollar likely because of the continued wide Chinese trade surpluses, tighter monetary policy and positive real rates.
I point out all these FX crosses because it’s very easy to say the dollar is up, the dollar is down for one reason when really the dollar has its own fundamental relationships with these very important other currencies. Big picture and longer term, the dollar’s problem is its very wide twin deficits of budget and trade and while the former will definitely narrow this year, both are still very wide relative to GDP. Also, higher inflation is not historically good for one’s currency.
US Dollar Continues To Break Down
With respect to inflation, the CRB food index on Wednesday closed at a 10 yr high, jumping by 1.9% before slipping by .3% yesterday. It’s only about 2% from a record high. The CRB raw industrials index yesterday closed within a hair of its record high.
CRB Food Index Nearing All-Time High
Stock market sentiment has definitely soured when looking at the II and AAII surveys. Reflecting action thru last Friday, II yesterday said Bulls fell to 43.7 from 50.6 but people remain very reluctant to get outright bearish as all of those and then some went to the Correction side which jumped to 33.3 from 25.9. I say ‘then some’ because Bears fell too, by .5 pt to 23. Everyone still wants to buy the dip. As for individual sentiment, AAII today said Bulls fell to the lowest since mid September at 24.9, down 7.9 pts w/o/w. Bears rose 5 pts to 38.3, a 4 week high.
Cass Freight said its shipments index for December rose 7.7% y/o/y after a 4.5% growth rate in November while little changed m/o/m. It did though rise 4.2% from November when they seasonally adjust it. They said “Though the record backlog of 105 containerships off Southern California and sharp declines in intermodal volumes in early 2022 still demonstrate capacity constraints on freight volumes, the strong finish to 2021 shows progress as the trucking industry has begun to build driver and equipment capacity in spite of extraordinary challenges.”…
New interview from legend Doug Casey discussing gold, silver and
global chaos! To listen click here or on the image below.
Implied freight rates from their data was still pretty robust. “The freight rates embedded in the two components (shipments and expenditures on freight) decelerated to a 33% y/o/y increase in December from 38% in November” but “rose another 3.5% m/o/m on a seasonally adjusted basis in December, to a new record.” Here’s color behind this, “Significant excess miles in the freight network are persisting into 2022 as the economy faces ongoing disruptions. Chassis production improved significantly in Q4 2021, but only enough to turn the direction of the chassis fleet from contraction to slight growth, and the chassis fleet remains far from what is needed to address rail network congestion.”
Here’s a quick check on transportation costs. The World Container Index of a 40 ft box going from Shanghai to LA is at the highest since late October at $10,621. It was at $4,200 one year ago and topped at $12,424 in September. The Shanghai to North America air cargo index fell this week to the lowest since October. I mentioned a few weeks ago that the spike in December was likely due to the scramble for shipments ahead of Christmas and air was the quickest way. The Dry Van rate per mile rose to a fresh record high yesterday. The Baltic Dry Index is at the lowest since March and continues to trade off coal and iron ore prices.
MORE TRANSITORY INFLATION:
Dry Van Rate Per Mile At All-Time High!
To listen to James Turk discuss why gold may finally be poised for a major up-move in 2022 CLICK HERE OR ON THE IMAGE BELOW.
To hear Alsadair Macleod discuss why big money is suddenly buying dips in the gold market CLICK HERE OR ON THE IMAGE BELOW.
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