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Joseph Stuber  

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  • The Asinine Gold Sell-Off? [View article]
    In the world of manipulated markets one must understand the most important manipulation of all - the yen carry trade. So why would gold be slammed for absolutely no reason at all - at least no apparent reason - for the same reason VIX gets slammed.

    VIX has an inverse correlation to stocks and gold has an inverse correlation to the dollar in a normal market. After a knee jerk spike in the dollar relative to the yen after Yellen's remarks last week - a statement that should have sent the dollar into the stratosphere all things being equal - the dollar stalled out and started to show weakness again.

    The problem with slamming gold is that it didn't produce the desired bounce in the dollar. So much for that strategy. Now one would assume the pressure on gold will subside for awhile. We will see.
    Mar 24, 2014. 11:17 PM | 3 Likes Like |Link to Comment
  • Why A Gold Play Finally Makes Sense [View article]
    keallen

    I do believe deception is not a good thing and that applies to me as well as it relates to my readers and requires recognition of my bad calls. I do think I have focused a little heavily on the bad calls of late and failed to take note in my writing of the good calls I have made and there have been many.

    I do agree with the point that manipulation has been very prevalent in all markets but that doesn't really give one a pass as a good analyst should see this and adjust appropriately. The problem of course is we have been reduced to trying to guess at the direction the manipulators are going to take the markets and when they will decide to change course.

    The massive manipulation of markets puts the average retail investor at a decided disadvantage doesn't it?

    JS
    Feb 12, 2014. 09:33 AM | 2 Likes Like |Link to Comment
  • Why A Gold Play Finally Makes Sense [View article]
    scrycer

    I think both your points are correct but am confused on your reference to inflation/deflation as it pertains to the dollar. A glut of dollars would result in the dollar falling in value in relative terms which would typically produce inflation. There are many ways to move those dollars out of circulation by the Fed and in fact they are using one of them now with QE taper. Of course at the present they are only reducing the rate of increase but they could actually go to zero on QE and actually start selling their assets and accumulating cash on their balance sheet.

    JS
    Feb 12, 2014. 09:08 AM | Likes Like |Link to Comment
  • Why A Gold Play Finally Makes Sense [View article]
    Mark

    Consider a net exporting country whose exporting companies receive dollars. The companies desire local currency and so the central bank exchanges those dollars for the local currency. Now what happens to the dollars - the central bank necessarily holds them or invests them in US Treasuries.

    Why not just exchange the dollars for the local currency. To do so in the case of a net exporting nation puts downward pressure on the dollar and upward pressure on the exporting country currency and that has a negative impact on the prospects for exports going forward. A net exporting country needs a weaker currency to attract business. Therefore the need to acquire interest bearing US Treasuries to avoid the impact of selling dollars and acquiring the local currency.

    But what happens when the dollar is no longer used as a reserve currency. The need to buy treasuries no longer exists as those dollars are no longer being received. That is what has occurred with China and Japan to a lesser degree and why they sold Treasuries in the first half of last year.

    Bottom line - those dollars are no longer being hoarded as insurance against US policy moves. That is the basic complaint of the BRICS, the UN, the IMF and others that leads them to the idea of a non-sovereign reserve currency. The system as proposed would be policy independent and the IMF would work like a central bank to address liquidity issues with the member sovereigns. Theoretically it is a sound arrangement.

    In any event the bottom line is that demand for US Treasuries and US dollars disappears even though dollar supply remains static and that produces a glut in US dollars. And an excess of US dollars produces a weak dollar and therefore all currencies are stronger relative to the dollar putting a dampening effect on exports.

    JS
    Feb 12, 2014. 03:43 AM | 1 Like Like |Link to Comment
  • Return To Bretton Woods: Economic and Investment Implications [View article]
    Seems to me the trajectory of the dollar is higher in spite of current monetary policy. Perhaps I am a little simplistic here but short of an agreement to set the price of gold how does the price of gold go up if the dollar gains in value?

    Your article is very insightful and I would really like your answer to my question.
    Oct 9, 2012. 08:38 PM | 3 Likes Like |Link to Comment
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