US Dollar vs Gold vs Bitcoin
2018 is going to be a difficult year for Forex traders because of fluctuations in the value of the US dollar. The Fed is planning to raise interest rates three more times in the coming year besides QT. Higher interest rates in the US will result in a flow of capital towards higher-interest bearing US paper, particularly from the EU and Japan. This in turn will result in higher quotations for the dollar, and one can expect a higher dollar price just after each increase in the Fed base rate. The dollar gains could also take place shortly before the FOMC meetings.
Another important factor is the Chinese initiative promoting the yuan as an international reserve currency. The Russians and Chinese in addition to the Indians like the idea of a gold-backed currency as they are basically gold bugs. They will therefore continue buying physical gold on the international markets. It should now be clear that the gold price in London and the US is rigged by the BIS and the bullion banks that cooperate in the fraudulent price setting that has been going on for years. The market is vitiated by future contracts that will never result in any physical transfer of the yellow metal. This market manipulation helps to hide the falling value of fiat currencies.
The Shanghai gold market has a very high turnover in physical gold, and the Chinese and Russians are happy to buy gold at US $ 1,250.00 an ounce and not the real market discovery price, which certainly would be much higher. The Chinese have been preparing the basis for setting up an oil futures market in Shanghai for some time, and this market will start soon.
Bitcoin has reached very high prices in a very short time, and this has prompted governments and central banks to start paying attention to cryptocurrencies. It is highly unlikely that governments and central banks are going to allow bitcoin to endanger fiat currencies. The price will go down as fast as it has gone up as soon as the central bankers decide on what strategy to follow. They have been able to manipulate the gold price, and they will put an end to the bitcoin mania by prohibition if other methods are not found.
The price of the US dollar in Forex markets will be influenced by the success and subsequent decline of Bitcoin while at the same time the Chinese support the yuan as an international reserve currency and continue putting more renminbi in circulation. The IMF will have to weight the yuan properly in the future.
The amount of US debt in foreign hands will also play a role in determining the value of the greenback. A selloff would bring the dollar lower. Watch out for that.
Walter Snyder
info@swissfinancialconsulting.ch
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