The US$ is a Piece of Crap
Trader Scott’s Market Blog
February 1, 2017
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The US$ is a piece of crap. That I agree with, hence for years my bullishness on the $ has never been about how great the Dollar is – it totally sucks. But currencies are relative to each other and to gold also somewhat, or sometimes alot of focus is on gold as the best “currency”. That focus will become more important later this year, and not just as a passing fad. The mocking of gold as a “pet rock”, or all of the other comments from idiots, will be replaced by respect for it again from a much wider audience. The Federal Reserve and all CBs are losing their “omnipotence’, but they have such high IQs they are blind to anything which can’t be “proven” by their stupid econometric models. However that’s looking down the road. In the meantime we have a horrific situation in Europe, both politically and banking wise – negative rates have destroyed the already weak banks, also in Japanese banks. So Japan is also a huge problem, demographically, banking, and government debt-wise. We have serious problems in China, which I’m super bullish on long term, and am waiting for a buying opportunity in Chinese stocks. I liked and owned the Yuan for years, but sold it awhile ago – their currency is going to be a big problem for the world. There is way too much complacency about how their currency situation will infect the world economy. There are also a ton of problems with India and their insane Prime Minister. The Rupee is a mess. But I’m also very bullish on India, it’s a matter of a big selloff in the stock market for an opportunity. And there’s Mexico, Venezuela, etc., etc. The other thing with the $ is the huge global short position which I’ve written about several times. So these issues, along with the huge accumulation area (linked in the previous post below), are my “reasons” for being bullish on the US$. But this is the year when all of these same issues will begin to ramp up the bullish outlook for gold, they have been building for years, it’s just about patience. A big $ rally will help to keep a lid on gold. But gold becomes the alternative currency if at least one major currency has serious problems – not just the US$. Below is a previous post from November which is my general outlook. So gold against ALL currencies is something I’ve been watching for a long time:
For years we’ve been hearing about the US$ collapse. There are blogs and books specifically devoted to this theory, and that’s all it is – a theory. Sort of like the theory of a stock market bubble and crash which I have vehemently disagreed with since 2009. And, of course, there have been fortunes made by the scam artists scaring so many decent hard-working folks into buying their product to “protect” themselves from these mythical crashes. It’s disgusting. Since getting bullish on the $ many years ago, people have given me every concocted notion about why the $ will crash and I listened and politely (hopefully) disagreed. It doesn’t mean there will be a perpetual bull market in the $. Its’ days are numbered, but like everything in markets, it’s about timing. The bull market is still on, but a pause is close. This is the basic $ chart I’ve been using for a while. Since “breaking out” (I don’t approach markets this way) above around 100.5, my belief is the 102+ area would be the first bigger resistance area. A spike in this area would likely be a short term top. A strong $ will keep a lid on gold advances, but that lid will loosen next year. It’s the main reason why for years my mantra has been to have patience with gold. It’s when the real banking troubles start to broaden (likely next year), when the $ and gold will rally together. We’ve seen glimpses of it over the last few years, but the confidence level in central bankers (CBs) was still sky high. That is changing, and it’s being reflected in the government bond markets (which are actually short term bullish now). The CBs days of total omniscience are also ending, which will cause a multitude of problems for their decades old ability to extend and pretend.
But what we need to continue watching is the performance of gold in foreign currencies relative to the US$, which has been my view for a few years. It’s the US$ which has been a detriment to a major push higher. But this relationship is not written in stone. Way too many believe it is true, however just a bit of research can show how that relationship can breakdown for significant periods of time. So I would recommend pulling up some charts of gold in foreign currencies and keep watch on them and here is a good place.
So this following exchange with someone is the problem, and why too many folks have gotten off focus about what a market is actually all about. I’ve been hearing this same type of argument for years. These are good people, but I’ve not been able to dissuade them from having a different approach to markets. And this is as the $ is at almost 15 year highs. I’ll keep trying:
Q: Scott, Please explain in next weeks blog how the Dollar can be losing purchasing power and yet soaring at the same time without the use of MAJIC ?
A: a)- Currencies are all relative to each other. b)- markets move based upon supply and demand period. There is tremendous demand for US$s.
