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Tuesday, September 16, 2014
Yellow fever turned green
Is the USD a crutch for traders? On the other hand, is it fear?
With Asia’s ever expanding economy and the growing emphasis on strengthening the middle class it is somewhat surprising that the consumer demand for gold is so low. Or is the demand still as strong but all the restrictions on imports that the government and the Reserve bank has put on China and India in the last year. The two countries that are the largest consumers of gold, are with the same demand but their hands are tied. This seems to be the theme world wide with so many factors swaying the people from political to the strong equity markets taking investors away from buying gold, however many central banks will still need to buy gold to secure a viable reserve currency. Traders seem to be afraid of the ERO, for a while all the political turmoil in Russia hadn’t caused any shift in trades but we now see that after a few months it fell dramatically. Now with Scotland’s vote just in a few days the GBP is suffering as well. The strength of the USD seems to remain a safe haven for investors as of now. However with The unforeseen realization is that as the U.S. dollar gets stronger the price of international goods gets cheaper and become more enticing for the U.S. to buy overseas. This can cause a major turn of events for the USD and with low domestic demand, we then will be keeping our USD in international waters instead of on U.S. soil. The U.S. economy will be right in the red again with the USD weak and the competition of the ERO, GBP and JPY strong.
Holding short at 1309.88 current price 1235.00 gain of 5.7%
Fxmade2trade