In Race to Bottom, US Dollar Falls Behind

yahoo ^ | 7/10/2013 | Jeff Cox

[ckilmer]

If there is a global currency devaluation war, the U.S. is losing.

[ckilmer]

Take a look at the chart on this page. Its shows two phenomenal things. First that, US oil production peaked in 1970, or a couple years before the US went off the gold standard—(which coincided/caused the vertical ascent of gold from roughly 1973-79. The second thing the graph shows is that US oil production currently is going straight up.

http://seekingalpha.com/article/1538602-chart-of-the-week-u-s-oil-supply-growth-exceeds-growth-in-global-demand?source=google_news

Oh yeah, here’s a historical gold chart which shows the ascent and fall of gold during the 70’s-80’s as well as the current rise & fall of the price of gold.
http://www.macrotrends.net/1333/gold-and-silver-prices-100-year-historical-chart

[ckilmer]

The pilot and the co-pilot are fine; just fine.

Free to pursue a life of religious fulfillment.
...........
I’m not sure I know how to interpret this.

Does this mean you’re a gold bug?

[ckilmer]

Here’s a historical chart dating from the 1960’s for the value of the dollar vs other currencies. And the trend for the dollar has been down with sharp counter cyclicals. The dollar is currently near the bottom of its range. (just as gold is near the top of its range.) generally a weaker dollar corresponds to with a stronger gold. The pressure for the next couple years is going to be for a stronger dollar and weaker gold.
http://www.tradingeconomics.com/united-states/currency

[sun7]

This yahoo article is already outdated. I just did a quick check and EUR has rallied strongly against USD from a low of 1.2755 yesterday to a high of 1.3206 just two hours ago. EUR/USD is now trading around 1.3088 and will likely go higher if it can overcome resistance. USD also fell against all the other majors.

[Sawdring]

Do you have a prediction for what the bottom price will be for gold?

[ckilmer]

No. But you can look at the top to bottom that happened from 1973 to 1983.

[ckilmer]

for a day trader this would be correct.

[sun7]

Actually, this latest EUR/USD rally already erased the last ten days’ worth of losses in the pair.

More importantly, the dollar index may be near its historical lows, but I would be very cautious betting the dollar can only go up from here. Looking at the long-term charts, and given all the competitive easing by almost all central banks, it seems more likely the dollar will go sideways or become range-bound for a long time to come.

[ckilmer]

Ok, I think I understand.

I would agree that the religious and poltical world is going to hell in a hand-basket.

I would also agree that if economic trends of the last 50 years kept going the way they have been, then too we’re going down economically as well.

However, imho the economic trends of the last 50 years are going into full reverse.

The USA has been running half a trillion trade deficits for a decade or so. This has lead to the steady decapitalization of America. And trillion dollar federal deficits for the last couple years.

I think that both of these will go into full reverse in the next several years with both federal deficits and trade deficits going to balance in five to seven years or so—before both go positive.