The Dow Jones Industrial Average (DJIA) rose to an all-time high, yet USD/CAD Stalls as Crude Oil Prices Soar, AUD Faces RBA Next. These charts and graphs show why I am scared, it looks like a bubble has formed in our economy.
Investors are looking at the dollar/cadence and seeing a declining trend that is too much for them to handle. When I first looked at the DJIA the price of the dollar was increasing, this makes sense because as the dollar rises in the cost of everything increases as well. We are seeing this scenario playing out now in the worldwide financial markets.
I have written a lot about the world’s central banks and why they have been propping up the greenback. There has been a slow decrease in these countries as oil prices increase. If oil prices increase to $200 per barrel, some of these central banks will fail. This is because they have increased the value of the dollar and inflation is going to be the problem.
This means that the future dollar/cadence appreciation will be only at a few percent. No matter how many times we tell people that we are going back up to an exchange rate that is stable with the value of the dollar, investors are not listening to us. They are thinking, “this is not right, I need to be able to buy this at the same time, it looks like a bubble has formed in our economy.”
It appears that the US dollar is overvalued at this point because the price of oil is increasing, but I cannot tell you exactly why it is happening or what is causing it. I cannot talk about this because the price of oil affects other commodities as well as our economy. When a commodity goes up, other commodities will go up as well.
So far this month, the USD/CAD is up twice as much as the overall USD is, if the currency pair is going to keep advancing, then the strength of the dollar will be needed to maintain that pace. People should continue to get out of bonds and even stocks to prevent losing money as the price of oil gets higher.
Stock markets can rally or crash depending on the oil prices. In order to get out of bonds, they need to get lower before getting higher.
I am afraid because of upcoming economic weakness, people are buying stocks in anticipation of the appreciation. This means that they are not looking at the situation logically. But what do you do when you see an increase in the dollar?
We are going to see a big jump in the USD/CAD, but it might take a while before we see the highest dollar/cadence appreciation. If it does happen, but the central banks of the world begin to fail, this will be the time when the dollar collapses, so everyone needs to get out of bonds and stocks now, before it is too late.
If oil prices increase to a level that is much higher than what we are currently seeing, then the dollar will continue to rise and could surpass that mark and dollar/cadence appreciation will also become higher. This is when everyone needs to buy gold. The idea of buying gold is more than likely to remain the same as when I first started thinking about it.
When I first started thinking about it, I thought, “Why would you buy gold when you can buy silver now?” Because they are both precious metals and when we buy both itis cheaper, but it will never be cheaper when the prices become different.
Once the dollar reaches and surpasses the cost of gold, the dollar will become irrelevant and dollar/cadence appreciation will be what it is supposed to be, a chance to buy and make money. all the rest will follow.