Back in March, the dollar was the most wanted currency in light of the Greek crisis, and ongoing currency wars raging between dozens of countries. In fact, the U.S. reserve currency was perceived as such a safe haven that it sat at over 100 on the index, with nations moving large amounts of their currencies into the dollar to hedge themselves from local and geo-political turmoil.
But as the U.S. markets peaked in May, and began a slide downward over the summer, trust in the dollar has waned, especially as the Chinese Yuan began to take market share in global trade. And on Oct. 14 the dollar reached a disturbing nexus that could foretell an even greater trend downward as it created a death cross for the first time since 2013.
For the first time since September 2013, The USD Index just signalled a “death cross.” Three of the last four times that the 50-day moving-average crossed below the 200-day moving-average, The USD Index tumbled significantly. – Zerohedge
The lack of initiative by the Fed to raise interest rates in September has suddenly spiraled out of control, where both economists and financiers are betting that the central bank will not have the means to raise rates again now until the middle of 2016, or even as late as 2017. But the reality is, the world is moving into a new global recession, and even the remotest possibility of raising rates is being replaced with talks of a new round of quantitative easing that will be even greater than the previous QE1-QE3 combined.
As the dollar loses more and more traction, the only options remaining for nations still reliant upon the reserve currency appear to be either physical gold or silver. And with banks such as J.P. Morgan Chase and HSBC leading the way in suddenly switching from shorting precious metals to buying them in massive bulk, the shortages we see now in the markets will continue to lead prices upward, and the death cross we is now occurring in the dollar may transition into a golden cross for these true safe havens.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.