Strength of Dollar Affects Gold Prices

January 23, 2014

In this episode of the Precious Metals Market Update, Tom Cloud discusses some of the technicals and fundamentals that are impacting gold and silver prices with exclusive early access for FTM Insiders.


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Audio Transcript Below

This is Tom Cloud with the Midweek Precious Metals Market Update.

I want to streamline this today and get right to the three things that are on my mind from watching these markets for 35+ years. I can really boil it down to three things that I’m going to watch very, very carefully throughout the year, and you should, too.

Dutch Bank Price Fixing Gold

The first is, we saw on Friday, the Dutch bank quit being a price fixer for gold after over 100 years in the famous Rothchild Room that’s used in London, where, twice a day, the price of gold is fixed after all transactions are looked at. The Dutch bank has been one of the longest price fixers of gold.

Abruptly, on Friday, they announced that they were not going to be a part of it anymore. A lot can be read into that, from conspiracy to wanting to get out before things get real bad, until investigations get into price fixing further.

We’ve already seen the Libor Investigation break in England on the interest rate fixing that has cost JP Morgan and other firms billions of dollars in fines, and now this price fix on gold manipulation also could start.

We’ve been talking about it for a couple of years in detail, but we’re now starting to see major players pull out. You’ve got to watch this closely to see if any other major players pull out of the gold price fix that occurs twice a day in the Rothchild Room in London.

Strength of Dollar Affects Gold Prices

Number two, and, to me, by far the most important, we sent out on Wednesday the 22nd, an email we hope you all got from Richard Russell talking about the dollar being the one thing to watch as it pretty much controls that, and interest rates, as to what the next move is going to be.

We’ve been very fortunate so far in this country, even though our fiat currency debt is going above $17 trillion, and now the Senate and congress has upped it to where it can go to $18.3 trillion and probably will do so in less than a year. This time, without any debate or anything, they just passed it.

The dollar looms out there, and we’ve said many times that once it breaks back down to 78 from the 81 it is right now in the world market, that’s pretty much when we think the game is over, and that’s when gold accelerates above $2000, and then goes on up to much, much higher numbers than that.

Richard, who is the dean of writers of newsletters for over 60 years and is a WWII veteran, continues to give us incredible information on the dollar and what’s going on worldwide. The difference in the rest of the world and us is that we’re not dealing with our problems, but just printing money at astronomical rates.

We are seeing the “Abenomics” in Japan, where the head of Japan is doing the same type thing we are here, just printing a tremendous amount of currency out of thin air.

This will be the year, 2014, when the dollar breaks below 78, and when it does, it’s going to be off to the races and could go back all the way to 72, about a 10% drop. When that happens, gold will go up about 13% for every 1% the dollar goes down. That’s what has happened over the last 13 years.

Watch Price Spread Between Gold and Silver

Lastly, for the ones that are following the metals on an industrial demand issue, where people are saying gold is going up and continues to widen the spread between gold and silver where we now see the ratio at over 62 to 1, with gold being over 62 times more expensive than silver.

James Turk came out last week, the most prominent so far, and we’re starting to see more and more saying this indicator has to be watched extremely closely because if it goes back toward 55 and then back toward 50 where silver is going up faster than gold, that’s when we’re going to see the inflation finally kick in.

Then we’re going to see people moving to silver for industrial demand and electronic demand. They’re going to start buying silver to store for industrial use once they feel the world is out of the woods for a major contraction like a deep recession or a possible depression.

This ratio right now continues to see gold keep going to higher and higher numbers, which leads people to believe that gold will be currency and the Chinese certainly are capable of doing that based on the gold reserves they are currently buying.

Three Strong Market Indicators

These three things have to be watched really with a fine hourglass. This thing could break any day.

Like I said, the Dutch bank has other people that are in the room when the gold fix comes twice a day in London. If other people walk out of it, it’s going to really be smelling like a rat, and it would mean you should get into gold and silver as quickly as you could.

The dollar value, as it goes toward 78 and as interest rates rise, we get a rotation of money back out of stocks and bonds, and back into gold, and this will happen if those two events happen.

Lastly, watch closely the spread between gold and silver until the major industrial users are convinced we’re out of the woods for recession or depression. That ratio could stay above 60, but if it starts going down, you want to get into silver as fast as you possibly can.

As we’ve talked about the last several weeks, you need to get into palladium, if you don’t own any, as quickly as you can.

If any of you need to talk to me, you can reach me at 800-247-2812.

If you have IRA money that you want to put into a precious metals self-directed IRA, we can discuss that and how you can download the application and the rollover form to make that happen. So, hopefully, we’ve covered a lot of information today, and if you do need me, you can reach me.

With this week’s precious metals market update, this is Tom Cloud signing out.

Want to speak with Tom Cloud? Call him direct at (800) 247-2812

 

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