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Guest post: Gold Positively Correlated with Dollar

 

Vince Lanci, Echobay Partners Ruminations while riding a train

 

 

 



 

Chart 1: Dollar Index vs. Gold Futures

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Gold is now positively correlated with the US dollar, this makes it officially a safety currency.

 

The race to devalue currencies and monetize debt has begun.

 

Europe's central banks will continue print money to finance deficits, even as the very banks being bailed out are shorting the Euro (Soros must be proud!).

 

The US has opened EURUSD swap windows to keep pace with Euro creation and keep a lid on dollar appreciation, which would destroy our government's fantasy of an export led recovery.

 

When Europe stabilizes, the Fed will resume its own agenda of debt monetization and the circle will be complete.

 

Then when the western banks and sovereign funds begin to announce they are accumulating gold, then you get out.