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I remember when I first started trading Forex back in late 2007, a little more than 6 years ago. Whenever the subject of trading would come up at a social gathering, I was usually pretty quick to chime in; I was so proud to be a “trader”. Without fail, one of the first comments people would make was,

“Oh, so you must like to gamble”. Or my personal favorite, “You must love going to Vegas!”. Being the naive trader I was at the time, I would get a little defensive and respond with something like,

“No, not really…trading is nothing like gambling if you know what you’re doing”. Of course at the time I had no clue what I was doing, but that’s beside the point.

Fast forward to today…boy was I WRONG about that statement. Make no mistake about it folks, trading is gambling!

Here’s what the Webster dictionary has to say about the definition of the word “gamble”:

1. To risk losing (an amount of money) in a game or bet
2. To play a game in which you can win or lose money or possessions
3. To risk losing (something valuable or important) in order to do or achieve something

Notice a common theme? “Risk” and “losing”. If there are two things a Forex trader knows, it’s that there’s always risk and you will lose money at some point. It’s simply the cost of doing business as a Forex trader.

So why then do so many Forex “pros” love to tell you that trading isn’t gambling? Or that their new and improved strategy is a sure thing with a 98% win rate? Because they want to sell you their product, of course. They want you to feel like you’re no longer gambling. Because gambling is a bad thing, right? The truth may surprise you.

Read More: Is Trading Gambling?

Justin Bennett is a full-time Forex trader and Owner of Daily Price Action. His Forex trading career began 6 years ago and has followed a path similar to many traders. For the first 3 years he tried nearly every indicator and strategy known to man, but each time the journey ended where it began, frustrated and in search of the next “holy grail” that would bring consistent profits. It wasn’t until he cleared every indicator from his chart that he had his “ah ha” moment. For the past 3 years, Justin has worked to perfect that moment into something that can be easily duplicated by other traders in search of consistent profits.

Article By RoboForex.com

Analysis for April 14^th, 2014

EUR USD, “Euro vs US Dollar”

Market was opened with gap down and Euro expanded its consolidation channel downwards. Instrument continues forming descending correction, flag pattern, with target at level of 1.3750. Structure of the pattern will help us to define future scenario.

GBP USD, “Great Britain Pound vs US Dollar”

Market was opened with gap down; Pound is forming the second descending impulse. It looks like market is forming correction towards level of 1.6640. Structure of this correction will help us to define future scenario.

USD CHF, “US Dollar vs Swiss Franc”

Franc is still consolidating. We think, today price may form correction as flag pattern and return to level of 0.8840. Structure of the pattern will help us to define future scenario.

USD JPY, “US Dollar vs Japanese Yen”

Yen is still consolidating; market completed continuation pattern. We think, today price may break minimum and fall down towards level of 100.00. Alternative scenario implies that pair may try to break consolidation channel upwards and complete current correction at level of 103.00. Later, in our opinion, instrument may continue moving downwards.

AUD USD, “Australian Dollar vs US Dollar”

Australian is forming descending impulse. We think, today price may reach level of 0.9340 and then return to level of 0.9330. This structure may be considered as head & shoulders reversal pattern. Later, in our opinion, instrument may continue falling down towards level of 0.9150.

USD RUB, “US Dollar vs Russian Ruble”

Market was opened with gap up. Ruble continues moving upwards; we can see head & shoulders reversal pattern. We think, today price may reach the first target at level of 36.20 and then fall down towards level of 35.75.

XAU USD, “Gold vs US Dollar”

Gold is still consolidating near level of 1322; this structure may be considered as continuation pattern. We think, today price may move upwards to reach target at level of 1357. Alternative scenario implies that instrument may expand this consolidation channel downwards as correction towards 1295 and then grow up towards level of 1357.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

Analysis for April 14^th, 2014

DJIA Index

It looks like Index completed correction in the form of double three pattern inside wave [2]. Earlier price formed bullish impulse inside wave [1]. During the day, instrument may start growing up again and form initial ascending impulse.

