Dollar gaining! Gold falling!That's the headlines. The dollar is gaining strength, and everything looks rosy. Sort of.
Actually, the dollar is gaining altitude against gold, and most major currencies, except one. And you'll never guess which one it is.
The Yen? How did you guess? You must have cheated, you dirtbags.
The buck's strength is temporary, and it comes from one source: the flow of money out of the stock markets and into Treasury Bonds. We don't have anything like genuine panic in the markets yet, but there's no denying people are getting scared, and they're yanking money away from Wall Street and putting it in Treasuries, where they think it's safe.
But the yen is rising faster than the dollar, and I have to wonder: Who's buying all those yen? Is it Wall Street and European investment banks, turning positions in U.S. stocks into yen to cover their debts to the Bank of Japan before the yen carry trade really starts to unwind?
Stay tuned. The JPY is back on the rise, to 117.7 and a little more strength will lead to a breakout against the dollar. When that happens, gold and silver will look a lot more interesting.