This post is about the dollar and Gold. If you don't care about the fate of your money, there's no need to read further.
As someone who has spent some time learning about charts and markets, I've picked up some knowledge along that way about "patterns" in the charts and what they portend for the future.
These patterns are predictive, but are not conclusive, which means they don't always work out as per their expectations. But the whole point of pattern analysis is that the patterns appear over and over again and almost always do perform as predicted, based on objective information.
If you want to learn about price patterns in charts, here's a link to a site:
http://www.leavittbrothers.com/education/chart_patterns/As you may know, the US dollar is the world's dominant currency, meaning that most commodities and currencies are priced in US Dollars. It has been this way since the end of WW1, when the Gold standard was in effect.
This creates an artificial demand for dollars since they are required to complete these transactions, but as long as this process continues, that isn't a problem we need to be concerned with.
You can think of a currency as a type of stock for a given country. They move against each other and commodities based on typical supply and demand requirements. They generally move up and down based upon the soundness of the countries policies on the creation of money. If they create too much, eventually the value of the currency will be diminished, because the tax reciepts and government accounts are declining as a result of poor financial performance.
The problem is the dollar is going down, and the chart's appearance is ominous. This means that the things you buy are going to cost you more in the future (in general) and that your paycheck isn't going to buy as much as it used to.
The only way to protect your wealth is to move it to the the vehicles that are moving up against the dollar. Until recently, housing, had been a great hedge since house prices rose faster than the dollar fell. Now, it's seems apparent that the house market is rolling over, and recent buyers will be very fortunate just to break even.
Fast or "Hot" money moves around very quickly in the global marketplace, as investors and speculators try to get in on the best trends. This creates a sort of volatility as things move up and down based on them chasing profit wherever they can see to. These things include the world's stock and bond markets, government bonds and currency and commodities.
Based upon my reading of these chart patterns, the US dollar looks very bad, and will after a bit of hesitation fall below .80 on the USDX, or the dollar index. This means that things priced in Dollars are going to go up. This means that oil and gold are still the things to buy. Gold is working through resistance at $645, and is headed back over $675 and probably the recent peak at $730.
It also appears the US is in something of a recession or slow-down, which will exacerbate the Dollars problems, as well as the employment picture. The cheaper dollar will eventually help, as it will reduce the cost of labor here.
But in the meantime, things aren't looking good for our economy, so be careful with things like copper and steel. If China is serious about slowing down their consumption, the price of these items can decline. Oil is different, you gotta have it, there really isn't a substitute.
I have written on this site about gold for years, when it was in the $300's. It's now in the $600's and if you had bought some decent mining stocks, you would have more than doubled your money by now.
I am writing this to help you prepare for the future. Having more money is going to be a necessity, so protect what you have and learn to make it work for you. Get out or stay out of debt, make sure you live below your means, and out your extra cash into safer vehicles, like Gold, and don't be slow about this. The dollar's move is picking up steam, and the jawboning by the Fed didn't slow it down for long.
You can see the USDX for yourself at
www.ino.com, as well as stockcharts.com Ino provides intra-day data, stockcharts only drills down to daily activity on their free site.
