By Jim Sinclair
The only things that are dollar positive is that the USDX as an index is small enough to manipulate, and the Commercials are still not yet in position for what is coming in gold.
There is an axiom that states the more leveraged market always leads the less leveraged market. That axiom means an index will lead cash but stand behind the listed derivative market, which in turn stands behind the swap market for currencies.
The means of manipulating almost everything is via the index trading supported by the ETF activity.
The dollar has NO future outside of blind algorithms, spin and index manipulation. NONE.
Gold is the inverse of the dollar and that is all you really need to know. This action taking place is productive to the future of gold if you truly understand what is afoot.
The following is one more piece of evidence of the contraction of demand for dollars as QE is an ever-flowing fountain of dollar supply via electronic creation.
Do not think it is a static picture in time, but instead look at it as values in motion.
The motion in dollar demand is down as the headline below adds Russia now to China’s approach. A swap of Treasuries for baskets is good for diversification, if the IMF is willing, as you move out of dollar denominated into basket denominated. What is being missed is this Chinese and Russian transaction with the IMF indicates diversification interest will continue.
The spin doctors and general public will see this as a onetime offset and therefore not market indicative, but in fact it is a major move in momentum and downward confidence factor.
Stand back from the minute to minute, day to day action that unseats you from your insurance and trust that fundamentals will trash the algorithms in time. If that was NOT true, we would not be in the trouble we are in NOW.
It is time for another reality check.
Those of you who are selling your gold and gold shares today are doing so because the dollar is in demand today based on the statement by the Russians. This shadows the previous statement by the Chinese concerning a preference for an IMF basket currency debt rather than US dollar debt.
That means the dollar is rising because the Russians and Chinese do not want dollars due to its depressing impact on Treasuries and the rise of rates there.
You are therefore agreeing that interest rates will attract the Russians and Chinese back into the dollar.
If you think this is anything more than the madness of the crowd and the gambleholics that inhabit the markets, you have lost your mind with the rest.
Today’s statement by Russia is a dollar negative event without any question whatsoever. Once all the hedgies and algorithms get them long up to their eyeballs it will be followed by more culling of their ranks.
Stay the course and ignore the ignoramuses. Use reason as your guide, not raw emotions.
Courtesy: www.jsmineset.com
