You know what they say, "cash is trash." While that may be true from a long-term investment perspective, I find the dollar to be one of the most important financial tools in an investors tool belt. Having a pulse on the dollar can give you an advanced perspective on all other markets. Since all goods, services, companies, and commodities are priced in dollars, we must continue to be aware of the Dollar Index and it's impact on all things finance.
Let's get started.
The Dixie is coming up on some crucial overhead resistance form this long term triangle we are in. This means that a downtrend in the value of dollars is coming, probably not until summer or fall of 2020 though. We should continue to see chop in an upward direction as commodities have an increase in volatility , and political and economic uncertainty increase. I believe we will reach some sort of crescendo in mid 2020, as the dollar hits resistance.
As the dollar hits resistance, we will likely see a continued loosening of monetary policy from the fed. Precious metals and other commodities will start to really develop strong up trends, and stocks will exacerbate their already extended bull run. While most financial gurus are calling for a catastrophic stock market crash, I'm thinking the opposite. I think there is some gas left in the tank for this bull market.
While the fed continues to lower rates, we'll see a lot of money flowing. When 2024 comes, we could potentially see the dollar reaching key support, and the fed funds rate approaching zero like in 2009. The fed will likely have to decide to either keep the dollar as a world reserve currency by increasing interest rates and crashing their own markets. Or, they can kick the can down the road and enter into negative interest rate territory like Europe. I expect them to crash the markets then.
Whether you like it or not, the dollar will lead the way, acting as an economic indicator for those in the know.
Thanks for reading.