The Dollar has just impulsively smacked the world upside the head. That would be the entire world that was seemingly short or bearish the Dollar. This was an impulsive move that means business, technically. Any other interpretation is an exhibition in denial.
The daily is very over bought and USD is due for a correction perhaps back down to the congestion near the SMA 50 (currently 73.02). The weekly chart is strong and shows that the last time USD broke EMA 22 in such fashion, it held above it and maintained a rally of intermediate proportions. Finally, there is the monthly which shows a very normal but ultimately doomed rally in the world's reserve currency.
Should gold investors and gold stock traders be concerned? Well, should they have been during the USD rally that lasted the entire year of 2005? I have been watching the correlation between the Dollar and the Gold-Oil Ratio (GOR) and those charts tell me to hold on. Gold is not oil. Gold is not copper. Gold is not moly. Gold is not lead. Gold is not uranium. Gold is not coal. In the slowing global picture, I expect this stuff to magically become more readily available - before the eventual next leg up in the supply constrained complex. But first the focus will be on the dance that Uncle Buck does with his paper partners.
It's show time for currencies now and gold and silver are taking the hit as the proceedings get under way. But what is unfolding here is the long, slow realization that not only is the USD a piece of paper (or digital entry) backed by nothing but confidence, but the solution is not going to come in the form of euros, looneys, francs or yen. The GOR and USD have been going generally in the same direction for a reason I think.
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