Ares
27th July 2011, 05:30 AM
Things have gotten very ugly for the US Dollar.
Up until last week, the US Dollar looked as though it might be staging some kind of a rally with a series of higher lows. However, we never quite made it above resistance but have taken out the multi-month trendline instead.
http://lonerangersilver.files.wordpress.com/2011/07/sc-23.png?w=460&h=284
Worse still, we’ve seen a new lower low formed, which indicates the upward momentum (however small) has been broken. We now have only two lines of support standing between the US Dollar and all time lows:
http://lonerangersilver.files.wordpress.com/2011/07/sc-24.png?w=460&h=284
This is quite a development as stocks have been showing pronounced weakness over the last month or so. And typically when the markets switch to a “risk off” mode money pours into the US Dollar.
But then again, we have the Fed still juicing the system behind the scenes:
http://lonerangersilver.files.wordpress.com/2011/07/fredgraph_2.png?w=490&h=294
As you can see, aside from a brief dip at the beginning of July, the US monetary base continues its near vertical trajectory, which tells us that the Fed continues to print money despite QE 2 ending.
It’s not much of a surprise, the Fed knows how to do one thing only: print money. However, the fact the Dollar is showing so poorly while Europe is taking a hit is a major warning that all is not well with the greenback.
I’ve long said that we were heading into some kind of inflationary collapse. We might get another round of deflation first (courtesy of Europe imploding), but the end result will be the same: the
US Dollar falling when the US defaults on its debts.
http://lonerangersilver.wordpress.com/2011/07/27/the-fed%E2%80%99s-killing-the-us-dollar-behind-the-scenes/
Up until last week, the US Dollar looked as though it might be staging some kind of a rally with a series of higher lows. However, we never quite made it above resistance but have taken out the multi-month trendline instead.
http://lonerangersilver.files.wordpress.com/2011/07/sc-23.png?w=460&h=284
Worse still, we’ve seen a new lower low formed, which indicates the upward momentum (however small) has been broken. We now have only two lines of support standing between the US Dollar and all time lows:
http://lonerangersilver.files.wordpress.com/2011/07/sc-24.png?w=460&h=284
This is quite a development as stocks have been showing pronounced weakness over the last month or so. And typically when the markets switch to a “risk off” mode money pours into the US Dollar.
But then again, we have the Fed still juicing the system behind the scenes:
http://lonerangersilver.files.wordpress.com/2011/07/fredgraph_2.png?w=490&h=294
As you can see, aside from a brief dip at the beginning of July, the US monetary base continues its near vertical trajectory, which tells us that the Fed continues to print money despite QE 2 ending.
It’s not much of a surprise, the Fed knows how to do one thing only: print money. However, the fact the Dollar is showing so poorly while Europe is taking a hit is a major warning that all is not well with the greenback.
I’ve long said that we were heading into some kind of inflationary collapse. We might get another round of deflation first (courtesy of Europe imploding), but the end result will be the same: the
US Dollar falling when the US defaults on its debts.
http://lonerangersilver.wordpress.com/2011/07/27/the-fed%E2%80%99s-killing-the-us-dollar-behind-the-scenes/