Q:Currencies are not relative to each other they are manipulated by the Central Banks for appearances to the gullible citizenry ! Question about the answer to B. You failed to account for the Dollar supply issue in your answer , has the Dollar supply gone up or down during this Dollar rally ?
A;Has the $ gone up in price or not. All markets are manipulated, no argument there. I’m in this business to make money though. You’re not accounting for the total global supply of $s. You’re only looking at it from a US centric point of view.
Q:No, That was indeed my question has the total global supply of $s gone up or down as the purchasing power went down ? ‘I’m in this business to make money though’, no again you’re in the business of collecting Electronic Federal Reserve debt notes that masquerade as money !
A:Actually, the profits I have made on my long US$ position over the last several years has increased my own personal purchasing power. Do you understand the difference between markets and theories? I don’t care about the US$ collapse theories. You will get your wish one day, but be careful what you wish for.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
February 1, 2017 @ 1:27 pm traderscott
I’d like to see gold and the US$ start to slowly come into alighnment. And in the previous posts were my comments about the potential technical setup for a bigger $ bottom.
February 1, 2017 @ 7:23 pm Jon
By “alignment”, you’re meaning directionally? It seems to me that it’s already beginning considering how well gold has held up to the recent strength of the $.
February 1, 2017 @ 7:36 pm traderscott
Yes Jon basically. Beginning to get more of a symbiotic relationship in a way. And let’s see about it, these relationships can morph quickly, but you’re right there is some change going on presently. And I have the gap video done, but the quality of it – still working on it. I’m spending way too much time trying to work this out, getting in the way of trading time and losing focus, but it’ll be a good part of the new site.
February 1, 2017 @ 8:19 pm Jon
As Dirty Harry said, “A man’s got to know his limitations”. You’ve made a gallant(and much appreciated) effort to pass on your knowledge, but don’t burn yourself out. Maybe wait till you get your blog refined before doing the time consuming vid’s? Your commentary and insight is more than enough for now. Just my 2 cents…
February 1, 2017 @ 10:06 pm traderscott
Kind words Jon thank you. I am enjoying this path/process. As only a full time trader from day one, then the writing which came out of the blue. And now the other stuff – it’s just a learning curve, especially about juggling the time.
February 1, 2017 @ 5:41 pm traderscott
In the post from 1/27, I left this comment right before the NYSE open – it’s how I attempt to follow the market, and hone the timing a bit. That re-accumulation area which was occurring at the time can be seen at the big arrow in this chart. In an uptrend, it’s the re-accumulation areas which give a market the “power” to begin the move back toward the recent highs. The other arrows reference the other price levels mentioned. You have the breaks of support and the stops hit, then the bounce. But something changed at the green arrow – the character had changed. That’s when I left this comment:
As for PMs, the bigger backups continue to be buys all thru this first quarter, as I laid out last month. Silver is continuing to do good work to break thru 17.30. That area will still see battling, but it will eventually get thru. And once again in gold, the sell stop runs, followed by the bounces are in full force. Hedge funds, etc. getting taken out, and then the bounce. But each break of support continuing to build the bearishness, to reset the sentiment, which wasn’t that bad at the $1220 resistance anyway. So we had the sell stops at 1210, 1206, 1200 of course, 1195 which set up 1192 as support, then 1187 and the bounce of course. And now the most re-accumulation since the break from the highs. This is building bearishness, and that’s good. if you believe the overall trend is up, as I do, the the real big breaks are potential buys, but we can’t let recency bias and extrapolation cloud our view. It’s scary to buy into the big selloffs, but it’s the only way I know how to do this business. And even if we’re wrong about the big overall trend, buying into the scary selloffs can still work, with taking some profits along the way. But my view is still just retesting of the secular low of December 2015.
February 2, 2017 @ 1:16 am Easy Al
I thought in last week that there would be a take-down of gold and silver this week when Shanghai Gold Exchange is closed as Chinese celebrate their new year (similar to the big take down in early October 2016 when they celebrated their national day). What might have prevented it from happening is the talking down the dollar Trump adminstration.