More detailed wave structure is shown on H1 chart. It looks like price formed zigzag pattern inside wave (Y). On minor wave level, Index completed impulse inside wave C, which means that instrument may reverse quite soon.

Crude Oil

Oil is trying to start fast descending movement inside the third wave. Several weeks earlier, Oil finished bearish impulse inside wave 1 and then completed wave 2. I’m planning to increase my short position as soon as market starts moving downwards.

As we can see at the H1 chart, Oil completed zigzag pattern inside wave [Y] of 2. On minor wave level, price is starting to form bearish inside wave (1). I’ll move stop into the black as soon as market starts moving downwards.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

By WallStreetDaily.com

Zoe’s Kitchen, Inc. (ZOES) went public on Friday, earning those privileged enough to score shares at the $15 IPO price a lightning-quick fortune.

The stock opened trading at $24.67, representing a 64.47% pop over the IPO price.

Brentwood Associates, the private equity firm behind Zoe’s Kitchen, was the big winner. The firm holds eight million shares at the pre-offering price.

Jefferies, Piper Jaffray and RW Baird acted as the IPO’s book runners. Rest assured, those firms’ best clients were offered an opportunity to secure shares at the pre-offering price of $15.

I realize it’s frustrating to hear more news about the rich getting richer. But don’t chase shares!

I’ve got my ear to the ground, and vow to deliver an opportunity to strike your own fortune in the coming days.

In the meantime, tech insider, Tom Anderson, just unearthed a company with some serious tailwinds behind it. I wouldn’t be a bit surprised if it’s atop the Nasdaq “biggest gainers” list within the next couple of days.

~Robert Williams, Founder, Wall Street Daily

Before founding Wall Street Daily in the teeth of the Financial Crisis, Robert Williams served as the lead financial analyst for a Forbes top-50 private corporation and an analyst for the endowment of a major academic institution.

From the desk of Tom Anderson… 

I think you’ll agree that spotting companies with the potential to generate double- or triple-digit gains isn’t easy.

But there are four super simple indicators I like to use that narrow the field by a significant margin.

I’d like to reveal these killer growth metrics today – along with one company that’s really picking up steam in all four areas.

In fact, some Wall Street Daily readers might recognize it from previous articles…

Killer Growth Metric #1: Customer Base With Deep Pockets. This one is pretty self-explanatory. After all, for a company to capitalize on a good idea, it needs customers who are willing to pay for it.

Killer Growth Metric #2: Wide Moat to Keep Competitors Away. It’s important to have a strong, competitive advantage. Other firms will try to copy a good, emerging technology and capitalize on it themselves – but they just won’t be able to measure up.

Killer Growth Metric #3: A Small Revenue Base. It might seem strange to look for a company that doesn’t pull in a ton of revenue. But it’s all about growth. If a company is already ringing up $10 billion in sales, it’ll be difficult for it to grow quickly compared to a company with, say, $50 million in sales.

Killer Growth Metric #4: Big Enough Portion of the Pie to Be Worthwhile. If a company has one billion shares outstanding, like Yahoo! (YHOO), then there are too many mouths to feed. Even an extra $50 million in profits would be too diluted to move the stock price. So I look for a company with just enough shares to be worthwhile.

There you have it. The list might be short and sweet, but taken together, these four metrics provide an insanely powerful filter for discovering the biggest gainers in the market.

Now it’s time to put it to the test…

A “Flash” of Genius

This week, my four metrics just spotted a company that shows all the signs of explosive growth potential: Fusion-io (FIO).

Longtime Wall Street Daily readers should be familiar with the name. It was recommended back in May 2012 as an alternative investment to Facebook’s (FB) IPO.

If you’re unfamiliar with the technology, Fusion-io provides resources to datacenters, allowing them to optimize their hardware.

Essentially, the company inserts flash memory into a datacenter’s servers at any point where there could be a bottleneck, significantly enhancing the speed of their operations.

On a real-world level, this allows web companies to move content across the internet as quickly as possible.

