A Strong Dollar = Weak Commodities

Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

Follow me on twitter@commodityinsite

The outstanding scenario today, is the sharp rise with the mighty US dollar and the pronounced weakness being seen with stocks, bonds, metals and host of other commodity markets. The scenario today is eerily reminiscent of a chapter in my new book, Haunted By Markets entitled, A Strong Dollar= Weak Commodities from October 3, 2014.


Here are a few of opening paragraphs.

---------------------------------------------------

"The third quarter of 2014 ended a few days ago and it was the worst three month period for commodities since 2008, when the nation was in the grips of a bout of economic weakness not seen since the Great Depression of the 1930's. Hard assets across the wide spectrum of commodities took a hard hit with corn prices falling to a five year low, while wheat and soybean prices fell to a four year low. Multi-month lows were seen with precious metals and petroleum. The only bright spot was with cattle, feeder cattle and a few soft or tropical markets such as cocoa and coffee.


None of that, however, is anything new. In my last weekly column entitled, Doing What Is Necessary I stated, This week, the U.S. dollar rose over the 85 level for the first time since the spring of 2010, while at the same time, the CRB Index was trading at a 12 month low and the Bloomberg Commodity Index slumped to a 60 month low. Individual commodities such as grains, gold, silver and a number of other hard assets also dropped to lows last seen 60 months ago. It is no coincidence the dollar is at a four year high and a host of commodities at a four year low.

But here is the rub. Should the dollar close over the, 90 to 92 level, it places the market back up to levels last seen in the years 2004 to 2006. A close over the 94 level, means the dollar is back up to the levels of 2002 and 2004, when commodities per se were just emerging from the Great Commodities Depression of the 1980's and 1990's. In other words, the dollar is on course to trade up to levels that in the past brought about deflation cycle for hard assets of all kinds. Assuming, of course, the 'ol greenback does indeed rise and hold over the 94 level."


-------------------------------------------


It is interesting to note the US dollar Index this morning is trading at 93.21 up 75 points and into a new, 5 month high. And while the dollar is at a 5 month high, gold is at a 5 month low coupled with pronounced weakness with stocks and bonds. The scenario being seen today is not quite identical to what took place in October, 14 but similar enough to scare those long any market anywhere.


Winston Churchill once said, The farther backward you can look, the farther forward you are likely to see. "


If you want to learn about the history of the Big Four, stocks, bonds, currencies and commodities check out my new book, Haunted By Markets. And dont forget if you purchase my book you receive at no cost 1 full month of my twice a day newsletter, Commodity Insite. Simply go to www.commodityinstie.com and check it out.





The time is 8:40 a.m. Chicago

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solutionss Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.


DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice.There is no guarantee that the advice we give will result in profitable trades.