Many supporters of Mr. Trump in the swing states are counting on him to bring the job back or create new jobs. Even if Mr. Trump eventually get all he wants from Congress (which is very unlikely), it takes time to pass legislation, and even more time to get the projects designed and started. The whole thing could take more than 1.5 years before it is felt. Bring jobs back from foreign countries, even if happens, will take much longer time. I doubt some of his supporters can wait for that long. At the same time, the establishment does not like Mr. Trump, which adds more pressure on him to deliver to his supporters more quickly. I thought one leveler his administration can pull quickly and easily is to talk down the dollar. After a while, their talking will not work anymore. Thus, I can even imagine that Mr. Trump will ask the fed on behave of the Treasury Department to intervene in the forex market sometimes in the future.
Some people currently believe that gold and silver can not move up sustainably as long as Fed is rising fed fund rate. What they forgot is that gold and silver kept moving up between 2003 and 2006, when the fed fund was lifted by 450 basis points . What we had was Bush’s Treasury Sectary, John Snow, talked differently from Robert Rubin and Paul ONeil on “strong dollar” policy. Gold and silver also moved up strongly in the second half of 1970s when the rate was hiked even more than that between 2003 and 2006 in terms of basis points.
February 2, 2017 @ 2:28 am traderscott
Good comment EA. Also in the early 1970’s same thing – surge in interest rates and the PMs. Fed raised by ten percentage points from 2/71-7/74, and yet gold rallied from $40-$200. Mainstream analysts are clowns. They don’t do any hard work. You obviously do work at this and it shows. You might like a post I did about the history of Fed rate increases and decreases and the market effects – click here.
February 2, 2017 @ 2:41 am traderscott
And EA, the US$ was falling during the 2003-2006 period you referenced. I’ve done quite a bit of work in this blog, for the short period of time so far, to attempt to dispel these false theories about markets. This work will continue and much more at the new site. I don’t understand how these falsehoods persist, and yet are accepted by most everyone. False market theories, actually almost any theories about markets, yet relying on them to actually enter into markets, will kill your account – kill it.
February 2, 2017 @ 10:39 am Easy Al
Thanks for the correction. I meant to say the first half of 1970s. I have a lot of typos. Hopefully, the new website that you are building will have a function to allow the poster to preview and edit/correct the post before it is published.
By the way, your postings have recently been linked on 321gold site several times. The contents and insights that you and other posters provided in your blog are really good.
February 2, 2017 @ 11:07 am traderscott
You see why you guys are so great – I just sent your idea to the tech guy. I want the site to be very user friendly. And I agree, the comments are outstanding.
February 2, 2017 @ 7:59 am David V
The $ has retraced and is bouncing off the .382 line and looks like it wants to fill the 11/11/16 gap at 98.95, with gold breaking resistance, not sure if this is bullish or bearish in the near term, sure the gold bugs are excited.
February 2, 2017 @ 9:01 am traderscott
Yes David, a 98 handle would make me feel beter about a bigger bottom forming. And as far as timing goes for gold, I have been concerned about this next week stretch. A bigger backup would have set things up better/firmer/stronger, but it is what it is. And you know my way of doing markets, a “breakout” is not a “confirmation” to me, it’s usually just more reason to get worried. But the big area in gold is $1245. Hopefully we don’t get there before a bigger selloff/backup.
February 2, 2017 @ 9:14 am Jon
Looks like 99.40 is resistance so far this morning. Hope you faded my call for a gold selloff this week…
February 2, 2017 @ 10:40 am traderscott
Mocking/humbleness great traits to have in this business. Only way to survive it.
February 1, 2017 @ 7:16 pm Q
Hey Scott. Thanks again for highlighting economies versus markets. And keeping us sane. ;-)
February 1, 2017 @ 7:30 pm traderscott
Of course Q, but as far as keeping you sane, don’t look to me for that. I’m barely sane myself.
