The Big Story in the Market: Continued Weakness in the US Dollar

Let me get to what's been going on in in the market. The big story in the market is the continued weakness in the US dollar.

Remember the Dollar Index rose about 6% between the election of Donald Trump and the inauguration day. The reason for the rally was the optimism surrounding all the economic growth that we were going to get as a result of tax cuts, deregulation, all this stuff that was going to happen. 

 Of course all this was also going to result in a tighter Federal Reserve because we were now going to have fiscal stimulus and so we weren't going to need as much monetary stimulus. Now remember at the time I argued that that was nonsense and of course so far I'm being vindicated because here we are were six months into the Trump presidency and nothing has happened.

Video: An Interview With Peter Schiff

"When I started buying gold in 2001 it was under $300 an ounce, it rose as high as 1900 USD/ounce by 2011. I started buying oil when it was at $20 a barrel or less and went up to 150 dollars a barrel."

Gold: A Short Squeeze Is Coming

Given the weakness in the US Dollar and the weak economic data, Gold should be moving up a lot more than it is. I still think that there's still a lot of overhang there's still a lot of short selling going on but I smell the mother of all short squeezes coming. (SPDR Gold Trust ETF (GLD), Market Vectors Junior Gold Miners ETF (GDXJ), Market Vectors Gold Miners ETF (GDX))

Markets: Australian Dollar, Canadian Dollar, Foreign Stocks

The Australian dollar (AUD) is very close to a two-year high it's at more than a one-year high as is the Canadian dollar (CAD) which was very strong on the week on the back of a rate increase by the Bank of Canada but the US dollar fell across the board, obviously foreign stocks better than US stocks given the tailwind that they have from appreciating currencies.

Economic Data Continues To Come Out Weaker Than Expected

Economic data continues to come out on balance weaker-than-expected. The Atlanta Fed today notching down its estimate for the second quarter GDP to 2.6 percent. This is the lowest the Atlanta Fed has been since they've been making forecasts on the second quarter. I assume that they're going to continue to ratchet that bar lower and lower as more economic data comes out.

Some People Are Trying to Keep the Price of Gold From Rising

Every time gold is about to breakout someone comes in and sells a tremendous amount of it all at one time. So, obviuosly there are some headwinds, some people are trying to keep the price of gold from rising for whatever reason but they will not be successful long term. Gold are going to rise as the US Dollar weakens. (Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX), Goldcorp (GG))