The U.S. Dollar Index fell 62 points to 74.80 on Monday, which makes this another new low for the year. The dollar has been trying to move higher the last few days, but just got crushed again today. This, of course, fueled commodities higher. Gold jumped $26 to close just shy of $1,143. Most other commodities were also sharply higher.
Commodities are working off the macro economic picture right now. The macro picture happens to focus on the Fed and the massive government stimulus programs. They have the spigots wide open right now with no indication they will back off anytime soon. The price action in gold and the dollar tell the whole story.
The trend right now is a momentum trend. Institutions are selling the dollar, while buying stocks and commodities - especially gold. Expect maximum exploitation out of this setup. I feel these moves are not sustainable and will end badly. That could be tomorrow or a couple years from now. The S&P (stock market) is just shy of a 50 percent retracement from the peak in 2007 to the low in March 2009. Could this be a top?
Hi Chuck,
Pleae can you explain why Gold for instance is hitting record highs yet, implied Volatility from a historical perspective is low in the Gold future Options.
Statistical 19.2% Implied 19.7%
I would have thought if an assest or commodity that is hitting new highs would have high inplied volatility??
Any ideas
Regards,
Russ