And the company has already attracted big-name clients. Indeed, companies such as Apple (AAPL) and Akamai Technologies (AKAM) are utilizing Fusion-io’s flash-based add-ons.

But that’s hardly the extent of Fusion-io’s reach.

This year, Facebook and Apple are rapidly expanding their datacenters to offer streaming music, video and messaging. They don’t want to be left behind by big, multi-product companies like Google (GOOG) or smaller, specialized companies like Pandora (P).

Well, with its dominant position in the industry, Fusion-io stands to benefit alongside Facebook and Apple as they expand their operations.

That makes right now the perfect opportunity to cash in on the next wave of digital entertainment expansion.

Plus, Fusion-io is still small, with just $375 million in revenue in the past year. (Metric #3, check!)

It has 100 million shares outstanding, so a quick increase in profit from the data center expansion will produce high growth. (Metric #4, check!)

And you can’t find customers with deeper pockets than Facebook and Apple. (Metric #1, check!)

To top it off, Fusion-io’s secret sauce is that it uses embedded controllers to create a virtual storage layer that’s faster than writing to disk, even solid state disks. This isn’t easy to do, so other vendors who compete with Fusion-io – like EMC Corporation (EMC) and Seagate Technology (STX) – have chosen to simply focus on selling solid state drives rather than integrating flash. (Metric #2, check!)

Bottom line: When you combine the right product, with the right customers, at the right time – and pair them with a company whose model can handle dramatic profit growth – then you could have one of the best performers of 2014.

Good investing,

Tom Anderson

The post Stock Mysteriously Rockets 64% Before Market Opens appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Stock Mysteriously Rockets 64% Before Market Opens

GBPUSD stays in a upward price channel on 4-hour chart, and remains in uptrend from 1.6465, the fall from 1.6820 could be treated as consolidation of the uptrend. Deeper decline would likely be seen, and the target would be at the lower line of the channel. On the upside, as long as the channel support holds, the uptrend could be expected to resume, and one more rise towards 1.7000 is possible. Only a clear break below the channel support will signal completion of the uptrend.

Provided by ForexCycle.com

By MoneyMorning.com.au

Not everything is as it seems.

On the one hand it’s the centre of healthy living.

On the other hand it’s the centre of gluttony.

We’re talking about California.

To be precise, we’re talking about the important parallel between Californians’ eating habits and a key resource 7,889 kilometres to the south east of your editor’s current location…

We’ll try to avoid sounding too high-falutin.

As your editor enters the second week of our three-week stay in southern California, it’s hard to get away from the fact that California is a state of contradictions.

Every time we come here we forget that one main course meal at a restaurant is usually enough to feed two people.

We forget that a small drink at an American fast-food outlet is the equivalent of a large at an Aussie fast-food outlet. What appears to be two litres of Diet Coke in a big cup with a straw really is more than enough for one person.

But California is also the home of the ‘beautiful people’. You don’t have to stroll around for long in southern California to see that.

That got us thinking. Is it possible to have one without the other – gluttons without the glamorous? And in a similar vein, is it possible to have clean energy without the adverse consequences of pollution?

It seems like a crazy question. But it’s something many in the green lobby fail to realise.

Want a Better Environment? Prepare to Pollute

Here as in Australia it’s impossible to avoid the ‘green propaganda’. Trade in that gas-guzzling car and get an electric car instead.

But the propaganda goes further. The next step is the plea to ditch the car and ride a bike to work instead. By necessity that means living closer to the main business areas – usually the centre of town.

That typically means living in higher density areas. That means building taller buildings. That means more resources – more steel and concrete.

That means digging more stuff from the ground. It means using iron ore and coal to produce steel. It means powering huge furnaces and releasing pollutants into the air. It means drilling for oil to power the huge equipment needed to dig and process the raw materials.

But at least the inner city dwellers that ride a bike to work are supposedly reducing their ‘carbon footprint’! But with all that inner city high-density building, perhaps they aren’t reducing it by as much as they think.

(By contrast, suburban homes, while larger have timber frames from timber plantations, which help the environment. Most also have gardens, which help the environment too.)

