Donald’s $ ducks

By Alasdair Macleod – Goldmoney

Measured in gold, the dollar’s decline is accelerating as foreigners bail out and gold is the go-to refuge. It is a panic on a global scale which looks like only just starting. Other than the gold price itself, the best illustration of the dollar’s plight is its trade weighted index. Ouch! This is a collapse against other currencies which are hardly paragons of virtue themselves. Not only is this a classic dollar bear market, but the momentum to the downside is consistent with becoming self-feeding.

What gold and the TWI chart are telling us is that taking everything into account markets now expect the dollar to lose purchasing power at an alarming rate. Consequently, we can kiss goodbye to prospects for interest rate cuts and lower bond yields. Instead, they will have to rise in the coming months which is bound to be a nasty systemic shock.