Goldtent TA Paradise

US Dollar decline is final piece of puzzle

1. Chartsmaster says:

   May 15, 2020 - 8:21 am at 8:21 am

   Patrick, You are correct that if the dollar collapses it will turbocharge gold & silver. Where I think many make a mistake is looking at DXY or any dollar index. That just measures the $USD vs the Euro, Japanese yen, GBP etc. If they ALL fall because they are all worthless fiat, it doesn’t matter if the dollar stays the same or even rises, because it is the least dirty shirt (and because it is the reserve currency which the world needs to conduct commerce) They are ALL losing value vs. gold and silver, and that is all that really matters.

   • Patrick says:

     May 15, 2020 - 8:29 am at 8:29 am

     YES. DXY is interesting to “fine tune” your long gold position. IF DXY UP.. then you should be long gold vs “Euro, Japanese yen, GBP etc.” IF DXY DOWN .. then long gold vs USD. Either case… being long gold is winner…

2. Spock says:

   May 15, 2020 - 8:52 am at 8:52 am

   There is a shortage of Euro Dollars, that is dollars in Europe for trade purposes.

   There is also a shortage in emerging markets, who have borrowed heavily in dollar currency, and who need dollars to service the debt.

   So outside the USA, folks are essential short USD, and the higher it rises against their local currency, the more squeezed they get.
   But they have no way to exit their dollar short positions, unless they default.

   • Patrick says:

     May 15, 2020 - 9:11 am at 9:11 am

     Spock, was that situation there in 2008? Did it aggravate? Maybe this divergence with vix and gsr is here to stay? I know in Lebanon there is a US Dollar shortage… so it fits with your premise… and the DXY agrees as it’s not falling.

     • Spock says:

       May 15, 2020 - 9:34 am at 9:34 am

       The synthetic dollar short squeeze was not pronounced in 2008, as it is now.

       Over the last 10 years there has been an exponential explosion in private and public sector borrowing outside the USA, in USD currency.

       Lebanon is just one example, and shows what happens. That is, default is the only way out in many cases.