February 1, 2017 @ 7:57 pm Q
Kindred Spirits ;-)
February 1, 2017 @ 7:58 pm Jon
Looks like they’re going to try and push the $ through 99.40 support tonight into Friday. By the way, sanity in an insane world is an ongoing struggle for those who see things for what they are…
February 2, 2017 @ 8:07 am Q
Indeed Jon A Post Red Pill Life Ain’t Easy
February 1, 2017 @ 11:32 pm Dmitrii
Can you tell me why I see different pictures of CS here (http://stockcharts.com/h-sc/ui?s=CS&p=W&b=5&g=0&id=p53851364910) and here (https://www.tradingview.com/x/9DVF0SaJ/)
When I look at stockcharts I see CS above big resistance (15.10) and I say CS is going to 21, when I look at tradingview I see CS below big resistance (15.93). Whick chart tool I must believe in?
February 2, 2017 @ 1:47 am traderscott
Dmitrii, the stockcharts is using NYSE data. I use a few different brokers and will compare data when something doesn’t seem right. Here is the NYSE consolidate data for the tradingview chart of CS. And the weekly here. It’s a little closer to the stockcharts. But two more things. This can be a problem – adjusted data vs. unadjusted data. And there is no right answer here – unadjusted for dividends is what I prefer. Some people want the adjusted data. You can use both. But today’s latest data should be the same, as long as there’s no dividend. I believe stockcharts adjusts. Tradingview does not, but they show the dividend at the bottom. One of my other platforms doesn’t adjust either, which I prefer. And the other thing is using intraday data can actually help to line things up. I have no answer for you, because there is no right answer – unadjusted is my preference, but looking intraday can possibly help. But remember, CS was actually higher before the dividend – so that is around 15.90.
February 2, 2017 @ 5:02 am Dmitrii
Scott, do you have any ideas why GDX daily chart show huge spike to 24.99 level yesterday https://www.tradingview.com/x/mxS1IekC/ and 5 min timeframe don’t show it
I’d want to see volume, but i can’t
Lucky, that huge spike triggered my take profit order at 24.95.
February 2, 2017 @ 7:46 am traderscott
That’s a “bad tick”. It should be fixed by the data provider. Ususlly so-called bad ticks are with more illiquid stocks. I was distracted with things yesterday, and didn’t notice until after hours. Some platforms let you manually fix them. Tradingview does not. They really gave you that trade? That’s weird.
February 2, 2017 @ 9:03 am Dmitrii
Yes, my broker executed this trade, i hope they don’t cancel it, that’s was good trade.
February 2, 2017 @ 9:16 am traderscott
Great. My fantastic mentor, SW, from my floor trading days, used to tell me “kid, it’s better to be lucky than smart”.
February 2, 2017 @ 2:48 am Fen
From this chart you shared with us, the accumulation are is rather big, so does it mean the upside of $ still has a long way to go?
February 2, 2017 @ 7:55 am traderscott
It is a big area, but the area from 2012-2014 had very little accumulation. So it’s approximately the same as the previous big accumulation in 1988-1996, which led to 125 on the DXY. This one is from a lower base, and the point counts are different.
February 2, 2017 @ 8:35 am Fen
Thank you very much, Scott.
I will reread your post again.
February 2, 2017 @ 9:49 am traderscott
There’s a new video just posted at the blog homepage.
February 2, 2017 @ 12:27 pm traderscott
This is an email message from the “esteemed” WSJ, which gave me a chuckle. Were you aware that Dr. Janet Yellen, PHD was a respected economist? Well she is apparently:
YELLEN STRUGGLES TO FEND OFF FED CRITICS: Federal Reserve Chairwoman Janet Yellen, a respected economist, has struggled to win over skeptical members of Congress and fend off calls for greater oversight from Republicans and President Trump. Central banks around the world are facing similar problems. Kate Davidson reports.
February 2, 2017 @ 12:52 pm traderscott
I’m hearing the usual junk about how gold can’t close below this or that price, otherwise it’s bearish. That’s horse manure. All that matters is the trend. If the trend is up, “trading below” xxxx.xx in gold, supposed crucial level, is a potential buying opportunity – of course with a proper setup. We were hearing that crap last month when, well in advance, I said I’m using a “break of support” below $15.75 in silver to buy. How much clearer can it be. And in the December 2015 post in the archives, saying it’s time to buy gold and the miners. We were hearing the same BS back then also. This business is very tough to begin with. Why do people want to confuse themselves and make it even tougher. So now for me, it’s patiently waiting for big backups to buy. Otherwise sitting. And if the rally gets too out of hand over the next week, which hopefully it won’t, then lighten up. PMs are very emotional, and the final surge after a big rally is not remotely bullish. Read the posts from early November, before the election, and my warnings about a gold top. The gold permabulls then were telling everybody to buy, buy, buy.
