Is The Dollar Headed Into The Abyss?

Back in January, I attempted to answer the question “Is Dollar's Dominance Over?”, as the dollar index (DX) had experienced significant losses.

However, we received two conflicting signals from the technical chart, which provided a bearish alert, and the interest rate differentials chart, which indicated support for the dollar.

In both polls, the majority of readers voted that the dollar's dominance was over and that it had already peaked for the dollar index.

Since then, the DX has made a bounce close to $106 with the support of a hawkish Fed, however these gains proved to be unsustainable, and the price dropped back down to hit the valley established in January, reaching a new low of $100.

Is the dollar headed right into the abyss?

Let's take a look at some updated charts, starting with the interest rate differentials.

DX vs Real Interest Rates

Source: TradingView

This time, I will be using a monthly time frame to provide a closer look at what could potentially cause the dollar to decline. Continue reading "Is The Dollar Headed Into The Abyss?"

Buy-The-Dip Stocks For Silver Exposure

For the past two years, investors in the precious metals complex have watched nearly every commodity race higher, with oil, coffee, orange juice and copper up significantly from their 2021 lows.

Unfortunately, gold (GLD) and silver (SLV) were both left in the dust after topping in August 2020 and February 2021, respectively.

And for investors looking for leverage to the metals, the corrections were even more painful in the mining stocks, with the GDX sliding over 50% from its highs above $45.00 per share set in August 2020.

Fortunately, we’ve since seen a reversal to this trend. Not only is gold knocking on the door of a new all-time high, but silver is outperforming over the past month, up over 35% from its lows after making a new year-to-date high above $25.00/oz.

This has lit a fire under several silver miners, with their margins set to improve by over 50% based on AISC margins of ~$6.00/oz in FY2022, and the potential to enjoy margins closer to $9.00/oz if the silver price averages $25.00/oz this year.

In this update, we’ll look at two silver miners that are still trading well off their 2020/2021 highs and look to be solid buy-the-dip candidates:

Pan American Silver (PAAS)

Pan American Silver (PAAS) is a $7.0 billion gold and silver producer with a production profile of approximately ~1.5 million gold-equivalent ounces [GEOs] after acquiring Yamana’s South American assets last year.

This makes it one of the largest producers sector-wide and the acquisition solidifies its spot as a top silver producer, with the company expected to produce ~28 million ounces of silver in 2024, and this excludes the massive Escobal Mine which has the potential to produce ~20 million ounces of silver if it is restarted. Continue reading "Buy-The-Dip Stocks For Silver Exposure"

What Happened To Reducing The Fed’s Balance Sheet?

Over the past year the Federal Reserve has driven up interest rates by nearly 500 basis points in its quest to try to tamp down inflation.

From a range of 0.25%-0.50% back on March 17, 2022, the Fed since then has steadily raised its target for its benchmark federal funds rate to 4.75%-5.00%, with the possibility of more to come. Over that time the Fed has raised rates nine times—four times by 75 basis points, twice by 50 bps, and three times by 25 bps.

At its two most recent meetings, in February and March, the Fed raised rates by only 25 bps each, possibly because it saw fit to take a slight pause and measure the effect of all these rate increases to see if they are having the desired effect of slowing the economy in order to bring down inflation.

Of course, as we know, the rate hikes haven’t done a whole lot in reining in inflation.

Rather, they created a panic among some fairly large regional banks that has unsettled the entire banking industry, the effect of which has done more to slow the economy than raising rates has done.

Should the Fed then say that the ends justify the means, even if the means—creating the panic—were totally accidental? Should the Fed now brand its “policy normalization” program a success even if a couple of banks failed in the process? Let’s hope not.

This fiasco does call attention to the other prong of that normalization process, namely a reduction in the Fed’s massive balance sheet, which was supposed to help raise long-term interest rates gradually and lessen the Fed’s presence in the U.S. economy.

On that score, there has been negligible progress.

Back in the good old days, before the 2008 financial crisis, the Fed’s balance sheet never totaled more than $1 trillion, a figure that now looks fairly quaint, yet it was a mere 15 years ago. Continue reading "What Happened To Reducing The Fed’s Balance Sheet?"

US Treasury Touches "Crypto-waters"

On 6th of April, the U.S. Department of the Treasury published the 2023 DeFi Illicit Finance Risk Assessment, the first illicit finance risk assessment conducted on decentralized finance (DeFi) in the world. The assessment considers risks associated with what are commonly called DeFi services.

The document is 42 pages long. This report looks at how criminals are using DeFi services to move and hide money illegally. DeFi services use technology called blockchain and smart contracts to allow people to make transactions without banks or other financial institutions.

However, many DeFi services are not following the rules meant to stop money laundering and financing terrorism. Some DeFi services are trying to avoid these rules by claiming to be fully decentralized, but this doesn't excuse them from following the rules.

The report recommends improving the rules and regulations for DeFi services to make sure they follow the laws and don't help criminals.

The cryptocurrency market may face regulatory scrutiny as authorities look to increase oversight on digital assets, so be informed and prepared for real bombshells in the not so distant future.

What do you think is the real target of the Treasury?

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I would love to see your comments on this news.

Let me update some crypto charts to snapshot what’s going there. The comparison chart of major cryptos vs. the market follows below. Continue reading "US Treasury Touches "Crypto-waters""

AI Technology Taking Heat

When ChatGPT hit the scene a few months back, the rip-roaring rally for anything artificial intelligence related was on.

Fast forward to today, and said rally has flamed out rather quickly. Not only have the artificial intelligence-related stocks begun to give back their gains received during the rally, but there is a national backlash swirling across the US.

In Washington, both Congress and the President are questioning whether artificial intelligence is a good thing. President Biden recently said, "Technology companies have a responsibility to make sure their products are safe before making them public." He was asked if AI was dangerous and responded, "It remains to be seen. Could be."

Even Congress is looking into AI and its safety. A nonbinding measure was recently introduced by Rep. Ted Lieu, D-Calif., which will direct the house to look into artificial intelligence.

Interestingly enough, the bill was actually written by the chatbot ChatGPT, which really put AI in the spotlight.

ChatGPT became a household name and really started the AI rally on Wall Street after it was announced the popular website BuzzFeed was planning to use the chatbot to write articles and create content. This occurred on January 26th, 2023. AI technology began to come under fire at the end of March, early April 2023.

Although, even at the beginning of the ChatGPT explosion, some experts and journalists were already calling out ChatGPT for returning historically inaccurate information when asked basic questions. These mistakes raised concerns, even during the beginning of the AI hype, about how trustworthy artificially intelligent machines' answers would be.

The answer is only as reliable as where the answers are originally coming from. Continue reading "AI Technology Taking Heat"