But anyway, what’s our point?

Our point is that when it comes to new technology and shifting to ‘green’ energy, there’s no such thing as a free lunch. If you want cleaner living and less pollution in urban areas (doesn’t everyone?) it doesn’t necessarily mean eliminating pollution or harming the environment, it may just mean shifting the problem elsewhere.

Take this report from the BBC:

‘Lithium, a key ingredient in lightweight batteries, is already powering the modern world, and could be key to getting the world to reduce its reliance on fossil fuels.

‘Look at a satellite image of South America. Halfway down on the left-hand-side is a distinctive white splodge.

‘Close up, that splodge turns out to be one of the most extraordinary and unspoilt places on earth, the world’s biggest salt flat…

‘This is the Salar de Uyuni and this hauntingly beautiful place could be part of the key to tackling climate change, helping to wean the world away from fossil fuels.

‘Which is why, pristine as it may be, the chances are that 50 years from now it will be all gone – dredged, crystallised and then carted away.

‘That’s because under its thick salt crust, the Salar de Uyuni is also the world’s biggest single deposit of lithium, accounting for perhaps a third of the world’s resources of this alkaline metal.’

You can see a satellite image of the area below:

Source: Google Maps
Click to enlarge

Without lithium you wouldn’t have lithium ion batteries. Without lithium ion batteries you wouldn’t be able to read this email on your lightweight laptop, tablet computer, or smartphone.

As Technology Improves, Demand for Lithium Will Grow

That’s the payoff. In order to achieve technological improvements and the convenience of staying in constant contact with friends and acquaintances, it will likely mean the destruction of a large area of pristine land.

We wonder what position the likes of Greenpeace would take on that?

It would surely be against the destruction of this natural environment. But then again, Greenpeace also promotes its activities through the likes of Twitter, Facebook, and Flickr. All of those media have grown in popularity in line with the growth of tablet computers and smartphones…big users of lithium.

As we say, there’s no such thing as a free lunch. If you want progress, and less pollution in major population centres (where most people live) it means causing an adverse impact to other areas, mainly where only a few people may live.

Technology is improving all the time, becoming more lightweight, and more portable. In order to keep this trend going and in order to help with the shift away from fossil fuels the world will need to rely more and more on other resources such as lithium and rare earths that have their own impact on the environment.

Life here in southern California may be a life of contradictions, but the same goes in the search for the ultimate in green energy (of which Californians seem to approve, despite the criss-cross of car-loving freeways). Lithium and the mining for it will be a key part of the shift away from fossil fuels.

And as unlikely as it may seem, perhaps the best way to profit from ‘green energy’ is to place a bet on a specific part of the resource sector – lithium.

Cheers,
Kris+

PS. Jason Stevenson is following one of the best lithium plays on the Aussie market. There’s little doubt that as technology becomes lighter and more portable that there will be a bigger demand for lithium in the use of lithium ion batteries. You can check out more of Jason’s work here…

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By MoneyMorning.com.au

By MoneyMorning.com.au

Today we’re going to explore the work of forecaster Phil Anderson. But no introduction to Phil’s ideas could be complete without a thorough look at the modern banking system. Because two factors underpin Phil’s real estate cycle theory: the capitalised economic rent and the credit creation of modern banks.

If you’re familiar with the intricacies of modern finance you’ll know this: the banking system creates its own deposits, via their lending. This credit creation brings new money into existence.

Now Phil is not, as they say, a ‘hard money’ man. He doesn’t advocate a return to the gold standard. In fact, he sees credit creation as a necessary and fundamentally positive process for the general economy — with a caveat (or two). The main flaw in the process, he says, is whether the credit is created for productive purposes (say building a bridge) or speculation in what he calls ‘government-granted licenses and privileges’. You can see what he means by that by checking out a free series of videos we’re producing with him here.

But one crucial aspect of Phil’s work is how the modern structure of our economy makes banks ridiculously larger and more powerful than they should ever be. Effectively, he says, society works for the banks, instead of the other way around.  

