Commodity currencies vs USD

[Alex-the Gr8]

The Dollar fell across the board, slightly against the majors but plummeted against currencies tied to commodities. Equities rose sharply in Europe and in the US - adding weakness to the USD. A better than expected ISM Non-Manufacturing Index, showing the first expansion in more than a year boosted stocks. Wall Street rose after four days, with the Dow Jones gaining 1.18% closing at 9600 points. The NASDAQ rose 0.98% and The S&P 500 soared by 1.5%. Crude oil ended above $70 a barrel. Gold (XAU) rose and finished at the highest level in a week at 1016$ an ounce. Though I've traded XAU pretty successfully in the past, these levels are starting to make me a bit nervous. Oh, and Obama makes me equally nervous. Did the USD drop after Rio won the Olympic bid? ;-) Way to go "O"!

 

[TWI]

Gold should only make you nervous at these levels if you have alternative tangiblle investments. I don not think it should if you have cash deposits in $ particularly. The $ is going in the tank so whether it is 1000 or 5000$ the guage is more about $ weakness than gold strength.
I notice the Swiss mortgage rates are starting to tick up after about 6 years fixed which suggests they are all thinking the same as I am that within 5-10 years we are going to see an inflationary monster at which point you really do not want anything but the minimum of cash in the bank. Owners of real, tangible assets will be the winners. Farmers, commodity longs even real estate. On this basis there is also no good reason why the stock market cannot continue to rally in $ terms eaither. For me it is property, commod inidces and gold bullion.

 

[clorets]

Obama is happy with the weak dollar, very little talk about the dollar in latest G7.
Commodity currencies are currently quite strong against dollar, specially after Australia raised its rate. The CAD gained significantly as well. We've even had rumors of arab countries wanting to drop the dollar as the oil currency!
As for gold, I've heard analysts take it above 1100 in the short term...probably China restructuring its reserve

 

[virtuos0]

Gold should only make you nervous at these levels if you have alternative tangiblle investments. I don not think it should if you have cash deposits in $ particularly. The $ is going in the tank so whether it is 1000 or 5000$ the guage is more about $ weakness than gold strength.
I notice the Swiss mortgage rates are starting to tick up after about 6 years fixed which suggests they are all thinking the same as I am that within 5-10 years we are going to see an inflationary monster at which point you really do not want anything but the minimum of cash in the bank. Owners of real, tangible assets will be the winners. Farmers, commodity longs even real estate. On this basis there is also no good reason why the stock market cannot continue to rally in $ terms eaither. For me it is property, commod inidces and gold bullion.

China agrees with you

 

[GammaJammer]

Inflation could be a real cancer in 5 years time, partly because most people won't necessarily instantly grasp the very salient point TWI just made about savings rates. I think being overweight cash / underweight 'real' assets hits you twice, on both sides of the position.