Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Election Rejection of Obama is Bullish for U.S. Dollar, Gold Rally Defferred

Currencies / US Dollar Nov 14, 2010 - 05:52 PM GMT

By: Ned_W_Schmidt

Currencies

Best Financial Markets Analysis ArticleRejection may be hard for most politicians to accept, but might be good for the nation and the world. Obama Regime's mismanagement of U.S. economy was rejected on 2nd of November in the U.S. election. That rejection ushered in the greatest change in political power in U.S. since 1948. Thus far, Obama Regime's only positive legacy will be the greatest political rejection in 62 years. That development means Obama Regime's reign of terror on wealth and economic growth has ended. That is bullish news for the U.S. dollar.


Second rejection of Obama Regime occurred this past week at the meeting of the G-20. While few world leaders are enthusiastic about China's management of the Yuan, U.S. monetary policy is deemed a far greater evil. Federal Reserves's QE-1½, with rare exception, has been rejected by leaders of world's 20 most important economies. Who will back down, the Federal Reserve or the rest of the world?

Strike three, or if you prefer the red card, for the Obama Regime occurred on Friday when world turned to focusing on Chinese monetary policy. In short, when will China again tighten monetary policy? World now recognizes that monetary policy of China, the engine of global growth, is extremely important. In short, the Obama Regime and the FOMC are being "passed over" in terms of global economic power. This neutering of those two sources of economic mismanagement is bullish for the dollar, at least in the short-term.

In above chart of U.S. dollar several important developments need to be observed. U.S. dollar has been in an inverted parabolic curve created by the fears of massive mistakes on the part of the U.S. Federal Reserve. Dollar now seems to be walking out of that formation on the "positive" developments discussed above.

Further, we have highlighted the previous major low for the U.S. dollar. Note that it traded down to a low, rallied, and then fell to another low that was the end of that period of decline. From there, dollar rallied strongly. A similar pattern, though none are ever exactly the same, seems now to be developing. A rally of some significance seems the likely path of least resistance.

Parabolic formation in $Gold in above chart is mirror image of that inverted parabolic curve for U.S. dollar. They are not different patterns, nor is one due to the other. They are the same phenomenon simply viewed from different perspectives. And, we know several things about parabolic curves.

One, all parabolic curves terminate. None last indefinitely, or go on to outrageous price forecasts.

Two, all parabolic formations terminate in pain. None are resolved with only minor suffering.

Three, parabolic formations like to create margin calls. Margin calls are more powerful than all investment ideologies and fantasy price targets.

Four, the downside risk is greater than many expect.

Long-term case for Gold is not changed by this formation, just deferred in the short-term. What may change is the time frame for reaching longer term price targets. We had not expected our longer term price target for $Gold to be achievable until latter part of 2012. On Silver, the situation is somewhat different, and more difficult. Silver will experience a growing, and near unstoppable, abundance of supply over demand during the next two years that may keep prices low for some time.

By Ned W Schmidt CFA, CEBS

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS as part of a joyous mission to save investors from the financial abyss of paper assets. He is publisher of The Value View Gold Report, monthly, and Trading Thoughts, about weekly. To receive these reports, go to www.valueviewgoldreport.com

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in