Moral Hazard Ingrained in the Financial System

One consequence of this is that banks cannot be permitted to fail when they overreach. If your business goes bankrupt, dear reader, nobody gives a damn. But a bank? The government will allow money printing to high heaven to get them out of trouble.

As Phil points out, this is why the US Federal Reserve has done everything in its power to recapitalise the US banking system and return it to profitably after the collapse of 2008. Savers be damned. Driving down the interest rate means US banks can borrow from the Fed at under 1% and buy long term government bonds paying just under 3%. They then cream profits off the spread, all for doing sweet you know what. Beats going to work, doesn’t it?

The member banks own the Fed. The Fed IS the banks. Of course it will act for their benefit, not the average American or anyone else.

There will come a time however, Phil argues, when the US Federal Reserve will raise interest rates and the spread the banks earn will narrow. That is to say, it will become less profitable for them to simply borrow from the Fed and buy governments bonds. That’s when they’ll go looking for credit growth by lending to consumers and business. Once again there will be times of ‘easy credit’. This sows the seed of another credit boom, and by then, according to Phil, we’re well into another real estate cycle.
 
You might be inclined to think we’re in times of easy credit right now. Not so, according to Professor Steve Hanke at John Hopkins University. He argues that the US Federal Reserve has actually adopted a contradictory monetary policy. How so?

State Money Versus Bank Money

Here’s the Professor:

‘The problem is that central banks only produce what Lord John Maynard Keynes referred to in 1930 as “state money”. And state money (also known as base or high-powered money) is a rather small portion of the total “money” in an economy. The commercial banking system produces most of the money in the economy by creating bank deposits, or what Keynes called “bank money”.

‘Since August 2008, the month before Lehman Brothers collapsed, the supply of state money has more than quadrupled, while bank money has shrunk by 12.1 percent – resulting in an anemic increase of only 4.5 percent in the total money supply (M4)… The public is confused – as it should be. After all, the Fed has embraced contradictory monetary policies. On the one hand, when it comes to state money, the US Federal Reserve has been ultra-loose. But, on the other hand, when it comes to the largest component of the money supply, bank money, a tight monetary stance has been embraced.’

The commercial banks have had to adjust to higher capital ratios under Basel III rules that govern banking, plus new regulations brought in by the Bank of International Settlements. This has restrained their lending. Hopkins calls it Bernanke’s Monetary Mess. But the history of banks says it won’t be long before the credit machine cranks again because credit growth drives bank profitability.

You can get a sense of where Phil sees all this going in his videos. Phil went on the record at the recent Port Phillip Publishing conference World War D talking about the coming boom over the next decade. But if you couldn’t make it to the conference, Phil’s World War D speech will be released here in the coming weeks.

We know Phil’s going on the record to talk about a coming boom over the next decade or so. That made an interesting contrast with Richard Duncan, who talked about the coming depression. This was no theoretical exercise, either. Where you put your money will depend on which you see coming. We have a feeling the crowd favoured the Duncan angle. But we’re sure Phil doesn’t mind. It is lonely on the other side of the crowd. But often, in the end, that’s where you want to be.

Callum Newman+
Contributing Editor, Money Morning

PUBLISHER’S NOTE: Gain Priority Access to an exclusive FREE six-part video series where Phil Anderson, the world’s foremost authority on real estate, stock and commodity cycles reveals the secret life of the investment markets… You’ll learn what’s next for Australian stocks…why real estate and stock market cycles repeat every 18 years…why this means we’re just one year into a historic 14-year housing boom…what it means for Aussie resources…and much more. All you need to do is just click HERE.