February 2, 2017 @ 1:42 pm The Seer
Hi Everyone, Really enjoy this site TraderScott as we get to discuss amongst each other and obtain different input.
I have been in metal since 1998 and did really well with mining stocks Jan – mid May 2016. In again waiting for
them to rise this Spring again – patience. What I have learned about my portfolio is to buy physical whenever you
have the extra cash and don’t worry about the spot price. My largest purchases were at g $285 and $7, $450 and $10.30, $800 and some s at $22 – $31 (very small amounts). We are in a huge upward trend zig zagging our way up in waves for several years now. Of course, you want to sell mining stocks at the top of wave 3 and 5 and buy back in at lower chart range again. . . . What I want to share is that it is still reasonable for newcomers to buy at today’s prices as in the future they will be much higher – it just takes patience. So 1998 to 2017 is 19 years and I am not getting any younger but have decades to go yet. So some years I never paid much attention because I know having it is important at any price as in serious situations it explodes too – look at the prices for physical in Venezuela . . . I hear one silver coin buys a few months of food! So hang in there whenever you feel bummed – it is a waste of time – instead feel empowered you have this knowledge and ability to protect yourself and knowing it will rally upward.
February 2, 2017 @ 12:58 pm Jon
So basically you’re saying don’t make easy hard and definitely don’t make hard harder..
February 2, 2017 @ 1:03 pm traderscott
Si, si. Correcto.
February 2, 2017 @ 2:01 pm The Seer
Cute…… Trump will straighten out the calculation formulas of all the announced numbers too – GDP, inflation, employment, debt,
budgets, get rid of black books, etc. if he and his staff can keep working safely . . .
I had a dream where the NWO/was sitting at a long white tablecloth table on a stage before a huge audience of global reporters.
Rockefeller next to Kissinger on the far left (get it far left) end of the table started to say, “Is there a Dr. . . .”
A friend of mine is 4th generation big global name and said the NWO/is fighting amongst themselves – meaning many want
to discontinue the things have been run. We have a chance here for honest economics, fair treatment, honor, etc. and return
to real money . . .
February 2, 2017 @ 5:42 pm Q
Yep as I’ve said here and elsewhere before I think Trump is a sign of change hopefully for the better from TPTB. Hopefully less MIFC chaos. Hopefully less debt and sound money.
February 2, 2017 @ 1:59 pm Sam
Well, the US Dollar broke down this morning. Gold broke up this morning. Gold has a target of 1300 at a minimum. Electronic currencies are crap, I like paper money. Europe is moving to an electronic currency so they can steal it. There is safety in cash, while we still have it.
February 2, 2017 @ 2:40 pm traderscott
The US$ is up on the day. And I have a lot of US$ cash. Sorry.
February 2, 2017 @ 2:35 pm The Seer
In your new website design can you put the newest blog post at the top so we don’t have
to scroll to the bottom to see the newest post? Thanks!
February 2, 2017 @ 2:45 pm traderscott
I’m not sure what you mean? When I go to the blog home page, it’s by date, newest first? It’s not newest first? If there’s a problem, I’ll fix it right away. What am I not understanding.
February 2, 2017 @ 3:08 pm The Seer
On my computer the newest entry shows up at the bottom. I have an Apple desktop using Firefox . . . .
February 2, 2017 @ 3:10 pm traderscott
I know ZERO about tech stuff, so will send this to the tech guy. I want to make sure this doesn’t remain a problem. Thank you.
February 2, 2017 @ 5:44 pm Q
I think he means our comments. He wants the, shown in reverse. I’m equivocal about it ;-)
February 2, 2017 @ 7:20 pm traderscott
But he specifically said blog posts. The tech guy said he wasn’t sure if he could change that. But the comments would be different (maybe). Not that it’s unusual, but I’m confused now. If The Seer wants to weigh in?