To explain, a repurchase agreement (repo) occurs when an institution discharges liquidity to the Fed in exchange for a Treasury security (overnight or short-term). And with US financial institutions currently inundated with excess liquidity, they are shipping money to the Fed at an alarming rate. I’ve been warning for months that activity is the fundamental equivalent of a decline due to the falling supply of US dollars (which is bullish for the USD index). Thus, pending a formal announcement from the Fed, the fundamental basis of the US dollar remains strong.

The bottom line? Powell’s only hope of curbing inflation is to strengthen the US dollar and weaken commodities (including gold and money) prices. For context, the major futures contracts are denominated in US dollars. And when the dollar rises, it is more expensive for foreign buyers (in their currency) to buy the underlying commodities. As a result, a stronger US dollar often stifles demand. And with the current supply and demand dynamics pushing commodity prices upwards, Powell will have to work magic – strengthen the dollar and reduce demand – if he wants his inflation problem to subside. .

In conclusion, gold, silver (ouch) and mining stocks sank like stones on September 29. And with the USD Index cutting 94 like a knife in butter, EUR / USD’s new 2021 lows were accompanied by new 2021 highs in the USD Index. Moreover, with the continuation of the momentum, the medium-term outlook for MPs remains rather bleak. As a result, further weakness will likely materialize before better days (likely) appear towards the end of the year.

Thanks for reading our free analysis today. Please note that the above is only a small fraction of today’s global gold and silver trading alert. The latter includes multiple details on bonuses such as targets for gold and money which could be achieved in the coming weeks. If you want to read these bonus details, we’ve got some great news for you. As soon as you sign up for our free gold newsletter, you get free 7-day, no-obligation trial access to our premium gold and silver trading alerts. It’s really free – Register today.

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Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Efficient Investing Through Diligence and Care

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All essays, research and information found above represent analyzes and opinions solely by Przemyslaw Radomski, CFA and the associates of Sunshine Profits. As such, it may prove to be incorrect and be subject to change without notice. Opinions and analyzes are based on data available to the authors of the respective trials at the time of writing. Although the information provided above is based on careful research and sources believed to be accurate, Przemyslaw Radomski, CFA and its associates do not warrant the accuracy or completeness of any data or information reported. The notices published above do not constitute an offer or a recommendation to buy or sell securities. Mr. Radomski is not a registered securities advisor. By reading the reports of Przemyslaw Radomski, CFA, you fully agree that he will not be held responsible for any decisions you make regarding the information provided in such reports. Investing, trading and speculating in any financial market can involve a high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits employees and affiliates as well as their family members may have a short or long position in any security, including those mentioned in any of the reports or essays, and may make purchases. and / or additional sales of such titles without notice.