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By MoneyMorning.com.au

By CentralBankNews.info
    Singapore’s central bank maintained its policy stance of a “modest and gradual appreciation” of the Singapore dollar to contain domestic and imported inflation and thus ensure price stability, but cautioned that it was ready to “curb excessive volatility” in the exchange rate.
    “Barring a significant shock in the external environment, the Singapore economy should expand at a moderate pace over the course of the year,” said the Monetary Authority of Singapore (MAS), which targets the Singapore dollar against a basket of currencies of key trading partners as a instrument to control inflation.
    “Wage pressures will persist and firms are likely to pass on business costs to consumer prices. Consequently, MAS core inflation is expected to stay elevated,” MAS added.
    Despite weak growth in the first quarter, MAS said economic activity should stay on a broad upward trajectory for the rest of the year with the economy expanding by 2-4 percent in 2014 and unemployment remaining low. In 2013 the economy grew by 4.1 percent.
    Singapore’s Gross Domestic Product expanded by only 0.1 percent in the first quarter from the fourth quarter for annual growth of 5.1 percent, down from 5.5 percent in the fourth quarter.

    MAS attributed modest growth in the first quarter to dampened demand for Singapore’s exports from bad weather in the U.S. while financial services were hit by the negative sentiment in global financial markets as the Federal Reserve started tapering its asset purchases.
    “In comparison, growth in the domestic-oriented sectors, including construction, remained firm,” MAS said.
   The monetary authority was upbeat about the prospects for the global economy, saying the outlook had brightened, with a recovery of the U.S. labour market supporting consumer spending, the euro zone emerging from two years of contraction and a mild turnaround in the global information technology industry buttressing growth in Asia, ex-Japan, even as domestic demand in the Asian region softens and China’s growth slows.
    “The Singapore economy is expected to grow at a moderate pace  in 2014, supported by the cyclical uplift in the industrialized economies,” MAS said.
   
   

By CentralBankNews.info
    Seven central banks lived up to expectations last week and held their policy rates steady as the focus of global monetary policy shifted to Washington D.C. and the spring meetings of the International Monetary Fund (IMF) and the Group of 20 finance ministers and central bank governors.
    The G20 once again tiptoed around the issue of how individual central banks, such as the U.S. Federal Reserve, can limit some of the spillover effects of changes to its own policy on other countries.
    Compared with the G20’s Sydney statement from February, when central banks were specifically mentioned, last week’s statement didn’t even mention central banks, a likely reflection of the fact that the Fed’s tapering of its asset purchases so far has been less disruptive than expected.
    Here’s the wording from last week’s G20 statement:
   “We are strengthening our macroeconomic cooperation by further deepening our understanding of each other’s policy frameworks and assessing the collective implications of our national policies across a range of possible outcomes. We will continue to provide clear and timely communication of our actions and be mindful of impacts on the global economy as policy settings are recalibrated.”
    Here’s the wording from the Sydney statement:
    “All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy.”

    It was left to the European Central Bank (ECB) to provide some excitement, with two top ECB policymakers taking another step toward preparing financial markets for a policy response if the euro continues to strengthen.
    Earlier this month the ECB stressed that its governing council was unanimous and ready to use unconventional monetary instruments in addition to rate cuts to ward off the threat of deflation.
    On Friday ECB Executive Board Member Benoit Coeure told Bloomberg TV in Washington that “the stronger the euro the more need for monetary accommodation.”
    As if to underscore that Coeure’s statement was not just a personal opinion but the consensus view of ECB policy makers, ECB President Mario Draghi the day after told a news conference:
    “The strengthening of the exchange rate would require further monetary policy accommodation.”
    In early Asian trading, the euro was quoted at $1.385, up almost 5 percent since the end of 2012 and 0.8 percent since the end of 2013 despite the more accommodative policy stance of the ECB compared with the Fed’s tighter stance.
   
    Through the first 15 weeks of this year, policy rates have been raised 13 times, or 9.2 percent of this year’s 141 policy decisions by the 90 central banks followed by Central Bank News, up from 8.7 percent end-March but down from 10.1 percent end-February.
    But global economic growth remains sluggish and inflation low, allowing some central banks to loosen their stance.
    Policy rates have been cut 15 times so far this year, or 10.6 percent of this year’s policy decisions, down from 11 percent at the end of the previous week and 14 percent at the end of February.

• BOJ maintains policy, demand to take hit from tax rise
• Indonesia holds rate, confident about 2014 inflation target
• Sweden holds rate, greater chance of near-term rate cut
• Poland on hold, repeats steady rate at least until end-Q3
• Korea holds rate, repeats good harvest keeps inflation low
• BOE maintains base rate, asset purchases, as expected
• Peru holds rate, H1 growth to be lower than expected

Article by www.goldstockbull.com

Gold bugs have been forecasting a dollar collapse for years. They have been correct about the gold price, which has advanced nearly 400% in the past 12 years versus a gain of just 64% for the S&P 500. They were also correct about the dollar during the first phase of the gold bull market (2001-2008), when the USD index fell from 120 to around 72.

But the dollar did not continue to plummet after 2008 and indeed has held up remarkably well. The USD index has put in a series of higher lows over the past few years, showing strength against other currencies. But this strength is being tested once again as the index has fallen to critical support around the 80 level. While these tests of support are typically spaced out by several months, this will be the second test of support in the past month. Pressure on the U.S. dollar appears to be increasing and failure of support could ignite a massive decline.

Looking back to the start of the gold bull market, we see that gold and the dollar have maintained a fairly consistent inverse relationship. When the dollar moved up, gold moved down. When the dollar fell, gold pushed higher. The only major exceptions were 2005 and early 2010, when gold and the dollar moved higher in lockstep.

It is interesting to note that over the first 12 years on this chart, there was never been a prolonged period where gold and the dollar dropped together. This has changed over the past year.

When we zoom in on the chart, we can see a new anomaly in boxes 1, 2 and 3, whereby the gold price has been dropping alongside the dollar, rather than rallying. If we add together gold’s losses in these three boxes, we get a decline of nearly $300, despite a weakening of the U.S. dollar. Something is clearly out of whack as gold has failed to push higher against the backdrop of a lower dollar for the first time in over a decade.

Lastly, in box 4 we can see gold rising alongside the U.S. dollar for the first time since 2010. When combining these time periods, gold and the USD have actually had a positive correlation for a good part of the past 18 months.

I believe the anomaly is due to increased manipulation and use of HFT algos in the precious metals market. I don’t suspect that the positive correlation will persist, especially with the increasing spotlight on gold price manipulation. Additionally, fundamental conditions are becoming increasingly favorable for a major drop in the value of the U.S. dollar.

There is a growing movement to dump U.S. dollars in global trade in favor of local currencies or even gold. Russia and China appear to be spearheading these efforts, with new bilateral trade deals that bypass the U.S. dollar and additional agreements with BRICS nations to use Rubbles or local currencies. Russia has also set up agreements to purchase oil from Iran with Rubbles, Yuan or even gold. Central banks are increasingly replacing dollar reserves with Yuan reserves and the increased spotlight on the manipulation in the gold market could hamper the ability of the United States to continue propping up the dollar.

These developments are all very bearish for the U.S dollar, whose days as world reserve currency appear to be numbered. Given the debt levels of the U.S. government, unprecedented money printing to bail out the banks and keep the economy afloat over the past 5 years and growing distrust and distaste for the U.S. following the NSA revelations, one has to wonder if the whole house of cards could come crumbling down sometime soon.

Gold has been the major benefactor, up roughly 10% year to date. The technical chart has turned bullish, with gold breaking through long-term resistance in February. It put in a rough double bottom, followed by outlines of a cup and handle pattern, both bullish indicators. The RSI is pointing higher with room to run and I expect gold will be above $1,500 within the next few months.

Gold bugs may have been too early in their call for the dollar’s demise, but the prediction may prove true yet. With the stock market looking to be in the midst of a major crash, precious metals would seem the obvious buy at the moment. Gold is one of the only asset classes that does not appear overheated and wildly overvalued at current levels. Whether the dollar collapses suddenly or dies a slow death, you will want to have gold and silver in your portfolio to protect your wealth.

Premium members get the monthly Contrarian Gold Report newsletter, access to the model portfolio and email trade alerts. To sign up for as little at $39, click here.

Article by www.goldstockbull.com